Friday 22nd August 2008
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The New Zealand chain will pay about US$5 million for the stores in Illinois and Missouri from Whitehall Jewelers, which is in Chapter 11 bankruptcy, it said in a statement. The purchase price amounts to 80 cents in the dollar on the cost price of inventory held at the stores, it said.
The acquisition, which is dependent on US Bankruptcy Court approval, will give Michael Hill "a sound launching pad" into the US market, the company said. Most of the stores are in and around Chicago, with two in St Louis.
Expanding in the US will be a test for the jeweler's retail model because the American market is "highly competitive" and the economy weakening, it said. No profit is expected from the Whitehall stores for several years.
Shares of Michael Hill fell 3.3% to 88 cents and have tumbled 25% this year. The company reported a profit of $25.23 million for the 12 months ended June 30, its highest ever.
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