The share price of international jeweler Michael Hill International Ltd [ASX:MHJ] has surged today thanks to the company’s second-quarter business update.
MHJ’s share price has now recovered past its pre-COVID level, building on a solid first-quarter performance.
At the time of writing, MHJ shares are up 7.35% or 5 cents, trading at 73 cents per share.
With momentum building in the share price, will we see a return in dividend payout this year?
Deferred dividend brought forward despite declining revenue
It appears the positives have outweighed the negatives in MHJ’s second-quarter business update today.
The jeweller said revenue for the 13 weeks ended December 27 fell 2.4% to $198 million.
Although total same-store sales rose 5.6%, with Australia stores leading the charge, rising 11.6% through the second quarter.
MHJ say they expect significant earnings growth in the first half of FY21 of $56–$60 million, representing 30–40% growth on H1 FY20 of $31.6 million.
The final 2020 dividend was cancelled and the interim dividend of 1.5 cents a share deferred to preserve cash during the pandemic.
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While the interim dividend was due to be paid in September, MHJ announced today it planned to pay the interim dividend on 29 January due to its improved cash position.
CEO Daniel Bracken emphasised improved margins underpinned company performance:
‘Following a strong first five months, it was particularly pleasing to see all markets deliver positive same store sales growth for the all-important Christmas trading period. I am delighted that our strong trading performance across the half, coupled with our unwavering focus on costs, has in turn delivered material EBIT growth for the Group, in spite of challenging trading conditions worldwide.
‘These results reaffirm our continued focus on a balance of both margin and sales growth, underpinned by a number of our strategic initiatives — brand, digital transformation, loyalty, retail fundamentals, and product mix.’
What about dividends this year?
All 154 Australian stores were trading at the end of the quarter during the crucial Christmas trade.
None of the 49 New Zealand stores were temporarily closed for the quarter.
And of the 86 stores, 21 stores progressively closed through November and December, and a further 25 stores closed from Boxing Day, with 40 stores trading at the end of the quarter.
With COVID-19 cases in decline in Canada, and the virus coming under control in both Australia and New Zealand, we could see better trade in the second quarter.
Which could correlate to improved dividends.
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