New Zealand Professional Investment Services Firm, Forsyth Barr

Forsyth Barr

New Zealand Professional Investment Services Firm

We are proud to be a New Zealand owned firm, with 21 offices throughout the country and over 300 employees. We assist personal, institutional and corporate clients providing a full range of investment services.

Forsyth Barr is a foundation New Zealand Exchange firm (NZX) and accredited market participant. We have been confirmed by the Financial Markets Authority as a Qualifying Financial Entity (QFE).

Research is the cornerstone of our advice. We have one of New Zealand's leading teams of analysts. Our global affiliations ensure comprehensive research coverage of all major investment markets.

Equity Bottom-Up

Michael Hill International / Equity Bottom-Up

<h2>Michael Hill Intl (MHJ)</h2>
1Q20 Sales — Initial Impressions: Strong start to the year
Michael Hill (MHJ) reported strong 1Q20 group same store sales (SSS) growth, up +11.9%, cycling weak sales in the prior period (1Q19 SSS -11.0% on 1Q18). Unsurprisingly, gross margins remain challenged given a highly competitive backdrop, which drove elevated discounting activity, particularly in Australia; although, somewhat encouragingly showed a slight improvement on 4Q19. Branded collections represented 37.9% of sales in 1Q20 (32.5% in FY19), illustrating execution on management’s strategy to grow these sales, likely helped by the 40th Birthday campaign.
Group sales growth is tracking well ahead of our full year run rate with upside risk to our forecasts. However we remain cautious over the margin outlook and recognise that it remains early in the period with the key Christmas quarter to come.
Divisional detail
<ul>
<li>Canada: Canada was the key highlight with 1Q20 SSS growth of +16.4% following a focus on productivity improvements which included changes to its operating team and incentive scheme.</li>
<li>New Zealand: 1Q20 SSS growth of +10.1%, with MHJ gaining market share.</li>
<li>Australia: The Australian business has been facing the toughest retail environment with more intensive competitor clearance activities. 1Q20 SSS increased +6.8%, however this is cycling a -12.8% decline in 1Q19 (vs 1Q18) and is likely the key source of margin pressure.</li>
<li>E-commerce:&nbsp;1Q20 e-commerce sales increased +18.9% year-on-year (+39.4% when adjusting for Emma &amp; Roe). E-commerce sales are over double that of MHJ’s single largest bricks &amp; mortar store.</li>
</ul>
Guy Hooper
Analyst, Equities&nbsp;
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+64 4 495 5255
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0800 367 227
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+64 4 495 8193
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PO Box: 5266, Wellington 6145
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<a href="http://www.forsythbarr.co.nz/" target="_blank" data-saferedirecturl="https://www.google.com/url?q=http://www.forsythbarr.co.nz&amp;source=gmail&amp;ust=1570836637514000&amp;usg=AFQjCNG5f6MRwLtX0gHPDAbjKQikNC-a-A" rel="noopener">www.forsythbarr.co.nz</a>
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<td>Twitter:</td>
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<a href="http://twitter.com/forsythbarr" target="_blank" data-saferedirecturl="https://www.google.com/url?q=http://twitter.com/forsythbarr&amp;source=gmail&amp;ust=1570836637514000&amp;usg=AFQjCNEACy24omLXfJqGSRPBAihRA2nkHw" rel="noopener">@forsythbarr</a>
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Michael Hill Intl (MHJ)
1Q20 Sales — Initial Impressions: Strong start to the year
Michael Hill (MHJ) reported strong 1Q20 group same store sales (SSS) growth, up +11.9%, cycling weak sales in the prior period (1Q19 SSS -11.0% on 1Q18). Unsurprisingly, gross margins remain challenged given a highly competitive backdrop, which drove elevated discounting activity, particularly in Australia; although, somewhat encouragingly showed a slight improvement on 4Q19. Branded collections represented 37.9% of sales in 1Q20 (32.5% in FY19), illustrating execution on management’s strategy to grow these sales, likely helped by the 40th Birthday campaign.
Group sales growth is tracking well ahead of our full year run rate with upside risk to our forecasts. However we remain cautious over the margin outlook and recognise that it remains early in the period with the key Christmas quarter to come.
Divisional detail

Canada: Canada was the key highlight with 1Q20 SSS growth of +16.4% following a focus on productivity improvements which included changes to its operating team and incentive scheme.
New Zealand: 1Q20 SSS growth of +10.1%, with MHJ gaining market share.
Australia: The Australian business has been facing the toughest retail environment with more intensive competitor clearance activities. 1Q20 SSS increased +6.8%, however this is cycling a -12.8% decline in 1Q19 (vs 1Q18) and is likely the key source of margin pressure.
E-commerce:&nbsp;1Q20 e-commerce sales increased +18.9% year-on-year (+39.4% when adjusting for Emma &amp; Roe). E-commerce sales are over double that of MHJ’s single largest bricks &amp; mortar store.

Guy Hooper
Analyst, Equities&nbsp;




T:


+64 4 495 5255




TF:


0800 367 227




F:


+64 4 495 8193




P:


PO Box: 5266, Wellington 6145








W:


www.forsythbarr.co.nz



Twitter:

@forsythbarr





Michael Hill Intl (MHJ): 1Q20 Sales — Initial Impressions: Strong Start to the Year

Australia

Michael Hill International Limited manufactures, wholesales, and distributes jewelry. The Company offers rings, pendants, necklaces, bangles, earrings, bracelets, watches, and other accessories. Michael Hill operates stores in New Zealand, Australia, Canada, and the United States.

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Michael Hill International (MHJ NZ)

Michael Hill Intl (MHJ): 1Q20 Sales — Initial Impressions: Strong Start to the Year

Michael Hill Intl (MHJ) 1Q20 Sales — Initial Impressions: Strong start to the year Michael Hill (MHJ) reported strong 1Q20 group same store sales...

Forsyth Barr

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