FY20Q4 Trading Update

ASX AND NZX ANNOUNCEMENT

RETURN TO TRADE DEMONSTRATES RESILIENT BUSINESS
WELL POSITIONED FOR THE FUTURE
Fourth Quarter Trading and Business Update
15 July 2020
Having temporarily closed all stores in late March 2020 due to COVID-19 restrictions, with a staggered reopening of
stores since May 2020, Michael Hill International Limited (ASX/NZX: MHJ) today announces its fourth quarter trading
results, along with a business update.

KEY POINTS
• Robust return to trade during staggered reopening of stores – Adjusted
1
same store sales for the quarter were
down 4.1%, against prior year, underpinned by initiatives gathering momentum across the business.
• Digital sales reach new highs – For the quarter, online sales were up 193% against prior year, delivering some of the
highest weeks in the Company’s history. In the quarter, a number of digital initiatives were accelerated and
delivered. For the year, digital channels represented 4.6% of total sales (FY19: 2.8%).
• Margin improvement – FY20Q4 margin up 200 bps against prior year, to deliver flat profit dollars for the quarter on
an adjusted
1
same store sales basis.
• Full year sales – Adjusted
1
same stores sales for the year were up by 2.7%, against prior year. For the nine month
period to FY20Q3, adjusted
1
same store sales were up 3.6%, against prior year.
• Resilient balance sheet – Net debt lower than FY19 close, through controlled working capital management and
inventory levels in line with prior year.
• Branded collection sales growth continues – Branded collections represented 39.9% of total product sales for the
quarter, resulting in 37.3% of total product sales for FY20 (FY19: 32.5%).
• Continued store portfolio management – 11 under-performing stores were permanently closed during the quarter
(7 in Australia, 3 in New Zealand and 1 in Canada), with a network total of 290 stores across all markets.
Decisive Fiscal Management
The Company took clear and decisive action to preserve cash with an absolute focus on cost disciplines, inventory and
capital management during the crisis and recovery period.
- All discretionary operating spend was paused with planned capital expenditure cancelled or deferred, other
than the completion of our cloud enabled ERP platform and one flagship refurbishment.

- Across the three markets the business stood down all retail team members from late March, with a gradual
return to work as stores reopened. In addition, over 100 support office team members were stood down. The
Company moved swiftly to access government wage subsidies across the three markets. Michael Hill recognises
and appreciates the ongoing support of these national programs for both our business and the wider
community.

- Following on from the margin improvements in the first nine weeks of FY20Q3, management’s focus on margin
continued through FY20Q4. As the business reopened, strategies across loyalty, digital-first and retail
fundamentals underpinned margin improvement in the business.

- Furthermore, the Company has taken decisive action to emerge with a modernised agile operating structure.
Reflecting on lessons learnt during COVID-19, and the ongoing transformation to a digital omni-channel
retailer, the business has undertaken a restructure, delivering a leaner support office.
The Company acknowledges the impact on our team members and customers during these unprecedented times and
thanks all members of the Michael Hill community for their continued support and understanding.

Digital First
The Company’s intense focus on digital channels accelerated through FY20Q4.
- During the quarter, the online channels delivered significant sales growth of +193%, with margin growing at an
even faster rate.
- This increased performance was supported by the accelerated delivery of a number of digital initiatives,
including enhanced website and user experiences; launch of virtual appointments and virtual selling;
advancements of our WeChat platform.
- The Michael Hill loyalty program Brilliance initially launched digitally in October 2019, and continues to go from
strength to strength with membership now exceeding 165,000. Members receive exclusive membership
pricing, welcome, birthday and anniversary rewards, as well as exclusive early access to company promotions.
Following the completion of our ERP upgrade, planning is now underway for further omni-channel enhancements
enabling click and collect, ship from store, drop ship and marketplace functionality.

Global Store Network
In early May 2020, based on Government health guidance, the Company started progressively reopening stores with
the majority of our global network open by early July.
Australia: From 9 May 2020, the Company trialed store openings to test instore safety protocols and gauge
customer demand. Following the trial, a number of store tranches swiftly opened across Australia, with most
stores open by the end of May 2020. Unfortunately, the recent outbreak of COVID-19 in Victoria has required
the Company to temporarily close 7 stores – further monitoring is continuing.
New Zealand: In mid-May 2020, our New Zealand stores opened in two tranches over two consecutive
weekends.
Canada: From 30 May 2020, based on local provincial guidance, the Company progressively reopened stores,
starting initially in the Western provinces, then moving across the country. With Ontario more heavily impacted
by COVID-19, many of the stores did not reopen until the first weekend of July.
The Company has long and established relationships with landlords in all markets and values the support received in
returning to trade. Through the strength of these relationships, the Company has negotiated rental abatements and
deferrals with many landlords. Negotiations continue with a number of landlords, and the Company remains confident
that appropriate commercial outcomes will be reached. The company is constantly reassessing our global store network,
and monitoring lower foot traffic, which in time could see further store closures.

