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Michael Hill
Michael Hill

Michael Hill closes stores

Jewellery retail giant Michael Hill has closed 50 per cent of its stores in the harsh US market.
The move came after the New Zealand-based company announced an expected operating loss of approximately $7.3 million for its US market during the 2009/10 financial year.

There are now nine Michael Hill stores remaining in the US – down from 17 – all based within the greater Chicago area.

The 17 stores were originally acquired from Whitehall Jewellers in July 2008, which had filed for Chapter 11 bankruptcy protection.

At the time, the company said it viewed the purchases as “a strategic acquisition to test its retail model in the highly competitive US market" and that it “did not expect these stores to achieve profitability for several years”.

Twenty months on, the company has declared it will close eight stores at the end of June – at a cost of about $2.2 million.

Chief executive officer Mike Parsell said the expansion into the US would continue.

"When the economy starts to improve and we become satisfied with the financial return on the model we will start to expand," he told Dow Jones Newswires.

He said he expected the struggling US stores to continue making losses “for a little while yet”, adding that the stores had shown ”no real sign of dramatic improvement."

Chairman Michael Hill said the company had chosen to focus on stores with the most promise.

"This group of stores will then give the company the best possible platform and opportunity to position the brand in the US," Hill said. "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."

In addition, the remaining stores will be refurbished to suit the company’s new look which was revealed late last year.

Hill said he expected the decision to reduce losses in the US for the 2010/11 year.

While the US market struggles, Michael Hill’s stores in Australia and New Zealand continue to perform strongly.

Parsell said the retailer would open 15 new stores in Australia, New Zealand and Canada this year.

Earlier this year the company’s Australian stores reported a 9.9 per cent jump in revenue for the first three months of 2010. New Zealand’s stores reported an increase of 6.5 per cent.

Michael Hill was down 4.3 per cent on the New Zealand stock exchange last night, trading at NZ$0.67.

More reading: More stores for Michael Hill

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Saturday, 22 February, 2020 11:37am
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