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Highlights

  • MHJ's EBIT declined by 75.84% YoY, while NPAT turned negative in FY24.
  • Digital sales growth remained positive, contributing 8% of total group sales.
  • MHJ's share price dropped by 11.4% in the past three months, closing at NZD 0.54 on 7 Feb 2025.

Australia-based Michael Hill International Limited (NZX:MHJ) is a jewellery retailer that operates over 320 stores in Canada, New Zealand and Australia. The company also operates several international digital platforms. In the financial year 2024 (FY24), MHJ reported a significant decline in its earnings, impacted by challenging economic conditions and inflationary pressures.

The company's earnings before interest and tax (EBIT) fell by 75.84% YoY in FY24, to NZD 14.2 million from NZD 58.9 million in FY 2023. Meanwhile, net profit after tax (NPAT) also recorded a downturn, with a NZD 479,000 loss, compared to  NZD 35.1 million profit in the previous year.

Despite these financial setbacks, the company continued to implement its strategic initiatives, focusing on retail fundamentals and driving topline sales. However, the fine jewellery sector remained sluggish due to weak consumer confidence and broader macroeconomic pressures.

Key Business Developments

On 23 January 2025, Michael Hill shared a trading update for the 26 weeks ended 29 December 2024. A notable highlight was the growth in digital sales, which were supported by strong digital traffic and the expansion of Bevilles’ omnichannel presence. Digital transactions accounted for 8% of total group sales during the half-year period.

Investment Insights: Positives and Negatives

Despite financial headwinds, Michael Hill reported some positive financial metrics:

  • Higher Net Margin: Improved from 6% in FY 2023 to 8.2% in FY 2024.
  • Higher Return on Equity (ROE): Increased from 4.5% in FY 2023 to 8.7% in FY 2024.

Market Risks and Future Outlook

Michael Hill faces significant risks, including global economic slowdown and macroeconomic challenges, which have affected consumer spending patterns. However, the company remains optimistic about its long-term prospects. It continues to focus on strategic priorities and claims to be well-placed when the economic conditions stabilise. Encouragingly, the first few weeks of January 2025 showed better positive sales momentum, particularly in the Canadian market.

Share performance of MHJ

MHJ shares closed at NZD 0.54 per share on 7 February 2025. In the past three months, MHJ’s share price has dropped by almost 11.4%.

52-week high of MHJ is NZD 0.92 and 52-week low is NZD 0.43.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is 07 February 2025. The reference data in this report has been partly sourced from EODHD/Others.