Commenting on the result, Michael Hill International Limited, CEO Daniel Bracken said:
“Michael Hill has emerged from the pause in store trading as a leaner, stronger and more focused business. I’m very
proud of the professionalism demonstrated by all our people over the last four months as we navigated the complexity
of a global pandemic - whether it be the health and safety of our team and customers, new instore protocols, the
unwavering focus on costs or our resilient and robust return to trade. I’m particularly pleased with our digital
performance over this period, as well as the continued success of our loyalty program, Brilliance. With the
implementation of the new ERP platform, together with the executives I am excited by the opportunities to enhance our
omni-channel offering.
“The reopening of our store network has seen very pleasing sales and margin performance despite lower foot traffic.
This reflects the dedication of our team members, the continued engagement of our loyal customers and the importance
of the strategic progress we have made over the last 12 months.
“Additionally, we have continued to evaluate and assess our business, the learnings from which have been reinforced
by some aspects of the global pandemic. This has allowed us the opportunity to reimagine and modernise our operating
model to become a more relevant omni-channel retailer of the future. These decisions have been necessary and
appropriate to ensure the health and resilience of the business and to put us in a stronger position for the future. Sadly,
this has result ed in a number of non-customer facing team members departing the business. While our aim throughout
has been to preserve as many jobs as possible, those who leave us will be treated with care, dignity and respect and we
will be providing as much support as we can through these challenging times.
“There is no doubt that economic uncertainty will continue, given future government stimulus packages in all markets
remain unclear, and ongoing volatility in consumer confidence is likely. As recent circumstances in Victoria have
demonstrated, further COVID-19 outbreaks pose additional risks. With these risks in mind, Michael Hill has moved swiftly
in addressing our operating model and associated cost base. Having said this, the Company has experienced a solid start
to the 2021 financial year, with all markets and channels ahead of prior year.”

SEGMENT BREAKDOWN
• The Australian segment adjusted
1
same store sales were down by 8.1% for the quarter. There were 155 stores trading
at the end of FY20Q4 (FY19Q4: 168).
• The New Zealand segment adjusted
1
same store sales were down by 10.9% for the quarter. There were 49 stores
trading at the end of FY20Q4 (FY19Q4: 52).
• The Canadian segment adjusted
1
same store sales were up by 38.1% for the quarter. This is largely due to strong
online sales and delayed opening of stores. There were 70 of the 86 stores trading at the end of FY20Q4 (FY19Q4: 86).

Revenue for retail operations from the sale of goods and services for FY20Q4:

The following figures are in Australian dollars Last Year* This Year* % Var
Total adjusted
1
same stores AUD 53,783,272 51,600,088 -4.1%
Total all stores AUD 133,130,618 52,504,336 -60.6%

Adjusted
1
same store figures in local currency
Australia same stores AUD 34,847,712 32,034,743 -8.1%
New Zealand same stores NZD 14,254,100 12,695,250 -10.9%
Canada same stores CAD 5,164,853 7,133,373 38.1%

All stores figures in local currency
Australia all stores AUD 72,455,983 33,057,006 -54.4%
New Zealand all stores NZD 28,848,872 12,975,930 -55.0%
Canada all stores CAD 31,170,861 6,699,435 -78.5%

Exchange rates used for FY20Q4:
New Zealand 1.06 1.07
Canada 0.94 0.92

Revenue for retail operations from the sale of goods and services for Full Year FY20:

The following figures are in Australian dollars Last Year* This Year* % Var
Total adjusted
1
same stores AUD 457,116,789 469,326,172 2.7%
Total all stores AUD 562,549,817 485,671,362 -13.7%

Adjusted
1
same store figures in local currency
Australia same stores AUD 256,485,033 256,847,297 0.1%
New Zealand same stores NZD 101,426,045 103,902,066 2.4%
Canada same stores CAD 100,561,785 102,880,317 2.3%

All stores figures in local currency
Australia all stores AUD 312,778,394 266,288,812 -14.9%
New Zealand all stores NZD 119,691,433 106,665,617 -10.9%
Canada all stores CAD 130,111,329 106,369,226 -18.2%

Exchange rates used for Full Year FY20:
New Zealand 1.06 1.05
Canada 0.95 0.90

1
Adjusted same store sales reflect sales through store and online channels on a comparable trading day basis and are unaudited.

