Michael Hill proved NZ retail pessimists wrong with a 9-point same-store swing

A number the retail gloom can’t explain

While the standard retail narrative blames every soft result on cautious consumers and cost-of-living pressure, Michael Hill International just posted a set of numbers that refuses to fit that story. Statutory net profit after tax rose 376% to A$10.0m, up from A$2.1m the year before, on group revenue of A$655.7m (NZ$801.6m).

The 376% figure is eye-catching but it comes off a low base, so it flatters the story. The more durable signal sits in New Zealand. In FY25, Michael Hill’s NZ same-store sales fell 5.5% and revenue dropped 5.0%. This year NZ same-store sales grew 3.6%, a swing of roughly nine percentage points in a single year, in a consumer environment that has not materially improved.

That is not a macro tailwind. It is execution.

Fewer stores, more sales

The telling detail is that Michael Hill delivered this while shrinking its New Zealand footprint. The company finished FY26 with 43 stores in NZ, down from 45, yet lifted NZ retail revenue to NZ$112.4m, up 3.1%. Growing same-store sales while closing doors is exactly the right trade for a profitability-focused turnaround.

The centrepiece of the reset was a brutal simplification: a brand portfolio cull from five brands to two, keeping only Michael Hill and Bevilles. Chief executive Jonathan Waecker has stuck to the same message throughout. “We’re listening more closely to our customers and our teams, we’ve simplified the business, and we’ve doubled down on quality jewellery,” he told RNZ. “As a result, sales are up across every market, profitability has improved sharply.”

The counter-narrative on cautious spending

Waecker’s read on consumer behaviour is worth pausing on because it cuts against the received wisdom. On the Mike Hosking Breakfast he argued that tough times don’t automatically kill considered purchases. “Since times are tough, Kiwis are being more considerate with their money,” he said. “It’s important they buy high-quality things that really bring them joy, and they’re picking Michael Hill more than anyone else.”

That is a commercially coherent point. Caution can drive trade-up behaviour in categories where quality and longevity matter, provided the retailer earns the trust. It is the opposite of chasing volume through discounting, and the margin numbers show it working.

Margin held, debt gone

The validation is in the balance sheet. Net debt fell from A$41.9m to A$5.5m, a near-clean position, driven by disciplined inventory management, stronger cash generation and improved supplier terms. It is worth noting a one-off A$7.5m Australian income tax refund also helped, so the underlying cash improvement is slightly less dramatic than the headline debt figure suggests. But the direction is unambiguous.

Crucially, gross margin held flat at roughly 60%. Protecting margin while growing the top line means the revenue is flowing to the bottom line rather than being bought with markdowns. Management backed its own confidence by restoring the dividend at 2 cents per share after paying none in FY25.

New Zealand and Canada carried it, Australia didn’t

All three markets finished in the black, but they didn’t perform equally. Canada led with revenue up 7.3% to CA$174m, New Zealand rose 3.1%, and Australia grew a softer 2.5% to A$372m. Online sales climbed 8.7%. Waecker was candid on the Australian soft spot, telling Heather du Plessis-Allan Drive the NZ offer was resonating strongly while “in Australia, we are seeing some softness with certain consumers”.

A tidy handover

The result lands alongside a leadership change. Chairman Rob Fyfe is retiring, succeeded by deputy chair Claudia Batten, also an Air New Zealand director. Fyfe called the transition “seamless”, and Batten’s existing board tenure lowers the risk. Fyfe was central to the strategic reset, but the succession has clearly been planned around it.

The lesson for any business owner watching demand soften is the one Michael Hill is demonstrating in real time. The consumer is not the whole story. A retailer that simplifies ruthlessly, protects margin and trades on quality can grow while the sector talks itself into decline.

Sources

• Profitability improves ‘sharply’ for jewellery retailer Michael Hill (2026-08-31)
• Michael Hill bolsters earnings after transformation; chair retires (2026-08-31)
• “Real proud”: Michael Hill reports 376% increase in annual net profit (2026-09-01)
• Michael Hill CEO on the company’s profit jumping 376 percent (2026-08)
• Michael Hill profit jumps 376% to A$10m, Rob Fyfe to retire (2026-08-30)
• FY26 Investor Presentation – Michael Hill turnaround strategy delivers record Group revenue (2026-08-28)
• Annual Report – Year Ended 29 June 2025 (2025-06-29)