Michael Hill has failed to find a buyer for its US business and will instead bear the brunt of exit costs.
The jewellery retailer will incur an estimated $6 million in costs associated with lease exit terms and redundancies for American staff but has managed to bed down agreements with landlords to close its nine stores by the end of April.
The exit, first announced in January, will bring an end to chief executive Phil Taylor’s multi-year battle to turn the loss-making business around, freeing up resources for investment into better performing markets such as Canada.
The listed business said on Thursday that its US revenues declined by 17.7per cent for the nine months to March 31, but that group sales excluding the troubled market were up 4.9 per cent.
Michael Hill was driven by a 17 per cent increase in Canadian sales and a 4.3 per cent increase in revenue from New Zealand, which offset slower growth in Australia, up 1.7 per cent.
Group same-store sales were up 1 per cent, excluding the US, driven again by a strong 4.1 per cent increase in Canada and 3.7 per cent increase in New Zealand, offsetting a .3 per cent decline in Australian same-store sales.
Test brand Emma & Roe disappointed again, dragging on group wide figures with a 5.8 per cent decline in same-store sales, although top line revenue was up 16.3 per cent.
“Emma & Roe results during the third quarter have been negatively impacted by the announcement to reduce the brand’s store footprint,” Michael Hill said. “The company continues to work through repositioning the brand in the demi-fine jewellery segment.”
15 Michael Hill stores were opened over the last nine months, including seven in Canada, while four were closed. One Emma & Roe store was opened.
In Australia, where growth remains subdued, six new stores were opened, bringing Michael Hill’s total to 171 in Australia and 344 around the world.
E-commerce sales increased by 62.8 per cent to $8.2 million, now representing 1.8 per cent of total group sales.
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