The Michael Hill International Ltd (ASX:MHJ) share price is up over 7% after releasing its FY21 trading update.
Michael Hill FY21 trading update
Michael Hill said it continued to see growth in quarterly same store sales with an increase of 7.5% against the prior corresponding quarter (FY20 Q4) and up 116.3% on an ‘all store sales basis’.
Same store sales for FY21 were up 8.6% on FY20, and up 10% against FY19. All store sales were up 13.5% for the year.
The company expects full year EBIT (EBIT explained) to be in line with, or above, analysts expectations. It also expects recently improved profit margins will be maintained.
Michael Hill said that it experienced record digital sales, with full year digital sales up 51.1%. Digital sales exceeded $30 million for the first time, this represents a record 6.2% of total full year sales.
Its loyalty program membership now exceeds 750,000, in FY20 memberships were around 200,000.
The company said that its balance sheet is strong. It boasted that strong business performance, inventory management and a focus on costs resulted in a year end net cash position of around $70 million.
Michael Hill opened one new store and permanently closed four stores during the quarter. It had a network of 285 stores across all its markets at the end of FY21.
Breakdown by country
Australian same store sales were up 8.7% for the quarter and ‘all store sales’ were up 100.1%.
New Zealand same store sales were up 15.7% for the quarter and ‘all store sales’ increased 129.9%.
In Canada quarterly same store sales were down 7.6% and ‘all store sales’ were up 173%.
COVID-19 caused temporary store closures across all three countries resulting in lost store trading days.
Looking ahead to FY22
Michael Hill said that the first few weeks of FY22 has seen further disruption with Queensland (24 stores), WA (20 stores) and NT (2 stores) impacted by short lockdowns.
An additional 30 Michael Hill stores in NSW remain temporarily closed and a further 34 stores in Victoria are temporarily closed due to lockdown restrictions.
Summary thoughts on Michael Hill and the share price
On the back of the trading update the Michael Hill share price is up over 7%.
For Michael Hill shareholders it’s good to see that the company is delivering growth and it’ll be interesting to see if it can continue its momentum in FY22. Digital sales could be an important factor in FY22.
