Tuesday, February 5, 2008

Michael Hill Jeweller's profit sparkles

In what will probably be one of this reporting seasons pleasant surprises, Micheal Hill International(MHI), today announced profit guidance of around $NZ 20 million approx for the last half year. A stellar performance given the 2007 full year result was slightly over $ 20 million.

It will be a record profit for the company.

The full press release, courtesy of the NZX, from the company is as follows:


MHI
05/02/2008
HALFYR

REL: 0835 HRS Michael Hill International Limited

HALFYR: MHI: Michael Hill International - Half year profit guidance

Tuesday 5th February 2008

Michael Hill International Limited - Half Year Profit Guidance

Net profit after tax for the 6 months ended 31 December 2007 is now expected
to be in the range of $19.25m to $20.00m (last year's comparable period
result was $15.331m and the full year result for the 12 months ended 30 June
2007 was $21.017m).

The improvement in profitability was driven principally from "same store"
bottom line growth and from "new store" contributions (15 stores opened in
2006/07 traded for the full 6 months). The company also continued to reap the
benefits from our supply chain initiatives over the previous 2 years.

The company expects to release its full half year result on Friday 22
February 2008.

This announcement is made in accordance with the continuous disclosure
requirements of the NZX.

RM Hill
Chairman
5th February 2008


Clearly the cost savings have helped immeasurably and that can only be good when factored into new stores as they roll out.

The same store sales growth is a good sign but some of that can be explained by the move from the company to go upmarket, their shop floor prices are higher than before.

So this doesn't necessarily extrapolate to more customers but higher margin ones and this is just what management were aiming for.

It will be very interesting to see the detail come Feb 22 when half year results are poured over and direction for the coming year/s are mapped out.



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Disclosure: I own MHI shares


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