The success of Michael Hill International's jewellery outlets over the past decade poses the question of whether 52.9% shareholder Sir Michael Hill will want to further increase his stake.
During the past decade stores numbers have increased from 120 to 240 and, while full-year revenue in 2002 was about $200 million, for the nine months to March this year it was just under $425 million.
Yesterday, the company released unaudited trading results for the nine months to March, which showed all-store sales revenue was up 8.8%, from $390.7 million a year ago to $424.9 million, the Australian and Canadian all-store sales contributing revenue gains of 9.1% and 18.1% respectively.
Michael Hill's relatively new ''Professional Care Plan'' for jewellery, comprising three-year and lifetime plans, booked a 24.5% increase from $20.2 million to $25.1 million.
Michael Hill shares remained unchanged at $1.34, none being traded, immediately after the announcement, prompting Craigs Investment Partners broker Peter McIntyre to highlight the lack of liquidity in the stock.
''You have to ask the question, with the company performing well for over a decade and the lack of share trading volume, whether Hill sees more value in taking a larger stake,'' Mr McIntyre said.
It appeared the jewellery chain might have ''exhausted'' further store opportunities in New Zealand and wanted to repeat its success further afield, in Australia, Canada and the United States.
During the next three years, the company plans to open 62 new outlets, mainly in Canada and Australia, with 30-40 stores over five years in Australia.
''Michael Hill is targeting 15 to 20 new stores opening every year for the future,'' Mr McIntyre said.
Michael Hill manufactured about 80% of its jewellery in Brisbane, which accounted for 30% of sales, while diamond products made up about 40% of sales, Mr McIntyre said.
Some of Michael Hill's success could be attributed to the ''twin tailwinds'' of improved discretionary consumer spending and the decline in global gold prices, which have fallen almost $US200 ($NZ236) per ounce during the past year.
''Michael Hill has had steady, incremental annual gains, which over the past 10 years has seen it more than double its revenue,'' Mr McIntyre said.
Michael Hill's 2.2% revenue growth matched New Zealand Treasury forecasts this week of 3% growth in consumer spending, he said.
Michael Hill International
All stores sales ($NZD)
Australia: up 9.1% at $280 million
New Zealand: up 3.6% at $86.6 million
Canada: up 18.1% at $48.9 million
United States: up 4.8% at $9.33 million
Professional Care Plan: up 24.5% at $25.1 million
