Michael Hill says Christmas trading missed forecasts, 1H earnings to be $34M to $36M

Michael Hill International, the jewellery chain that bears its founder's name, said sales growth stalled in the second quarter, which limited earnings growth in the first half of the year.

"December quarter sales, including the critical Christmas trading period, fell short of our forecasts and didn't deliver the improvement over last year that the company had expected," the Brisbane-based company said in a statement.

Earnings before interest and tax in the six months ended Dec. 31 were in a range of $34 million to $36 million, from $34.8 million a year earlier, it said.

In its annual report published in September, chief executive Mike Parsell said the chain was seeking an increase in same-store sales and ebit in the 2012/13 financial year, especially in Australia.

Michael Hill is the first NZX 50 company to give an earnings update ahead of the results season that kicks in next month and investors are waiting to see whether more companies give guidance ahead of their results.

"Most companies are going to be cautious in terms of their outlook statements," said Shane Solly, portfolio manager at Mint Asset Management. "February is going to be pretty interesting."

Despite the weaker-than-expected second quarter, Michael Hill's sales for the first half rose 8.8 percent to $312.8 million, led by growth in its biggest market of Australia, up 9 percent to $206.7 million. Sales in New Zealand rose 3.7 percent to $63 million, Canadian sales rose 19.4 percent to $36 million and US sales rose 0.8 percent to $6.7 million.

On a same-store basis, sales rose 2.6 percent to $287.7 million, with Australian sales on that basis up 2.6 percent and New Zealand up 3.1 percent.

"All four markets struggled to gain traction over last year's sales in the second quarter" though they achieved "solid" same-store sales growth, it said.

Shares of Michael Hill last traded at $1.25 and have advanced 43 percent in the past year. They are rated 'outperform' based on two recommendations compiled by Reuters.

BusinessDesk.co.nz

Comments from our readers

No comments yet

Add your comment:

Your name:
Your email:	Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Anti-spam verification:

Type the text you see in the image into the field below. You are asked to do this in order to verify that this enquiry is not being performed by an automated process.

Related News:

Michael Hill increases 2013 sales 6.8 percent in challenging environment
Michael Hill International Limited
Michael Hill 9-month sales rise 8.8 percent , led by Australia, New Zealand
Michael Hill 1H earnings creep up on Australian gains, tax dispute lingers
Michael Hill lifts first-quarter revenue 14% on rising North American sales
Michael Hill prepares response to Australian Tax Office
Michael Hill FY profit up 5.8 percent , Australia slows growth
Michael Hill FY same-store sales edge up 0.3 percent
Michael Hill International
Michael Hill nine month sales flat on "sluggish" Australian market