Michael Hill tips hat to loyalty program, omnichannel in latest half-year reports

Jewellery retailer reports strong growth in customer loyalty program membership and benefits from marketing as well as omnichannel investment as counterbalancing tough Covid conditions

More than 1 million loyalty program members, the launch of click-and-collect and omni-channel growth have helped Michael Hill International counterbalance Covid shutdowns to report steady results in the first half of the financial year.

The jewellery retailer posted half-yearly same store sales of $306.5 million for the half-year to 26 December, up 11.4 per cent year-on-year. Group comparable EBIT increased 15.5 per cent to $51.6m, while statutory net profit after tax was $37.1m, a slight dip on H1, FY2021.

In Australia, same store sales increased by 6.4 per cent. However, the loss of more than 7500 store trading days saw retail segment revenues decline by 7.8 per cent to $161.5m for the half. Gross profit locally was down 2.8 per cent to $104.5m. It was a similar story in New Zealand, with revenue dipping 3.3 per cent to $67m as store closures brought about by the pandemic hit. By contrast, Canadian sales lifted 23 per cent $93m.

Like many retailers, Michael Hill has seen digital sales grow over the pandemic. In H1, FY22, digital sales were up 37 per cent to $26.7m, representing 8.2 per cent of total revenue for the first half. Buoying Michael Hill’s omnichannel approach further was the debut of click-and-collect in time for peak Christmas trading season.

Over the last 18 months, the retailer has also rolled out digital appointments, virtual selling, ship from store. Overall, it cited hefty digital traffic and conversion growth year-on-year, along with stronger digital gross margins.

On top of this, Michael Hill said it was trialling its own marketplace strategy across all three of its core markets – Australia, New Zealand and Canada. In addition, it flagged plans to introduce a new payments platform.

Another key area of customer-led investment highlighted in the half-year report is Michael Hill’s Brilliance customer loyalty program, which has now reached 1 million members. This is up from 600,000 members less than 12 months ago.

Members not only delivered high average transaction value and margin experience but were also spending more frequently with larger basket sizes, Michael Hill reported. This included delivering average transaction values nearly double that of non-members in Q2, FY22. The company noted brand and loyalty are key to driving medium to long term sustainable growth in both sales and margin for the group.

As previously reported in CMO, another tech investment supporting Michael Hill’s quest to improve engagement was its rollout last year of a brand and employee feedback management platform.

And thanks to the benefits of investments in loyalty, digital and personalised marketing, Australian gross margin for the half increase significantly by 330bps to 64.7 per cent, the company reported. 

Michael Hill managing director and CEO, Daniel Bracken, said he was particularly proud of the Christmas trading period, which was the best Q2 in the company’s history and represented the 10th quarter of positive same store sales growth since Q3, FY19.

“In addition to our strong sales performance, pleasingly, gross margin expansion also continued. All aspects of our business contributed to this result, ranging from the highly engaging and emotive marketing campaign to deployment of new digital initiatives, excellence in supply chain and inventory management and our Christmas recruitment strategy,” Bracken said. In total, Michael Hill accrued just over $23m in marketing expenses over the first half.

“Our transformation agenda and strategic initiatives are truly gaining traction – the elevation of our brands across all facets of the business; the Brilliant loyalty program now exceeds more than 1 million members; deployment of digital-first initiatives including click-and-collect; and continued focus on retail fundamentals best evidenced by strong lifts in average transaction value, conversion and gross margins.”

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