Michael Hill closing US stores after failing to secure buyer
Written on the 12 April 2018 by David Simmons
Jewellery retailer Michael Hill (ASX: MHJ) has seen sales dip in Australia as the group continues with its planned exit from the United States.
While group revenue increased 4.5 per cent at the end of the third quarter, sales were down by 0.3 per cent in Australia.
Despite recording a 4.9 per cent sales growth in the United States, Michael Hill is still in the process of exiting that market.
In the group's half year results, the company said it struggled to gain traction in the US market and could not scale-up in that retail environment.
The company announced on Thursday that is has failed to secure a buyer for its US stores after it did not receive any "satisfactory offers".
As a result all nine US stores are scheduled to close around 30 April 2018. The jewellery retailer will incur an estimated $6 million in costs associated with lease exit terms and redundancies for American staff.
Though sales dropped in Australia, Michael Hill's other markets performed well. Same store sales improved 3.7 per cent in New Zealand and 4.1 per cent in Canada.
As announced in March, the company is closing the majority of its Emma & Roe stores as part of a plan to create a "demi-fine" jewellery market. By the end of the third quarter the company has actually opened another Emma & Roe store and has not commenced the large-scale shut down of that brand just yet.
A total of 15 Michael Hill stores were opened by the end of March, bringing the total of stores in the group to 344 stores globally. Four Michael Hill stores were closed during the period.
The group saw the most success online, with eCommerce sales increasing by 62.8 per cent to $8.2 million for the period. Online now represents 1.8 per cent of total sales for Michael Hill.
The biggest growth for the company seems to be in Canada where seven new stores were opened by the end of the third quarter, bringing the total of Canadian shopfronts to 82.
Business News Australia
Author: David Simmons