Monday, June 15, 2009

Stock of the Week: Michael Hill International

In this Stock of the Week I am going to look at the multinational Jewelry retailer Michael Hill International [MHI.NZX]

Like every other business and especially retailers, Michael Hill is suffering somewhat from the economic downturn, its results to 31/12/08 that, but this company has a long history of good returns to shareholders and spectacular revenue and profit growth and the drop in profit will not last forever.

Over the last year or so the company has shifted its direction from a pure jewelry discounter to a more upmarket player, with its own branded watches and a range of luxury branded products, starting with Michael Hill Perfume.

Expansion from its present base of over 230 stores is on the cards with a goal of 1000 stores by 2020, the bulk of them being in North America, which kicked off in Canada a few years ago and entered mainland America at the end of 2008 when MHI purchased 17 stores in Illinois and Missouri from Whitehall Jewelers who were in Chapter 11 Bankruptcy.

Of course this is risky, there are many retailers that have washed up on the retail rocks in the land of the free because of unwise and unsustainable expansion, many of them in 2009, but Michael Hill's (the man and the company) expansion strategy up till now has been carefully calculated every step of the way and so far has paid off.

Canada has proven a tough nut to crack thus far but prospects were improving until the recession hit late 2008.

Michael Hill (the man) thinks this is a perfect time to expand and I am with him there - cheaper start-up costs makes for a good base to grow from and gives leeway to get through the tough times.

Which brings me to the share price. The stock hit a low of 45c earlier this year but has risen up to 69c market close on Friday. The stock has been as high as $1.25.

I am looking at buying more on share price dips, and they will come.

Good Luck!

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Recommended Amazon Reading

The Intelligent Investor: The Definitive Book on Value Investing. A     Book of Practical Counsel (Revised Edition)
The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel (Revised Edition) by Benjamin Graham
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c Share Investor 2009


  1. just looking at MHI's historical results you see improving revenues, improving profits except for a blank 2004 year? Then in 207 the share price crashed from over $12 to under a $1.

    do u know why this happened?

  2. Hi anon, yep, it can be easily explained. There was a 10 for 1 share split at the time...


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