Covid-19 coronavirus: Michael Hill closing 9 stores globally, 3 in NZ, forecasts further closures

Michael Hill has just issued a business update. Photo / Doug Sherring

Coronavirus has taken a toll on Michael Hill International which said this morning it was closing nine stores, of which three are in New Zealand.

The business posted an update on the NZX explaining the impact of the pandemic on the business.

"The company has decided that it will not re-open some underperforming stores across all three segments, to date, five in Australia, three in New Zealand and one in Canada. Further store closures are likely across all markets, based on store performance and the outcome of landlord negotiations," it said.

The location of the three New Zealand stores was not revealed but Michael Hill has an outlet in the hard-hit Queenstown on Rees St and some in the market this morning wondered if that store would remain open.

But Chris Wilkinson of First Retail Group did not think Queenstown would shut.

"I imagine it will be stores where there is an overlap - there might a lease expiry ahead or sites in older centres or malls without a likely successful future. It won't be Queenstown because this serves as a positioning piece for the Australian and New Zealand market. There are many stores in Queenstown that have a dual role both as brand ambassadors and retail outlets," Wilkinson said.

The business might instead shut stores in smaller regional areas.

A spokesperson for the company today said from Australia: "We still have not quite covered all the staff involved and we're hoping to be able to redeploy the vast majority of them, so until we've done that we don't want to say where the stores are."

Michael Hill International said that in late March, "all 301 stores globally had temporarily suspended operations. We have been actively planning the reopening of our store network and great consideration has been placed on re-evaluating the store network, customer demographic, and store profitability. We are determined to open the right stores at the right time with the right inventory".

From tomorrow, nearly 100 Australian stores and 25 New Zealand stores will be open. The rest of the Australian and New Zealand stores will progressively re-open over the coming month. Plans are underway to start gradually opening the Canadian stores from late this month, the business said.

But retailing has been hard hit

"The company still anticipates an ongoing impact on revenue and profitability due to the uncertainty of the economic landscape. Accordingly, we have been negotiating with all our landlords to reach reasonable commercial arrangements that reflect the reality of the consumer marketplace and trading conditions," it said today.

Stores have stickers on the floor to ensure social distancing, more contactless payments are being used, perspex screens are up, products are continually being cleaned and staff trained in new safety procedures.

But there was a bright spot: the company got a big boost in online sales in the last three weeks, outperforming the previous record week from Christmas last year, it said.

"Over the seven-week period of store closures, we took the opportunity to deliver a number of key digital initiatives and we have developed new strategies to grow our business and meet our evolving customers' needs," it said.

Chief executive Daniel Bracken had surgery and would need a reduced work load for the next few weeks. The board had decided not to appoint an acting CEO in the meantime, the business said.