Today, Michael Hill International (ASX:MHJ) released its latest grand reset plan titled “Clarity, Focus & Discipline to Unlock Performance.”

I’m calling BS right off the bat. The presentation frames it as an AI-powered, multi-engine growth story, but the underlying levers are traditional, bog-basic retail hygiene (so badly needed as their recent performances demonstrate).

When stripped of the marketing hyperbole and fluff, it's nothing more than a back-to-basics clean-up of simplifying brands, tightening promotional discipline, improving product architecture, and trying to lift store-level productivity—rather than a transformational growth strategy.

The presentation repeatedly emphasizes:

• “retail fundamentals.”
• “pricing architecture.”
• “inventory velocity.”
• “execution discipline.”
• “store‑level profitability.”

For mine, this is code for: we need to fix the basics that have slipped. And slip, they have!

Peter Lynch of ‘One Up on Wall Street’ fame would be grossly underwhelmed by this tripe.

The beauty of retail is the cookie-cutter approach of opening new stores in new geographies using the same winning systematized approach, and yet, this new management team is suggesting that Australia and NZ are tapped out, and Canada, which they claim has a long runway, has a potential of around 9 more new stores.

Here are a few things missing and why it matters:

They’ve set an EBIT margin target of 10%. This is aspirational at best.

They provide no quantification of:

• cost savings
• productivity uplift
• store‑level economics
• required sales density
• required GP% improvement

It is a destination, not a model.

There is no:

• sales per store
• sales per sqm
• contribution margin
• payback periods
• ROI on refurbishments
• ROI on new stores

This is a major omission for a retailer claiming productivity‑led growth.

There was no detail on labour cost inflation. Australia ( their biggest market) has new industrial laws on the employment of young staff and a recent gradual increase in the average wage.

In a wage‑inflation environment, a flat store network with rising labour costs means:

• operating leverage deteriorates
• store contribution margins compress
• EBIT margin targets become harder to hit

No explanation of how SSS (same store sales) growth will be sustained in a recessionary environment

The presentation assumes:

• more customers
• more transactions
• more frequency
• more engagement

But does not explain:

• how they will drive traffic in a downturn
• how they will protect margins while offering “value”
• how they will avoid promotional creep

No quantification of the jazzy new term of “AI‑powered retailer” claim

This is marketing fluff.

There is no:

• cost
• ROI
• use‑case detail
• uplift metrics
• timeline

Besides, their online sales are just 8%, and even if they increase 2x or 3x (and the ‘how’ isn't explained), it's not a huge adrenaline rush for the bottom line.  

Final score: Reality 6 - Mumbi-Jumbo Schmaltz O

Not investible for mine, and the major risk now is execution of a pack of cliches and time-worn hackneyed expressions. The great man will be turning in his grave. 

Second Quarter Business Update

KEY POINTS

• Significant EBIT growth – The Company expects FY21H1 Group EBIT1 of $56m to $60m, with comparable EBIT2 for the half of $41m to $45m (FY20H1: $31.6m), representing 30% - 40% EBIT growth.

• Solid growth in same store sales in all markets and channels – Same store sales were up 6.3% for the half and up 5.6% for the quarter against prior year, with an outstanding performance in Australia.

• Sustained margin improvement – Margin growth in all markets and channels of 150 to 250 bps for the half against prior year, underpinned by the strategic initiatives implemented over the last eighteen months

. • Growth maintained in digital sales – For the half, online sales were up 102%, with digital initiatives continuing to deliver increased sales and margin across all markets. Digital channels now represent 5.8% of total sales (FY20H1: 2.8%).

• Continued growth of branded collections – Branded collections represented 38.4% of total product sales for the half (FY20H1: 35.4%).

• Strong balance sheet and ongoing disciplined cost focus – Diligent management of all expenditure, working capital, inventory levels and a sustained, deliberate focus on CODB delivered a significant cash position at half year end.

• Canadian segment impacted by temporary store closures – In accordance with COVID-19 government directives, 21 stores progressively closed through November and December, and a further 25 stores closed from Boxing Day.

• Store portfolio management – No stores permanently closed or opened in the quarter, with a network total of 289 stores across all markets at the end of the half (FY20H1: 304).

*Also to pay outstanding div on 29/1/21 for shares held RD 13/1/20