Jewellery retailer Michael Hill International Ltd will close all 9 of its US stores around 30 April at an estimated cost of $US4.5 million ($NZ6.1 million).
The company (which is based in Brisbane, hence its main reporting currency is the $A) said on Wednesday it had sought a buyer in parallel with negotiating lease exits, but got no satisfactory offers: “The company has therefore negotiated non-binding in-principle lease exit terms with all US landlords and will now proceed to negotiate binding formal documentation with those landlords.”
The cost estimate covers lease termination & employee severance.
Michael Hill announced its intention to withdraw from the US and review the future of its 30-store Emma & Roe chain in January.
Combined, the US and Emma & Roe represented 11% of stores at the end of 2017, but accounted for only 5% of total annual group revenues and contributed an $A12 million loss before interest & tax.
9-month group update
In a financial update on Thursday, for the 9 months to 31 March, Michael Hill said that despite the US and Emma & Roe problems, it grew same-store revenue by 0.4% to $A429.3 million.
The Michael Hill brand, excluding the US, delivered total store sales growth of 4.9% to $A441.6 million and same-store sales growth of 1.0%. Michael Hill same-store sales improved 3.7% in New Zealand and by 4.1% in Canada, but Australian same-store sales declined by 0.3%.
US same-store sales fell 13.9%, and all-store by 17.7%, to $A10.2 million in both cases.
Emma & Roe same-store sales fell 5.8% to $A9.37 million, but all-store rose 16.3% to $A13.7 million.
The company added 15 Michael Hill stores and one Emma & Roe store, and closed 4 Michael Hill stores, taking the total at 31 March to 344 stores trading at 31 March, made up of 314 Michael Hill stores and 30 Emma & Roe stores. Ecommerce sales increased by 62.8% to $8.2 million, representing 1.8% of total sales for the group.
9 February 2018: Michael Hill sees $A25 million cut from store exits
31 January 2018: Hill concedes defeat in US, will reposition second brand
14 January 2018: Michael Hill lifts sales but US concerns continue
Attribution: Company releases.