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Tag: Michael Hill

  • Michael Hill profit hit by staff underpayment

    Michael Hill profit hit by staff underpayment

    Michael Hill posted a $16.5 million net profit in FY19, which was impacted by the $4.5 million back-payment it made to employees, after it found that it had unintentionally underpaid workers for the past six years.

    Still, this was an improvement form the $1.6 million net profit in FY18, following the closure of its Emma & Roe business.

    Total revenue for the international business fell to $569.5 million, compared to $575.5 million during financial year 2018.

    Online sales grew 43.6 per cent to $16 million, up from $11.1 million, while branded collections – driven by Michael Hill’s recent expansion into bridal jewellery – made up 32.5 per cent of total sales.

    Chief executive Daniel Bracken said the team was disappointed with the results overall, but pleased with having generated positive sales momentum.

    “2019 was a transitional year for the company,” Bracken said.

    “The pace of change has been intense this year with a greater sense of urgency and determination to deliver, which is really infectious. There is a strong belief in the strategy and each other – and a healthy impatience among us to see results.”

    While the business saw revenue growth in Canada of 1.8 per cent to $147.3 million (CA$133.1 million), both the Australian and New Zealand markets saw segment revenues decline.

    Australian revenue declined 3.7 per cent to $313.6 million, while New Zealand saw revenue fall to $113. 9 million (NZ$120.1 million) – a 4.1 per cent decrease on FY18.

    Michael Hill’s chief financial officer Andrew Lowe said the business believes the retail environment in Australia will continue to be challenging through 2020.

    Same-store sales fell 3.3 per cent over FY19, though improved on a quarter by quarter basis over the course of the year – from an 11 per cent decline in Q1 to a 0. 6 per cent increase in Q4.

    According to Lowe, this was largely due to the impact of a competitive retail environment, as well as a shift away from heavy discounting.

    2020 and beyond

    Looking toward the next 12 months, Bracken said the business will focus on the fundamentals of retail and build on the five strategic priorities identified last year: omnichannel retail, customer loyalty, branded collections, brand loyalty and operational excellence.

    “Our focus will be on strengthening our customer proposition with new branded product and improved disciplines in buying, selling and marketing,” Bracken said.

    According to Bracken, branded products could reach approximately half of total sales over the next two to three years, and act as an avenue to attract new customers as well as satisfy loyal customers.

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  • Michael Hill Sales Suffers

    Michael Hill Sales Suffers

    Jewellery retailer Michael Hill’s revised operating model is showing some encouraging signs, with sales falling at a slower rate in the March quarter compared to prior periods.

    Over the three months to March 31, 2019, total sales fell by 0.8 per cent to $117.5 million, and same-store sales fell by 1.5 per cent to $110 million.

    When compared to the 11 per cent decrease in same-store sales in Q1, and 2.9 per cent fall in Q2, Q3 suggests the jewellery retailer’s operations are stabilising.

    “We are particularly encouraged by the early results achieved from our new integrated customer-led retail operating model, which was introduced in March and saw some same store sales growth for the month,” Daniel Bracken, Michael Hill International chief executive,  said.

    The business indicated it would shift its business model toward a “more sophisticated and integrated” customer-led experience in February, in order to better personalise the shopping experience for its customers.

    “We have already seen the potential for the new integrated model to lift customer engagement and sales, as well as improve operational efficiencies,” Bracken said.

    “This is an exciting time for the company as we continue to deliver on our strategic initiatives and make fundamental improvements to the way we operate.”

    Michael Hill’s same-store sales in Australia fell 3.4 per cent in the quarter, with conditions remaining challenging for retailers, to $61.8 million – compared to the $64 million seen in the same period of 2018.

    While one store was opened during the period, three were closed. The retailer ending the period with 71 stores trading.

    In New Zealand, same-store sales fell 6.3 per cent to NZ$24.73 million ($23,42 million), with the end of March seeing an overall slowdown in consumer sentiment and spending in the region. One store was closed, leaving a total of 52 stores trading across New Zealand.

    E-commerce sales over the period contributed 2.9 per cent, or $12.5 million, of the business’s total sales over the nine-month period to March 31, 2019. This reflects a 53 per cent increase on the same nine-month period the previous year.

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  • Jeweller Michael Hill is closing all but six of its 30 Emma & Roe stores

    Jeweller Michael Hill is closing all but six of its 30 Emma & Roe stores

    Michael Hill will spend $5.8 -$7.9 million closing all but six of its 30 Emma & Roe stores by the end of the financial year as part of its repositioning of the struggling brand.

    The move will see Emma & Roe exit its operations in New Zealand and New South Wales to focus specifically on south-east Queensland.

