Michael Hill shutters underperforming stores as online sales reach new high

Jewellery retailer Michael Hill said its digital sales reached new highs for the fourth quarter of FY20.

CEO Daniel Bracken said he is pleased with the company’s digital performance for the period, adding that the coronavirus outbreak has taught the team to evaluate, assess and modernise the business.

“This has allowed us the opportunity to reimagine and modernise our operating model to become a more relevant omnichannel retailer of the future,” Bracken said.

“These decisions have been necessary and appropriate to ensure the health and resilience of the business and to put us in a stronger position for the future.”

The company posted a 193 per cent increase in online sales for the quarter compared to the previous year, delivering some of the highest weeks in Michael Hill’s history.

In the quarter, a number of digital initiatives were accelerated and delivered. For the year, digital channels represented 4.6 per cent of total sales compared to FY19’s 2.8 per cent.

With the staggered reopening of its stores, Michael Hill posted a 4.1 per cent decline in same store sales compared to the previous corresponding period, underpinned by initiatives gathering momentum across the business.

The company’s adjusted full year same store sales were up by 2.7 per cent compared to the previous year. In the first three quarters of FY20, adjusted same store sales were up 3.6 per cent against the prior year.

Michael Hill has reopened 290 of its stores in a staggered approach, but 11 have been closed permanently.

The company shuttered seven underperforming stores in Australia for the quarter, three in New Zealand and one in Canada in response to impact from the Covid-19 pandemic. 

“Sadly, this has resulted in a number of non-customer facing team members departing the business,” Bracken said. “While our aim throughout has been to preserve as many jobs as possible, those who leave us will be treated with care, dignity and respect and we will be providing as much support as we can through these challenging times.” 

Bracken said he and the team are also pleased to see the continued success of their loyalty program Brilliance.

“With the implementation of the new ERP platform, together with the executives I am excited by the opportunities to enhance our omni-channel offering,” he said. 

According to Bracken, there is no doubt that the economic uncertainty will continue, given that future government stimulus packages in all markets remain unclear, and ongoing volatility in consumer confidence is likely.

He said with this in mind, the company will continue to focus intensely on its digital channels adding that they have also moved swiftly in addressing their operating model and associated cost base.

“Following the completion of our ERP upgrade, planning is now underway for further omnichannel enhancements enabling click and collect, ship from store, drop ship and marketplace functionality,” he said. 

Michael Hill stated its increased online performance was supported by the accelerated delivery of a number of digital initiatives, including enhanced website and user experiences; launch of virtual appointments and virtual selling; and advancements of its WeChat platform.

Brilliance, initially launched digitally in October 2019, now has more than 165,000 customers.

“Having said this, the company has experienced a solid start to the 2021 financial year, with all markets and channels ahead of prior year,” Bracken said.

Michael Hill temporarily closed all its stores in late March 2020 due to Covid-19 restrictions, with a staggered reopening of stores since May 2020.

The company added it is constantly reassessing its global store network, and monitoring lower foot traffic, which in time could see further store closures.

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