Michael Hill has announced its first-year profits, with a noted decrease of 66 percent. The drop in profit has been attributed to the repositioning of Emma & Roe and the cost of exiting the US.
The chain announced plans to pull its US stores at the end of January, after focusing on the stores for almost a decade in the US. The loss-making operations were pulled completely by January 24.
Since launching in the US in 2008 as Michael Hill’s fourth overseas market, the business has struggled to make a return despite significant investment. Shortly after Michael Hill’s second New York store opened at the Roosevelt Field shopping mall during late 2015.
As part of the Emma & Roe strategic repositioning, the brand’s 30 stores will be assessed for viability over this month and February.
The closure of the US store was announced at the same time as the new plans for a strategic repositioning of the Emma & Roe brand.
The reposition of the brand resulted in an AU$19.6 million EBIT loss.
For the retailer, profit dropped to AU$8.7 million in the six months ended December 31, from AU$25.8 million a year earlier.
Sales from continuing operations rose 4.5 percent to AU$342 million. The company opened 14 Michael Hill stores in the first half and same-store sales edged up 0.3 percent. It now has a total 347 stores including 30 in the Emma & Roe chain.
The Michael Hill brand will still have around 300 stores globally once the US outlets are shut. Currently, this includes 172 Michael Hill stores in Australia, 53 in New Zealand and 83 in Canada. These stores are still performing strongly, it says, accounting for 95 percent of total group revenues.
Michael Hill's dual-listed shares last traded on the ASX at A$1.095 and have dropped 19 percent in the past 12 months. Profits are expected to rise as the company’s inner structure stabilises.