Michael Hill International jewellery chain has warned of a first-half trading result being "materially below" last year's record $19.4 million result because of lower margins, restructuring and US acquisition costs.
For the six months trading to December, chairman Michel Hill said in a market update statement yesterday that sales were targeted at the expense of margins, meaning margins would be "significantly lower" for the first half, because of the exchange rate deterioration on inventory purchases.
Also, margins were hit because of difficult trading conditions, which prompted the chain to go to "sale" mode earlier than usual in its New Zealand, Australian and Canadian outlets, Mr Hill said.
"A conscious decision was made to target sales at the expense of margins due to uncertainties of the current economic climate," Mr Hill said.
Overall, all store sales were up 8.7% for the half year, from $208.8 million to $226.9 million, with Australian sales up 9.5%, and Canada 11.7%.
However, New Zealand sales were down 7.6% from $53.6 million to $49.5 million.
The interim result, due on February 20, would be materially below last year's record $19.45 million, he said.
