The Michael Hill International Ltd (ASX: MHJ) share price is in the green following the release of the company's financial year 2021 (FY21) earnings.
Right now, the Michael Hill share price is 86 cents, 3.64% higher than its previous close.
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Michael Hill share price jumps on $43.5 million profit
Here's how the jewellery retailer performed during FY21:
- $45.3 million of net profit after tax – 1,382% more than that of FY22
- Revenue increased 13.1% to $556.5 million
- Earnings before interest and tax (EBIT) increased 414% to $72.4 million
- $149.2 million of net operating cash inflows – up 96%
- Unfranked 3-cent final dividend. Total dividends for FY21 of 4.5 cents per share
Michael Hill's Australian stores' revenue in FY21 was up 17.1% compared to that of FY20. Its Australian stores brought in $312.3 million.
Revenue from New Zealand-based stores reached approximately $121.6 million – 19.1% higher than in FY20.
Finally, Michael Hill's Canadian segment's stores' revenue increased 6.9% to around $129.4 million.
Additionally, the Michael Hill branded collection's sales increased to 42.1% of its total sales.
Michael Hill ended the financial year with $72.4 million of cash in the bank and no debt.
What happened in FY21 for Michael Hill?
FY21 was a big one for Michael Hill and its share price.
The company recorded $34.8 million worth of digital sales. That's a new record and 6.3% of its total sales.
Traffic to Michael Hill's website was also up 35.3% compared to the prior period, likely helped by the addition of 'ship from store', 'click and reserve', and 'virtual selling' offerings.
The company's loyalty program, Brilliance by Michael Hill, now has 800,000 members, up from around 200,000 in FY20.
Michael Hill also entered into a new financing facility in FY21. The new $70 million facility is jointly funded by ANZ and HSBC and is currently undrawn.
During FY21, the company opened 1 new store in Canada and closed 6 underperforming stores. As of 27 June, Michael Hill has 285 stores.
Though, COVID-19 did have a big impact on Michael Hill throughout FY21. Across all its stores, it lost 10,447 trading days in FY21.
Of those lost trading days, 3,458 were in Australia, 464 in New Zealand, and 6,525 in Canada.
What did management say?
Michael Hill's CEO, Daniel Bracken, commented on the results driving the company's share price higher today. He said:
Setting aside the global store network closure in 2020, the company has now delivered eight consecutive quarters of positive same store sales growth together with sustained margin expansion.
Throughout the year, we successfully navigated the complexity of the global pandemic, with half our Canadian stores closed for many months, and sporadic temporary closures across our global network…
While I'm delighted to see incredibly strong results from Canada following its full reopening, and the resilience of our New Zealand business, the impact of extensive disruptions in Australia and now New Zealand are very concerning.
What's next for Michael Hill?
Here's what might move the Michael Hill share price in FY22:
Michael Hill didn't provide guidance for FY22. However, it commented that ongoing COVID-19 outbreaks have impacted its business in July and August.
Over the first 7 weeks of FY22, the company has lost 2,637 store trading days in Australia, bringing its total lost trading days for FY22 so far to 2,755. The lost trade is expected to have an impact of around $5 million.
Though, same-store sales are up 17% since 27 June, driven mostly by the reopening of Eastern Canada in early July.
Additionally, Michael Hill is re-engineering its global supply chain, with a Canadian distribution centre expected to open ahead of peak Christmas trading.
Michael Hill share price snapshot
Today's gains included, the Michael Hill share price is 22% higher than it was at the start of 2021. It has also gained 167% since this time last year.
