No buyers found for Michael Hill's US stores, cost of exiting market upwards of $6 million

Thursday, 12 April 2018

All nine Michael Hill stores in the US will close by the end of the month.

Staff at nine Michael Hill stores in the United States are set to lose their jobs after the jewellery firm failed to find a buyer.

In January, the company, which is dual listed on the Australian and New Zealand sharemarkets, announced it was pulling out of the US market following months of declining sales.

A month later, Michael Hill sought a buyer, but on Thursday, the company announced its efforts to find one did not result in any 'satisfactory offers'.

As a result, the nine stores will shut before April 30. All staff will be offered redundancies and support.

Michael Hill International was founded by Sir Michael Hill in 1979 when he opened his first jewellery store in Whangarei.

* Michael Hill profit drops 66 per cent due to US exit costs

* Jeweller Michael Hill exits the 'highly competitive' US**

The total cost of exiting the US, including the cost of cancelling leases and paying employees, was estimated to be US$4.5 million (NZ$6.1m).

Earlier this year, Michael Hill International chief executive Phil Taylor said the US business had struggled to provide a return, despite 'significant investment' since entering the market in 2008.

Sales for Michael Hill's US stores totalled A$10.2m (NZ$10.7m) for the nine months ended March 31. This was a drop of 13.9 per cent.

Meanwhile, sales at its 30 Emma & Roe stores also dropped, from $9.9m to $9.4m.

'Emma & Roe results during the third quarter have been negatively impacted by the announcement to reduce the brand's store footprint,' the company said in a statement on Thursday.

Last month, Michael Hill announce it was closing 24 of its Emma & Roe jewellery stores and would refocus the remaining six.

This came after a review into the trans-Tasman charm jewellery brand, which identified customer demand for lower cost products.

The company employs about 168 across the affected shops, some of whom will be transferred to other Michael Hill stores, while others will be made redundant.

New Zealand's only Emma & Roe store is in Auckland's Manukau, which will close, affecting up to seven staff members. The six remaining stores will be in the Brisbane, Australia region.

Michael Hill International was founded by Sir Michael Hill in 1979 when he opened his first jewellery store in Whangarei.

The group has a total of 344 stores, with 314 Michael Hill stores in Australia, New Zealand, Canada and the US, and 30 Emma & Roe stores in Australia and New Zealand.

The group's headquarters, including its wholesale and manufacturing divisions, are in Brisbane, Australia.

Michael Hill shares were up 1c to $1.17 on Thursday.