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Michael Hill warns full-year result under pressure due to tough Australian market

Michael Hill International, the listed jewellery retailer, says a drop in same store sales in its biggest market of Australia in the first nine months will put pressure on its full-year result.

Australia continued to be a difficult market for the group, with same-store sales down 2.1 percent to A$220.8 million in the nine months ended March 31. On an all-store basis for Australia, sales were down 1 percent to A$229 million.

Chairman Michael Hill said management was focused on correcting the downward trend in Australia and there was still a full quarter to go before the full-year result.

Overall the jewellery retailer had same-store sales growth of 0.9 percent to A$358 million and all stores up 3.5 per cent to A$382 million. In local currency terms, New Zealand continued to trade well, up 4.8 percent to $87.4 million while all stores rose 4.3 percent to $88 million.

Canada same store sales rose 2.9 percent up C$47.9 million and overall sales growth up 15.5 percent to C$60.6 million. The US also had a good result with same store growth of 7.2 percent to US$6.3 million and overall sales growth up 14.2 percent to US$8.2 million.

The company opened 11 new Michael Hill stores and closed 2 during the first nine months, taking total stores to 287 and lifting total revenue by 3.5 percent.

The group said, as mentioned in the 2014 annual report, it was continuing to refine and test the Emma & Roe retail model and consequently this trading update didn't include financial information for those stores. Two additional Emma & Roe stores opened during the period taking the total to 8 stores.

Michael Hill reported a half-year profit of A$23.7 million, up 45.9 percent.

Its shares are currently trading at $1.18 on the NZX, down 11 percent for the year while the NZX 50 Index has traded up 16 percent over the same period. The stock is rated a buy by a Reuters poll of three analysts.