The first quarter of the financial year didn’t have the expected start for jeweller Michael Hill. The company saw sales drop even after its exit from the US market.
The transition was tough for the company as it scaled out of the US market, around the same time Michael Hill announced the departure of CEO Phil Taylor due to health reasons and also discontinued its Emma and Roe sub-brand.
Falling by 8.8 percent the jewellery chain’s sales from continuing operations fell to A$112.12 million in the three months ended Sept. 30 from A$122.9 million a year earlier. Same-store sales posted a sharper decline of 11 percent.
Michael Hill opened three stores and closed three stores in the quarter, leaving it with 306. The retailer has 169 stores in Australia and plans to open another two ahead of Christmas. It has 53 stores in New Zealand and 84 in Canada.
Australian sales dropped 11 percent to AU$65.1 million in the quarter, while New Zealand sales fell 7.4 percent to NZ$$23.9 million.
Four Emma & Roe stores were closed, leaving two left as the retailer winds up the unit. Heavy discounting increased trading activity, with Emma & Roe sales more than doubling to AU$2.4 million.
Taylor reiterated that the new strategy had a difficult start, but they were still on the right track.
“We have now moved to adjust our promotional activity for the balance of the financial year,” he said. Hill said that management has implemented a “range of initiatives” to ensure strong performance during the key Christmas trading period.
“We are in the mid-market and are up against strong discounting in all markets,” Taylor said. “As such we will continue to have great offers and competitive pricing, so our stores can continue to compete on a day to day basis,”
He reiterated that the company needs to “back away from overly aggressive discounting and pricing” but acknowledged it was a difficult balance to achieve.