The above figures for all store sales represents eleven months sales results with accounting adjustments plus June preliminary sales figures prior to
final accounting adjustments, and are unaudited.

Revenue figures stated above include the Professional Care Plan (PCP) revenue recognised during the period and sales through our store and online
channels (for Australia and New Zealand for the full year and for Canada up to February month end, given the delayed opening of return to trade of
the Canadian stores network). The PCP income recognition pattern is based on existing estimates and is subject to ongoing management review and
adjusted at half-year/year-end as required.

* Commencing FY20, MHJ has adopted a retail reporting calendar. Accordingly, the figures above reflect comparable quarterly
13-week trading periods and trading days.
- ENDS -

Investors:
Andrew Lowe
CFO & Company Secretary
+61 7 3114 3505
andrew.lowe@michaelhill.com.au


Investors:
Anthea Noble
Investor Relations Manager
+61 438 770 704
anthea.noble@michaelhill.com.au

Media:
Mark Rudder
GRACosway
+61 411 362 362

ABOUT MICHAEL HILL INTERNATIONAL
Michael Hill International was founded by Sir Michael Hill in 1979 when he opened his first jewellery store in Whangarei,
New Zealand. The Group currently has 290 stores globally across Australia, New Zealand and Canada. The Group’s global
headquarters, including its wholesale and manufacturing divisions, are located in Brisbane, Australia. The Company is
listed on the ASX (ASX:MHJ) and the NZX (NZX:MHJ).

For more information:
investor.michaelhill.com

michaelhill.com.au
michaelhill.co.nz
michaelhill.ca

Disclaimer
Certain statements in this announcement constitute forward-looking statements. Forward-looking statements are
statements (other than statements of historical fact) relating to future events and the anticipated or planned financial
and operational performance of Michael Hill International Limited and its related bodies corporate (the Company). The
words “targets,” “believes,” “expects,” “aims,” “intends,” “plans,” “seeks,” “will,” “may,” “might,” “anticipates,”
“would,” “could,” “should,” “continues,” “estimates” or similar expressions or the negatives thereof, identify certain of
these forward-looking statements. Other forward-looking statements can be identified in the context in which the
statements are made. Forward-looking statements include, among other things, statements addressing matters such as
the Company’s future results of operations; financial condition; working capital, cash flows and capital expenditures;
and business strategy, plans and objectives for future operations and events, including those relating to ongoing
operational and strategic reviews, expansion into new markets, future product launches, points of sale and production
facilities.

Although the Company believes that the expectations reflected in these forward-looking statements are reasonable,
such forward-looking statements involve known and unknown risks, uncertainties and other important factors that
could cause the Company’s actual results, performance, operations or achievements or industry results, to differ
materially from any future results, performance, operations or achievements expressed or implied by such
forward-looking statements.

Such risks, uncertainties and other important factors include, among others: global and local economic conditions;
changes in market trends and end-consumer preferences; fluctuations in the prices of raw materials, currency exchange
rates, and interest rates; the Company’s plans or objectives for future operations or products, including the ability to
introduce new jewellery and non-jewellery products; the ability to expand in existing and new markets and risks
associated with doing business globally and, in particular, in emerging markets; competition from local, national and
international companies in the markets in which the Company operates; the protection and strengthening of the
Company’s intellectual property rights, including patents and trademarks; the future adequacy of the Company’s
current warehousing, logistics and information technology operations; changes in laws and regulations or any
interpretation thereof, applicable to the Company’s business; increases to the Company’s effective tax rate or other
harm to the Company’s business as a result of governmental review of the Company’s transfer pricing policies,
conflicting taxation claims or changes in tax laws; and other factors referenced to in this presentation.

Should one or more of these risks or uncertainties materialise, or should any underlying assumptions prove to be
incorrect, the Company’s actual financial condition, cash flows or results of operations could differ materially from that
described herein as anticipated, believed, estimated or expected. Accordingly, you are cautioned not to place undue
reliance on any forward-looking statements.

The Company does not intend, and do not assume any obligation, to update any forward-looking statements contained
herein, except as may be required by law. All subsequent written and oral forward-looking statements attributable to
us or to persons acting on the Company’s behalf are expressly qualified in their entirety by the cautionary statements
referred to above and contained elsewhere in this announcement.