Why Michael Hill’s (ASX:MHJ) net profit rose despite closures, low foot traffic

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Summary

• Michael Hill International Ltd (ASX:MHJ) announced a significant surge in the first-half net profit.
• The Group reported healthy earnings despite continuous store closures and a significant decline in foot traffic throughout the period.
• Michael Hill’s board announced an interim dividend of 1.5 cents per share on 26 March 2021.

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Michael Hill International Ltd (ASX:MHJ) on Wednesday announced a significant surge in the first-half net profit even as continuous store closures throughout and a significant decline in foot traffic in all markets negatively hit the Group’s business. The Group said that the team’s focus and energy and the transformational change agenda at Michael Hill helped it post healthy earnings for the 26-week period ended 27 December 2020. 

The jewellery chain reported an 82.1 per cent rise in statutory first-half net profit after tax (NPAT) to A$38.9 million from A$21.4 million in the first half of FY20. The statutory earnings before interest and tax (EBIT) surged by 66.9 per cent to A$58.9 million from A$35.3 million in 1H FY20. 

Image Source: © Guyerwood | Megapixl.com

While the same store sales were up 6.3 per cent to A$312.1 million from A$293.6 million in 1H FY20, the operating revenues fell by 2.9 per cent to A$319.9 million from A$329.5 million for 1H FY20.

Dividend

Michael Hill’s board announced an interim dividend of 1.5 cents per share on 26 March 2021.

Image Source: © Cmmeraydave | Megapixl.com

Digital sales

The digital sales surged by 102 per cent to A$18.5 million in the half year, reaching 5.8 per cent of total sales compared to 2.8 per cent in the prior corresponding period. The Group said that it had lost 3,709 store trading days from lockdowns during the half year, equivalent to A$23 million of lost sales.

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Outlook

Commenting on the outlook, Michael Hill International CEO Daniel Bracken said that he was encouraged by the strong start to H2 with the same store sales of 11 per cent for the Group for the first eight weeks. With two new executives joining the Michael Hill leadership team, the company would continue the transformation and drive the growth agenda, Bracken added.

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