Michael Hill shutters half its U.S. stores
Michael Hill shutters half its U.S. stores, forecasts American loss plus closure costs
June 8 (BusinessWire) - Michael Hill International Ltd., the jewellery chain that carries its founder’s name, will close half the U.S. stores it bought from a failed retailer and forecast a full-year loss in America of US$6 million.
The NZX-listed company has completed a review of the 17 stores it bought from the Whitehall Jewelers Chapter 11 process. At the time of the acquisition in July 2008, Michael Hill said it didn’t expect the outlets, in and around Chicago, to be profitable for several years.
The review was undertaken “in the face of some of the harshest retail and economic conditions in recent history,” chief executive Mike Parsell said in a statement.
The company will close eight stores by the end of this month and “consolidate to a smaller platform of nine stores, all of which are within the greater Chicago area,” Parsell said.
The forecast operating loss of US$6 million excludes costs of the store rationalisation, which will amount to US$1.8 million including lease termination costs and staff entitlements, which will be recognized in the full-year results.
The remaining stores are to be refurbished “to bring all of them up to the company's latest global concept.”
“The board remains positive about the US market and is aiming to position the brand to take full advantage of the financial recovery over the coming years,” he said.
Shares of Michael Hill last traded at 70 cents and have fallen 11% in the past six months.
The U.S. operations recorded a wider operating loss of US$2.9 million in the first half, from a year-earlier loss of US$1.04 million, which covered only four months of trading. Australian is the company’s most-profitable market, with first-half earnings before interest and tax rose 5.6% to A$24.4 million.
Michael Hill said the closures in the U.S. won’t affect other parts of the company and it plans to open as many as 15 new stores in other markets over the next 12 months.