    In an update provided to the market on Tuesday morning Michael Hill said that its review of the Emma & Roe brand, kicked off in January after another set of lacklustre trading results, was now completed.

    While management believes there’s an opportunity for the business in the demi-fine jewellery segment, it has opted to drastically reduce the brand’s footprint and will move forward with a “smaller, concentrated store footprint” for an initial trial period that will run until the end of FY19.

    Michael Hill has already negotiated non-binding lease exit terms with most of its Emma & Roe landlords and will now move forward with binding negotiations, which will likely see the brand exit several states and concentrate on a “single market area”.

    Chief financial officer Andrew Lowe said that Michael Hill will consider scaling the brand back-up in the future, but wants to preposition the company in an agile way.

    “30 stores is a very large footprint and the intention is to reposition the brand…we want to do that effectively and in an agile way with that smaller footprint,” he said.

    Michael Hill said it will redeploy Emma & Roe employees to Michael Hill stores where possible, but will undertake redundancy arrangements for others, with total severance costs expected to be finalised in 2H18.

    Severance costs, alongside one-off cash costs associated with lease terminations, are expected to cost $5.8 – $7.9 million, although management said this reflected the information currently available to it and was subject to change.

    The company also said that its negotiation to exit its nine stores in the US are ongoing with landlords.

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  • Michael Hill to step out from US market

    Michael Hill to step out from US market

    New Zealand jeweller Michael Hill is to close down its US operations following a strategic review.

    The complete exit of its loss-making retail operations in the US comes after continued poor performance saw same-store sales drop a further 10 per cent in the retailer’s most recent trading update.

    Since launching in the US in 2008, the Michael Hill US business has struggled to provide a return for the group despite significant investment into developing a viable business model.

    “Our time in the highly competitive US jewellery market taught us a lot and helped to strengthen our core business including the development of our bridal collection strategy and the development of our professional care plan,” said Taylor.

    “However, our US operations have not gained sufficient traction in recent years and the level of capital required to scale-up the business is not warranted under current trading conditions.”

    After the US closures are finalised, Michael Hill will continue to operate more than 300 stores globally, including 172 in Australia, 53 in New Zealand and 83 in Canada.

    The company said it continues to see significant long-term value in its Australia, New Zealand and Canada businesses. which continue to perform strongly. During the first half of the current year, those stores accounted for 95 per cent of total group revenue and recorded same-store sales and total revenue growth of 1 per cent and 5 per cent respectively.

  • Michael Hill books profit, despite US weakness

    Michael Hill books profit, despite US weakness

    Michael Hill CEO Phil Taylor has booked a 66.8 per cent increase in net profit after tax (NPAT) to 32.6 million for the year ended 30 June, amid a repositioning of its Emma & Roe brand and the introduction of proprietary lines to Michael Hill.

    The company recorded a 5.8 per cent increase in revenue to $582 million for the year, while earnings before interest and tax (EBIT) was up 2.3 per cent to 48.1 million.

    As it advised the market in July, comparable sales were up 1.5 per cent across the group, with 8.8 per cent same-store growth in Canada and 1.2 per cent growth in Australia driving the positive result.

    Taylor told investors on Monday morning that the introduction of proprietary lines into Michael Hill would cause some short-term pain for the company, including capital expenditure associated with design and margin pressures due to the clearance of old stock.

    He is, however, confident that the new “collections” range will be a pillar of the brand’s future growth, providing it with a key point of differentiation in the market and more flexibility around fashionability – an area of the market that’s growing relative to the traditional fine segment.

    “We do have a commitment to the branded collection strategy, we see it as the major differentiator for our brand in the mid-market,” Taylor said.

    “The flipside to that is that we need to make space for that in the store as well as funding that via capital requirements,” he continued, referencing a 35 per cent increase in capital expenditure for the year to $33.1 million, which was also impacted by legal costs from the last calendar year.

    At the more fashion-focused Emma & Roe brand, a review has been kicked off after significant investment yielded a 1.9 per cent decline in same-store sales and involves a repositioning of price and style.

    Still “opportunity” in the US

    Taylor still sees an opportunity in the US, despite comparable sales declining 8.8 per cent for the year, saying that the disruption associated with management changes, including the appointment of Brett Halliday as CEO, have now “settled”.

    “If we can stabilise [US operations], get some growth back in it gives us some options to look at what else we can do with the business [and ask] where else we can take it,” Taylor said.

    “It’s very much a case of exploring and thinking about the options, because it is a very large market and it is strong in our category – if we can find the right model it’s a huge opportunity for the business.”

    Taylor has previously said it will be “hard to justify” continuing the US venture to the board if a material improvement can’t be achieved by the end of FY18.

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