Michael Hill International has delivered a significant earnings recovery in the first half of FY2026, marking a decisive shift after a challenging period for the Australian-based jeweler. The Michael Hill profit turnaround was driven largely by strong performance in Canada, where record sales and expanding margins helped offset softer results in other markets.
The results, covering the 26 weeks ended December 28, 2025, reflect a leaner cost structure and improved retail execution under new Chief Executive Officer Jonathan Waecker, who assumed the role in August 2025. The period follows a transitional year that included the passing of founder Sir Michael Hill and former CEO Daniel Bracken.
While all regions showed signs of stabilization, Canada emerged as the clear growth engine, delivering high-margin gains in a competitive North American retail environment.
Financial Results Signal Disciplined Recovery
The first half of FY2026 highlights a materially stronger financial position for the group.
Statutory Net Profit After Tax rose 32 percent to AUD $22.3 million. Comparable EBIT increased 28.6 percent to AUD $31.0 million. Group revenue reached AUD $371 million, up 3 percent year over year, while same-store sales advanced 3.8 percent across the network.
Equally notable was the company’s strengthened balance sheet. Michael Hill reported a positive net cash position of AUD $20.7 million, representing a $30.5 million swing from the net debt position of AUD $9.8 million a year earlier. The improvement reflects tighter inventory control, disciplined capital allocation, and operational efficiencies.
Despite the stronger fundamentals, shares declined approximately 5.4 percent following the earnings release. The market reaction was attributed largely to management’s decision to withhold an interim dividend in favour of preserving balance sheet strength. Management indicated a potential return to dividends at the full-year stage.
Canada Emerges as Growth Catalyst
The Michael Hill profit turnaround was heavily supported by record-breaking results in Canada.
Canadian segment revenue increased 6.2 percent to CAD $96.3 million, equivalent to approximately AUD $105.8 million. Same-store sales rose 6.1 percent in the first half. Momentum accelerated further in early second-half trading, with Canadian same-store sales surging 13 percent in the first eight weeks of H2.
The performance stands out given ongoing margin pressure across the global jewelry industry, particularly from elevated gold and silver prices. In Canada, however, gross margin expanded by 70 basis points to 61.5 percent, underscoring disciplined pricing and product mix management.
Company leadership noted continued market share gains in Canada, supported by strong retail fundamentals and curated merchandising strategies. Holiday gift sets resonated with consumers, helping drive higher average transaction values during key trading periods.
For Canadian retail observers, the results reinforce how premium positioning and operational precision can deliver outsized performance even amid cost volatility.
Mixed Performance Across Australia and New Zealand
Outside Canada, performance was more varied but generally stable.
Australia remains Michael Hill’s largest market, generating AUD $209.1 million in revenue, up 2.1 percent. Same-store sales increased 4.8 percent, and gross margin improved modestly by 20 basis points to 60.7 percent. The Australian business continues to serve as the group’s foundational earnings anchor.
New Zealand, the company’s founding market, returned to positive sales growth with revenue rising 2.4 percent to NZD $62 million. However, profitability remained under pressure. Gross margin declined 60 basis points to 58.3 percent, and the region recorded a net loss in store count, closing two locations during the period.
While the Oceanic markets provided steady contribution, they did not match the acceleration seen in Canada.
Operational Shifts Underpin Turnaround
The recovery reflects deliberate strategic adjustments implemented by management over the past year.
Inventory discipline was a central priority. The company reduced inventory holdings by AUD $11.3 million, focusing on clearing aged stock and improving stock efficiency. This approach created room for newer, higher-margin product introductions.
Operational efficiencies also improved. Michael Hill negotiated more favourable supplier terms and optimized supply chains, including the rollout of a new distribution centre in Auckland. Capital expenditures across technology and store development were tightly controlled.
In-store execution was refined through a tighter merchandising focus and better product curation. These measures enabled the company to mitigate raw material cost pressures while maintaining profitability.
The combined impact of these initiatives is reflected in both margin expansion and improved cash flow.
Canadian Footprint Anchors Growth Strategy
Canada has evolved from a strategic expansion market into Michael Hill’s most consistent growth engine.
As of early 2026, the retailer operates more than 80 stores across the country, with estimates ranging between 82 and 86 active locations. Ontario accounts for roughly 45 percent of the Canadian fleet, with approximately 37 stores concentrated in high-traffic shopping centres.
British Columbia and Alberta represent the next largest markets, with approximately 18 and 16 stores respectively. The brand also maintains a smaller presence in Manitoba and Saskatchewan.
Rather than pursuing aggressive new store openings, management has prioritized optimizing the existing network. Renovations of top-performing stores and selective closures of underperforming locations are aimed at maximizing capital efficiency and lifting average productivity per square foot.
Flagship Strategy Elevates Brand Positioning
A central driver of Canadian margin expansion is the rollout of new-concept flagship stores designed to elevate brand perception.
In late 2025, Michael Hill opened a new-concept flagship at Yorkdale Shopping Centre in Toronto. The opening coincided with the company’s 45th anniversary and serves as a blueprint for its premium repositioning strategy.
The store departs from traditional jewelry counter formats, embracing a more boutique-style aesthetic with refined finishes and curated displays. The location also introduces higher-margin product tiers not available in all stores, including the Stardust diamond collection and bespoke services such as the Tennis Concierge, which allows clients to custom-build tennis necklaces and bracelets.
Building on this momentum, the company is preparing to launch a second Canadian new-concept flagship at CF Pacific Centre in downtown Vancouver. The centre is widely regarded as one of Western Canada’s premier luxury retail destinations.
By establishing elevated flagships on both coasts, Michael Hill aims to increase average transaction values, attract higher-income clientele, and further enhance gross margins across the Canadian portfolio.
Strong Start to Second Half
Early trading in the second half of FY2026 suggests continued positive momentum.
Across the group, same-store sales were up 6 percent in the first eight weeks of H2. Performance benefited from solid Valentine’s Day trading and Lunar New Year activity, both important periods for jewelry sales.
Canada continues to lead this acceleration, reinforcing its role as the company’s primary earnings growth driver.
