Michael Hill to exit 24 Emma & Roe branded stores

The Brisbane-based company expects to close the 24 stores by June 30 this year. Photo / File

Michael Hill International plans to leave 24 of the stores in its unsuccessful Emma & Roe chain at a cost of A$5.8 million ($6.2m) to A$7.9m, and reposition the remaining six stores in the "demi-fine" jewellery segment.

The Brisbane-based company expects to close the 24 stores by June 30. The company is negotiating exit terms with landlords and will redeploy staff to its Michael Hill stores where possible and offer redundancy and support to others, it said.

The jewellery manufacturer and retailer launched the Emma & Roe brand in April 2014. In 2016 it said the chain, which sold charm bracelets and accessories, had moved from a trial phase into growth mode and said it was eyeing 200 Australasian locations for the brand and as many as 100 in Canada.

However today the company said a review of the brand had identified an opportunity in the relatively new "demi-fine" jewellery segment and said the six stores would allow it to iterate the new model at speed.

Last month, Michael Hill posted a 66 per cent drop in first-half profit, mainly reflecting A$19.8m of provisions to reposition the Emma & Roe chain and to recognise costs of exiting the US market.

In the first half, Emma & Roe achieved a 20 per cent gain in sales to A$10.5m but recognised a A$15.2m charge for impairments and onerous leases, resulting in an A$19.6m loss in earnings before interest and tax.

The company said today it was still negotiating with US landlords about leaving its nine US stores as part of its plan to completely exit the US market.

In the first half, US revenue fell 15 per cent to US$6m ($8.3m) for an ebit loss of US$5.6m, including a provision for impairment and onerous leases of US$3.5m.

Michael Hill, named after its founder, has expanded from a single store in Whangarei in 1979. At the end of last year, it had 172 Michael Hill stores in Australia, 53 in New Zealand and 83 in Canada as well as the nine US stores earmarked for closure. Some 29 of its Emma & Roe stores were in Australia, and one in New Zealand.

Its shares last traded at $1.16, having shed 18 per cent over the past year.