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Challenging Retail Market Hits Michael Hill Sales

Company’s move away from aggressive discounting also hurt revenue, it said.
Aug 19, 2019 9:11 AM   By Rapaport News
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RAPAPORT... Revenue at Michael Hill fell in the last fiscal year amid a difficult retail environment and the company’s move away from discounting prices.

Group revenue at the Australia-based jeweler fell 1% to AUD 569.5 million ($386.2 million) for the year ending June 30. Same-store sales — at branches open more than a year — slipped 3.3% to AUD 524.7 million ($355.8 million), the company said last week.

Revenue in Australia slid 3.7% to AUD 313.6 million ($212.6 million), as the company moved away from its previous discounting strategy, which had a dampening short-term effect on consumers’ willingness to buy goods. The retailer’s previous strategy included continual discounting, which led customers to wait until items were on sale prior to purchasing. At the end of 2018, the company said it would move away from that policy in order to restore the value of its brand. However, in the first four months of the year, customers waiting for sales failed to purchase as many goods, Michael Hill noted. Challenging and competitive conditions in the country’s retail market also affected sales.

“We have been able to improve sales momentum despite challenging trading conditions in our key markets,” said Michael Hill CEO Daniel Bracken. “Following our fourth-quarter sales results, I’m confident that in the coming year we are well positioned to deliver improved performance.”

Sales in New Zealand declined 4.1% to NZD 120.1 million ($77.1 million), while Canada proved to be the company’s strongest performer, with revenue increasing 1.8% to CAD 133.1 million ($100.4 million). Meanwhile, e-commerce sales for the year increased 44% to AUD 16 million ($10.8 million).

Profit was AUD 16.5 million ($11.2 million), compared with AUD 1.6 million ($1.1 million) the previous year. Michael Hill had initially reported a profit of AUD 4.6 million ($3.1 million) for fiscal 2018, but later adjusted the figure to account for compensation it paid its retail employees in Australia, after discovering it had been underpaying them.

Michael Hill operated 306 stores at the end of the fiscal year. It closed five of its six remaining Emma & Roe stores during the period.

“Whilst we expect market conditions to remain challenging, our focus will be on strengthening our customer proposition with new branded product and improved disciplines in buying, selling and marketing,” Bracken added.

Image: A Michael Hill store. (Michael Hill)
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Tags: Daniel Bracken, Emma & Roe, Michael Hill, Rapaport News
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