Australian jeweller group Michael Hill International has recorded a sales lift of 4.7 per cent for the first 45 weeks of FY24.
This is despite an 11.1 per cent plunge in sales in New Zealand for the 45-week period, which was offset by a 12.3 per cent boom in the Australian market.
According to the group, the sales boom in Australia was driven by the inclusion of its Bevilles brand in FY24 only. Sales performance in the core Michael Hill brand has improved marginally compared to the first half but remains negative to last year.
The Bevilles brand has also not met sales expectations, the group reported, and has been further impacted by the relocation announcement and systems integration process.
The jewellery business also launched its high-end jewellery offer TenSevenSeven last year in the Australian market.
Regarding New Zealand, Michael Hill International called the segment its most challenging, with deeper macroeconomic pressures significantly impacting consumer behaviour and discretionary spend.
The continued negative sales results are also driven by a decline in consumer credit approval rates across the country, the group reported, and an increase in "serious retail crime events" impacting a number of its stores.
The business also operates over 80 stores in Canada, with that segment recording a 0.4 per cent fall in sales for the first 45 weeks of FY24.
The Michael Hill group also reported that its gross margin remains suppressed due to sustained higher input costs and record gold pricing, with all markets continuing to experience aggressive promotionally led retail trading conditions, which is also contributing to margin pressure.
Given the compressed sales and continued gross margin decline, previously reported first-half earnings have been eroded, with an operating loss of around $10 million for the third quarter of FY24.
“There is no doubt that consumer discretionary spend, and the fine jewellery category in particular, remain under pressure due to macroeconomic forces,” Michael Hill CEO and managing director Daniel Bracken said. “Higher interest rates are leading to a sustained and prolonged decline in consumer spending.
“Looking forward, as interest rates moderate, we anticipate sales and margin recovery.”
The Michael Hill group reported that its management is activating initiatives to stimulate sales and restore margin as pressures continue. There is also a heightened focus on managing operational costs and capital expenditure.
Actions have been taken to reduce costs across the business including inventory, corporate overheads, underperforming stores and further optimisation of store rostering.