Michael Hill International (ASX:MHJ) reported a stronger first half of FY26, with management pointing to improved execution across product, marketing, and operating discipline as the key drivers behind higher earnings and positive momentum in all three core markets.
First-half performance driven by sales growth and operating leverage
Chief Executive Officer Jonathan Waecker, presenting his first half-year results since joining in August 2025, said the group delivered “profitable growth” across Australia, Canada, and New Zealand. Comparable EBIT for the half was $31 million, up 28.6% on the prior year, supported by revenue growth, a broadly flat gross margin, and stronger operating leverage.
Market results: Canada leads, Australia improves, New Zealand returns to growth
Management highlighted improving momentum compared with the company’s FY26 AGM trading update (which covered the first 16 weeks). For the full 26-week half:
- Canada: same-store sales grew 6.1%, which management described as another record performance. Segment revenue rose 6.2% to CAD 96 million, gross margin increased 70 basis points, and the network ended the half with 82 stores.
- Australia (including Bevilles): same-store sales increased 4.8%, an improvement from earlier in the period. Segment revenue rose 2.1% to AUD 209 million, gross margin increased 20 basis points, and the network ended with 160 stores, including 37 Bevilles locations.
- New Zealand: same-store sales increased 1.8%, returning to positive growth. Segment revenue rose 2.4% to NZD 62 million. Gross margin declined 60 basis points, which the company attributed largely to the deliberate introduction of more attractive price-point products that supported sales and gross profit growth. The network ended with 43 stores.
Waecker also told investors that New Zealand is being managed with more market-specific nuance than in the past, rather than a “homogenous” approach across countries. In response to a question, he said New Zealand EBIT increased 1.6% to NZD 9.6 million, alongside top-line growth, as the market pulled different levers heading into Christmas.
Product, store and supply chain initiatives
Waecker said feedback from store teams and customers has been consistent: simplifying operations, staying close to the customer, and focusing on retail fundamentals drives performance. He said the group tightened product focus, sharpened go-to-market execution, and introduced more deliberate “price point marketing” to clarify opening, core, and premium ranges while supporting margin discipline.
Management credited new collections and concepts—Vermeil, Lume LAB., and the Earring Bar—as well as an expanded Pendant Bar range, as contributors to customer interest and in-store “newness.” The company also expanded curated Christmas gift sets, limited edition items, and novelty ranges to capture peak gifting demand.
The company opened three flagship stores ahead of the Christmas period: Rundle Mall (Adelaide), Bondi Junction (Sydney), and Yorkdale (Toronto), each incorporating a new brand design and updated in-store customer experience.
Operationally, the company highlighted the transition to a new New Zealand distribution center, which became operational early in the financial year. Waecker said around 70% of New Zealand customer orders now ship the same day, stores can be replenished daily, and replenishment frequency has increased approximately 25% to 40%. He also said a recent New Zealand stocktake produced a zero item and dollar variance, which he attributed to improved accuracy from the new approach.
Balance sheet improvement, refinancing, and dividends
Guillaumond said the group ended the half with net cash of AUD 20.7 million, an improvement of AUD 30.5 million versus the prior year’s closing net debt of AUD 9.8 million. She attributed the change to working capital initiatives, including improved supplier terms and a reduction in inventory of AUD 11.3 million to AUD 201.9 million.
In Q&A, Guillaumond described a new arrangement with one supplier where the company pays for stock when it is sold and may be able to return unsold stock. She said the structure improves working capital, reduces inventory risk, and increases availability for customers. She noted it increased payables by around $10 million at the half, with the accounting benefit flowing through payables while inventory is still recognized on the balance sheet.
The company also refinanced its existing debt facility for an additional two years with ANZ on improved margins and added CBA as a new lender. While the board did not declare an interim dividend, Guillaumond said returning to a “sustainable and consistent” dividend remains a priority, and the board intends to return to dividends at the full-year results, subject to trading conditions and the company’s dividend policy.
Second-half trading update and Investor Day
Waecker said momentum continued into the second half. For the first eight weeks of H2, total group sales were up 4.5% and group same-store sales were up 6%. By market, same-store sales were up 6.5% in Australia, up 13% in Canada (local currency), and up 7.1% in New Zealand (local currency).
On gross margin, management said precious metal prices remain a key variable to manage rather than an assumed “drag,” noting the company has levers including pricing, promotion, and portfolio mix. Waecker said the business is focused on maintaining and ideally growing margins and that, on average, changes in metal costs flow through cost of goods sold over roughly a year, reflecting the group’s stock turn profile.
The company will hold an Investor Day on Tuesday, 14 April 2026 at its global head office in Cannon Hill, Queensland, including a tour of the on-site Brisbane distribution center and manufacturing facility. Management said it was not planning to broadcast the event but will upload materials to the ASX and NZX.
In response to questions about capital allocation and Bevilles growth targets, Waecker said Bevilles experienced softer trading in the first half but saw an “inflection point” in early December with improved execution and promotional clarity, alongside early signs of margin recovery. He said Bevilles has continued that momentum into the third quarter and is trading ahead of the group average in the first eight weeks of H2, with further details to be provided at Investor Day.
About Michael Hill International (ASX:MHJ)
Michael Hill International Limited owns and operates jewelry stores and provides related services in Australia, New Zealand, and Canada. The company offers rings, earrings, bracelets and bangles, necklaces and pendants, chains, watches, collections, and gifts, as well as birthstones. It also provides care plans and diamond warranty services. Michael Hill International Limited was founded in 1979 and is based in Cannon Hill, Australia.
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