Michael Hill International said the exit from its US business is expected to cost US$4.5 million (NZ$6.1 million) for lease terminations and employee severance costs after it was unable to find a buyer for the jewellery stores.
The jewellery chain decided to wind up its US business in January after a decade-long investment failed to build a profitable business and the company said today all nine US stores will close around April 30 and the staff offered redundancy and support.
"Efforts to find a purchaser for the US business did not result in any satisfactory offers," Brisbane-based Michael Hill said in a statement to the New Zealand stock exchange. "The company has therefore negotiated non-binding in-principle lease exit terms with all US landlords and will now proceed to negotiate binding formal documentation with those landlords."
Michael Hill, founded by its namesake with a single store in Whangarei in 1979, is this year pulling back from some of its recent expansions with the closure of its US business and repositioning and downsizing of its fledgling Emma & Roe chain, with 24 of the stores to close at a cost of A$5.8 million-to-A$7.9 million (NZ$6.1 million to NZ$8.3 million).
Sales at Michael Hill stores in its continuing business in Australia, New Zealand and Canada increased 4.9 percent to A$441.6 million in the nine months to March 31 as the company opened 15 new stores, taking the total to 314, the company said in a separate announcement today. Excluding new store openings, same-store sales lifted 1 percent.
Six new Michael Hill stores opened in Australia, taking the total to 171, helping sales over the nine months to increase 1.7 percent to A$252.7 million. Same-store sales slipped 0.3 percent.
In New Zealand, two Michael Hill stores were opened, taking the total to 52, with sales lifting 4.3 percent to NZ$96.9 million. Same-store sales increased 3.7 percent.
Meanwhile, in Canada the Michael Hill chain grew by seven, taking the total to 82 and boosting sales 17 percent to C$98.2 million. Same-store sales advanced 4.1 percent.
The company said the Emma & Roe brand was negatively impacted in the third quarter by the announcement that the store footprint would be reduced. Sales at the stores lifted 16 percent to A$13.7 million, while same-store sales fell 5.8 percent.
In the US, sales dropped 18 percent to A$10.2 million, while same-store sales slid 14 percent.
The dual-listed shares last traded at $1.16 on the NZX, having declined 15 percent over the past 12 months.