Tuesday 6th March 2018
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Michael Hill International plans to exit 24 of the stores in its unsuccessful Emma & Roe chain at a cost of A$5.8 million to A$7.9 million, repositioning the remaining six stores in the 'demi-fine' jewellery segment.
The Brisbane-based company expects to close the 24 stores by June 30 this year, it said in a statement. The company is negotiating exit terms with landlords and will redeploy staff to its Michael Hill stores where possible and offer impacted employees redundancy and support, it said.
The jewellery manufacturer and retailer launched the Emma & Roe brand in April 2014. In 2016 it said the chain, which sold charm bracelets and accessories, had moved from a trial phase into growth mode and said it was eyeing 200 Australasian store locations for the brand and as many as 100 in Canada. However today the company said a review of the brand had identified an opportunity in the relatively new 'demi-fine' jewellery segment and said a six-store footprint would provide the opportunity to iterate the new model at speed.
"Having identified the opportunity, the company announced it would reposition the Emma & Roe brand into this emerging demi-fine jewellery segment, with the new proposition involving a smaller, concentrated store footprint during an initial test and trial period for the remainder of FY18 and whole of FY19," the company said in its statement announcing the store closures.
Last month, Michael Hill posted a 66 percent drop in first-half profit, mainly reflecting A$19.8 million of provisions to reposition the Emma & Roe chain and to recognise costs of exiting the US market. In the first half, Emma & Roe achieved a 20 percent gain in sales to A$10.5 million but recognised a A$15.2 million charge for impairments and onerous leases, resulting in an A$19.6 million loss in earnings before interest and tax.
The company said today that it is still in negotiations with US landlords regarding its exit from its nine operating US stores as part of its plan to completely exit the US market. In the first half, US revenue fell 15 percent to US$6 million for an ebit loss of US$5.6 million, including a provision for impairment and onerous leases of US$3.5 million.
Michael Hill, named after its founder, has expanded from a single store in Whangarei in 1979. At the end of last year, it had 172 Michael Hill stores in Australia, 53 in New Zealand and 83 in Canada as well as the nine US stores earmarked for closure. Some 29 of its Emma & Roe stores were in Australia, and one in New Zealand.
Its shares last traded at $1.16, having shed 18 percent over the past year.
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