Jewelry group Michael Hill closes Australian stores and fires managers
A well-known jeweler has announced a major management hierarchy and store cuts after profits plummeted.
Jewelery group Michael Hill blamed tough store conditions and “aggressive” competitive behavior for its shock decision to sack senior managers and close six stores in its latest trading update released on Friday.
The New Zealand-founded company forecast profits of $30-33 million in the first half of the 2023-2024 financial year, well below the $54.5 million recorded in the same period 12 months earlier.
This is despite a 4.1 percent increase in sales to $362.8 million across the group in the same period.
Five underperforming Michael Hill stores have closed in Australia in the past six months, along with another in Canada.
Jewelery group Michael Hill has closed five stores in Australia and axed a 'number' of senior management positions after profits plummeted for the first half of 2023-2024
The stores affected included two in NSW and one each in Victoria, Queensland and regional WA.
A 'number' of senior management positions were reduced to reduce operating costs.
The company did not disclose how many jobs were lost.
“It is clear that margins were under pressure from both input costs and promotional activities, and inflationary forces were driving higher costs in many aspects of the business, which together impacted half of earnings before interest and taxes,” General said. director Daniel Bracken.
'While the first half was certainly a challenging period for our business, with a decline in sales for the core Michael Hill brand, we are encouraged by our performance against the wider jewelery sector.
“As consumers continue to monitor their discretionary spending, our multi-brand strategy puts us in a strong position to continue to capture market share from our competitors as we expand the Bevilles network and take the Michael Hill brand to the next level.”
The jeweler was founded 45 years ago in New Zealand by Michael Hill (pictured with his daughter Emma)
Declining consumer demand and the rising costs of gold and diamonds were also factors.
“The macroeconomic environment impacting consumer sentiment resulted in difficult trading conditions, while both inflated input costs and aggressive competitive behavior also put pressure on margins,” the company said.
The very first Michael Hill store opened in 1979 in Whangarei in the far north of New Zealand.
Eight years later the company was listed on the New Zealand Stock Exchange and expanded its presence to Australia.
Founder Michael Hill stepped down as company chairman at the end of 2015 to make way for daughter Emma.
Declining consumer demand and rising costs of gold and diamonds have contributed to the jeweler's declining profits
The company currently has 272 Michael Hill stores in Australia, New Zealand and Canada.
The group also has 26 Bevilles stores after acquiring the Australian jewelery chain for $45 million last April. Since then, a further four Bevilles stores have opened.
The Michael Hill Group recently launched its high-end jewelery brand TenSevenSeven online and the first store will open in the coming months.
The brand is also teaming up with Australian rock band INXS for a new jewelry collaboration inspired by two of the band's biggest songs: 'By My Side' and 'Never Tear Us Apart'.
Michael Hill has almost 300 stores in New Zealand, Australia and Canada