Same store sales across Michael Hill’s three key geographies have improved in the first seven weeks of FY26 compared to FY25 overall.
The group’s Canada recorded the highest lift in comp sales, up 6.8 per cent, followed by Australia (up 3.4 per cent). Both are slightly higher than their FY25 comp sales, which were then up 4.4 per cent and 1.2 per cent respectively.
The group’s New Zealand segment remains challenged by local economic issues, but has improved to a comp sales drop of 3.2 per cent, which is higher than the 5.5 per cent decline in NZ comp sales for FY25.
The latest bump up in sales also followed improvements in Michael Hill’s second half of FY25, where same store sales were up 6.5 per cent and 2 per cent in Canada and Australia, and down 2.4 per cent in New Zealand.
Despite the comp sales improvements, total sales growth across Michael Hill for FY25 was broadly flat, down just $1.2 million to $643.7 million.
The group’s gross margin also dipped slightly, falling from 60.6 per cent to 60.5 per cent in FY25, with Michael Hill reporting an impact from record gold prices and a sector-wide elevated promotional environment, which was largely offset by introducing new higher margin product.
The retailer also restructured “a number of” departments during FY25, which resulted in the exit of some senior leadership roles, alongside cutting discretionary spend and other overheads.
“In response to challenging trading conditions during the year further cost optimisation programs were undertaken, including a review of the support centre structure, ways of working and costs, to realign our structure to strategic delivery and productivity,” the company shared in its preliminary report.
These cost cutting measures led to a nearly flat decline in net profit to a comparable earnings before interest and tax (EBIT) of $15.3 million, down from $15.9 million in FY24. It also led to a turnaround in statutory net profit after tax (NPAT), which hit $2.1 million, up from a $500,000 loss in FY24. This result includes the net after tax impact of two non-cash items – a $7.4 million impairment expense of the Bevilles brand intangible asset, partially offset by a $3 million favourable litigation outcome.
Across the segments, Australia’s 1.4 per cent revenue lift for FY25 was matched with a 70 basis point fall in gross margin to 59.7 per cent.
Within this result, Michael Hill reported that its recently acquired Bevilles business has seen challenging retail trading conditions suppress sales growth and margin. This is despite the brand having expanded to 37 stores, including seven stores in the new market of Queensland.
“Trading conditions have also been particularly difficult in Victoria, where the [Bevilles] brand was founded and the majority of the acquired stores are located. As a consequence, we have paused further store expansion to ensure the business model is optimised before we scale the network.
Given this decision, the Bevilles brand intangible asset of around $20 million has been the subject of a non-cash impairment of $7.4 million.
The Australian store network finished the year with 160 stores, including 37 Bevilles stores. This is down from 171 stores in total at FY24 end, with Michael Hill noting 11 store closures and two conversions from Michael Hill to Bevilles.
Michael Hill’s Canada segment delivered another year of record sales, however gross margins dropped by 50 basis points to 60.1 per cent.
During the year, one store opened and four stores closed in the North American market, resulting in 82 stores at year end.
As for New Zealand, Michael Hill noted the improvement in comp sales, but also reported a 90 basis point fall in gross margin to 58.3 per cent.
“FY25 saw a continuation of the challenging trading conditions experienced in FY24, with the added overlay of volatile gold and diamond prices, combined with the looming threat of US tariffs,” chair Rob Fyfe said.
“Despite this backdrop, and the tragic loss of our CEO Daniel Bracken in February, the business has continued to pursue our agreed strategy and made hard decisions to ensure we are well-placed to benefit from any improvement in economic and trading conditions.”
As well as the death of Daniel Bracken earlier this year, the company’s founder Sir Michael Hill also passed away in July. Fyfe said Sir Hill’s vision and ambition will continue to motivate the Michael Hill team for many years to come. “I couldn’t be prouder of the resilience, dedication and commitment shown by every team member within the Michael Hill Group,” he said. “We also thank our external suppliers and partners for their continued support of the business.”