"We sensed a tightening of the market in October and November when sales were relatively flat, but the Christmas period was definitely harder than we anticipated," said CEO Mike Parsell. "Demand was not to the level that we anticipated and there was a lot of competitive activity which put a bit of pressure on margins as well,” he said.

Michael Hill International Ltd., New Zealand based retail jewelry and manufacturer, said that a difficult Christmas trading period in Australia would translate into a disappointing fiscal first half net profit, compared with the previous corresponding period in 2004. In a company statement on January 9, 2006 the retailer said that sales for the six months ending December 31 have been “adversely affected by difficult trading conditions.”

As a result, the group’s net profit for the six month period is likely to be in the range of $7.3 million to $8 million as compared with a profit of $8.8 million in 2004. Michael Hill said that sales at its New Zealand stores during the six month period increased 1.6 % while its Australia stores saw a decline of 2.3%. On a same-store basis, Australian sales for the three months ending Dec. 31 declined 4.3%. Sales in the companys Canadian stores increased 9.9%, according to the company.