Under-fire Michael Hill Jeweller has seen its annual profit plunge almost 86%, after exiting the US and its Emma & Roe outlets cost the jewellery retailer more than $34 million during the past year.
For the year to June, Michael Hill Jeweller's revenue rose 4.4% to $575.5 million, earnings before interest and tax were down 19.5% at $50.1 million, while profit plunged 85.9% from $32.6 million a year ago to $4.6 million.
Profit was impacted by the one-off cost and deterioration in the performance of its Emma & Roe outlets, of which there are still six to be closed, and US profit from operations, of $34.8 million, the company said.
Forsyth Barr broker Suzanne Kinnaird said the company's exit from the US and Emma & Roe had ``materially impacted'' its result.
``Michael Hill Jeweller has battled on a number of fronts in full-year 2018 and starts full-year 2019 a tighter-looking company in terms of its operational and management focus, and with a stronger balance sheet,'' she said.
The 2.5c final dividend took the full year to 5c. Shares in the company, down more than 17% on a year ago, traded flat at $1.07 yesterday.
There are a total 312 outlets, including 171 in Australia, 83 in Canada and 52 in New Zealand, plus the six remaining Emma & Roe stores.
Michael Hill chief executive Phil Taylor said the year was one of ``recalibration and repositioning'', which included the exit of the US and Emma & Roe businesses, and new strategies were in place to support growth in new channels and markets.
``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,'' Mr Taylor said in a statement.
He said the company had strengthened its balance sheet by reducing net debt from $39.4 million to $28 million and net operating cash flows increased by 38.1% from $39.8 million to $54.9 million.
Mrs Kinnaird said no guidance was given and growth rates remained ``uncertain'', given repositioning to an efficiency and profit margin focus.
``Management need to restore market confidence in its ability to execute with a risk that could take time to deliver tangible gains ... not helped by a tough [retail] operating environment.''
