Michael Hill delivers 28.6% profit surge as Canada posts record sales
Michael Hill International has reported a 28.6% increase in comparable EBIT to $31.0m for the six months ending December 2025, demonstrating profitable growth across all three operating markets. The Michael Hill FY26H1 Results (ASX: MHJ) reveal revenue increased 3.0% to $371m, with same store sales climbing 3.8% on the prior corresponding period.
Canada achieved record sales with same store sales growth of 6.1%, whilst Australia posted 4.8% same store sales growth and New Zealand returned to positive territory with 1.8% growth. The retailer’s balance sheet strengthened materially, with net cash reaching $20.7m compared to net debt of $9.8m in the prior year, representing a $30.5m improvement. The company has not declared an interim dividend but stated its intent to return to dividends at the full year results. The store network contracted by nine locations during calendar year 2025 to 285 stores.
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Same store sales growth across all markets
Michael Hill delivered revenue growth across its three geographic segments, with Canada recording its strongest performance. The Australian segment remains the largest contributor by revenue, whilst Canada demonstrated the highest same store sales momentum and New Zealand showed recovery from prior period weakness.
Gross margin held broadly flat at 61.2% despite higher input costs for gold and silver, indicating effective pricing discipline and cost management across the business.
| Market | Revenue | Change | Same Store Sales | Comparable EBIT | Change | Stores |
|---|---|---|---|---|---|---|
| Australia | $209m | +2.1% | +4.8% | $27.5m | +22.2% | 160 |
| Canada | C$96m | +6.2% | +6.1% | C$15.9m | +16.6% | 82 |
| New Zealand | NZ$62m | +2.4% | +1.8% | NZ$9.6m | +1.6% | 43 |
The Australian segment achieved profitable growth through topline sales expansion and cost management, with comparable EBIT margin expanding 220 basis points to 13.2%. Canada’s record performance saw comparable EBIT margin increase 140 basis points to 16.5%, whilst New Zealand’s comparable EBIT margin remained stable at 15.5%. The multi-market growth reduces geographic concentration risk whilst demonstrating successful execution of the company’s retail fundamentals strategy.
What is comparable EBIT and why does it matter?
Comparable EBIT strips out non-recurring items and accounting adjustments to show underlying operational performance. This metric removes the impact of AASB16 lease accounting (which adds back lease costs that are reclassified under the accounting standard) and one-off costs such as restructuring expenses or litigation settlements.
For the first half of FY26, reported EBIT was $38.9m (up from $32.4m in the prior period) after including $7.5m from AASB16 lease accounting impacts, $1.0m from IFRIC SaaS-related guidance, and small one-off costs including board and CEO transition expenses of $0.5m and employee restructure costs of $0.1m. Investors focus on comparable EBIT because it provides a cleaner view of how the business is trading operationally, without accounting noise or non-recurring events that distort period-to-period comparisons.
Trading momentum continues into FY26H2
The positive momentum from the first half has carried into the second half of FY26, with particularly strong trading across Valentine’s Day and Lunar New Year. For the first eight weeks of FY26H2, same store sales performance by market was:
- Group total sales: up 4.5%
- Group same store sales: up 6.0%
- Australia same store sales: up 6.5%
- Canada same store sales: up 13.0%
- New Zealand same store sales: up 7.1%
The acceleration in momentum, particularly Canada’s 13.0% same store sales growth, suggests the first half result was not an isolated performance. All three markets are trading ahead of the same store sales rates achieved during FY26H1, indicating sustained customer engagement and effective execution of merchandising and marketing strategies.
Strategic initiatives underpinning the turnaround
Michael Hill’s operational improvements are being driven by a focus on retail fundamentals, operational excellence, and improved go-to-market behaviours. The company has introduced fresh collections, expanded its Pendant Bar concept and gifting range, and reinforced value positioning through quality merchandise at accessible prices and an enhanced in-store experience.
Three flagship stores opened in time for Christmas trading: a refurbished Rundle Mall location in Adelaide, a new Bondi Junction store in Sydney (opened late October), and a refurbished Yorkdale store in Toronto (opened early November). The company successfully transitioned to a new distribution centre in New Zealand during the period.
Working capital initiatives contributed to the improved cash position, with inventory reduced by $11.3m year-on-year to $201.9m (from $213.2m in the prior period). The store network was rationalised by a net nine locations during calendar year 2025, reflecting ongoing optimisation of underperforming sites. This demonstrates disciplined capital allocation alongside revenue growth, with the company focusing on profitable expansion rather than pursuing sales at any cost.
Investor Day scheduled for April
Michael Hill will host an Investor Day on Tuesday 14 April 2026 at the company’s Global Head Office in Brisbane (34 Southgate Avenue, Cannon Hill, QLD, 4170). The event will run from 10am to 2pm Brisbane time and is expected to provide a deeper strategic update.
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Outlook and investment considerations
The Michael Hill FY26H1 Results demonstrate an operational turnaround characterised by profit leverage on modest revenue growth, combined with material balance sheet strengthening. The company has transitioned from net debt to net cash whilst maintaining investment in store refurbishments, new locations, and infrastructure such as the New Zealand distribution centre.
The decision to forgo an interim dividend whilst targeting a return to dividends at full year results suggests management confidence in sustaining the improved performance. Continued store network optimisation through closure of underperforming locations indicates disciplined capital allocation, whilst the strong start to the second half provides near-term earnings visibility.
Key metrics summary:
- H1 comparable EBIT: $31.0m (+28.6%)
- Net cash: $20.7m
- H2 same store sales to date: +6.0%
- Store network: 285 stores
The combination of profitable growth, balance sheet repair, and accelerating momentum positions Michael Hill to deliver on its stated pathway to capital returns whilst maintaining investment in strategic growth initiatives. Canada’s record performance and 13.0% same store sales growth in the early weeks of H2 represents a particularly notable development for investors monitoring geographic diversification and market execution.
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