As expected the clean up costs from a change of strategy (especially its US presence) took a toll on Michael Hill International’s full-year profit which slumped 86% in the year to June.
A change in strategy during the year saw the company decide to quit its Emma & Roe and the US (incurring closure and other costs) but the retailer says the new strategy has it positioned for growth.
The Brisbane-based company said net profit was $4.6 million in the year to June 30 down from $32.6 million in the prior year after it opted to wind up its US stores and close down the Emma & Roe chain.
Those one-off costs – including the write-down and disposal of assets and lease settlement costs – totalled $25.5 million. Stripping out those costs, earnings before income and tax fell 17% to $40.1 million.
"The period was one of recalibration and repositioning for the group, which included the exit of the US and Emma & Roe businesses. While the cost of exiting these businesses had a material one-off impact on the financial result, Michael Hill is a stronger and more resilient business today with a clear strategy for long-term growth,” CEO Phil Taylor said in yesterday’s filing with the ASX.
By June 30, all US stores were closed and of the 30 Emma and Roe stores, 24 stores were closed by June 30. The remaining six Emma & Roe stores are in the process of being closed.
The company said it had 321 stores trading on June 30, including those six.
The company said operating revenue from continuing operations were up 4.4% to $575.5 million while group profit from continuing operations fell 21% $34.8 million.
Directors said the company will pay a final dividend of 2.5 cents a share, bringing the full year dividend to 5 Australian cents, unchanged on the year.
Revenue in its core market – Australia- increased rose 1.2% to $325.7 million despite “challenging retail conditions remain in Australia”, which resulted in a 0.9 per cent decline in same-store sales and 5.9% dip in earnings before interest and tax to $48.6 million. New Zealand revenue rose 2.7% to $125.2 million, with a 2.3% rise in same store sales. Performance in Canada was strong with a 16% jump in revenue to $C130.8m and same store sales growth of 3.8%.
It did not provide guidance for the current year. The shares fell 2.5% to 97.5 cents.
