Michael Hill to close three underperforming local stores

Michael Hill International has announced it will be closing three under-performing New Zealand stores, with more closures possible.

In an announcement to the New Zealand Stock Exchange, the company said it would make a final decision on the number of closures based on store performance and the outcome of landlord negotiations.

Closures were expected to happen across the company’s international network. So far, Michael Hill International has decided to close three stores in New Zealand, five in Australia and one in Canada.

The company planned to open 25 New Zealand stores today, with the remaining stores to be opened by the end of May.

In its announcement to the market, the company said it had reevaluated the store network, customer demographic, and store profitability.

‘‘We are determined to open the right stores at the right time with the right inventory,’’ it said.

Covid-19 would continue to have an impact on sales, the release said.

‘‘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.’’

While the future was uncertain for some stores, online sales over the last three weeks had been strong, the company said.

For the past three weeks, digital sales were above the company’s previous record Christmas 2019 levels.

Michael Hill has 304 stores in New Zealand, Australia and Canada with global sales of A$569 million (NZ$593m) last year.

Globally, the company employed an estimated 2500 employees.

In 2019, there were 52 Michael Hill stores in New Zealand.

First Retail Group chief executive Chris Wilkinson said Michael Hill International had been proactive in streamlining the business in the past.

‘‘Michael Hill is a very smart business, and they have already shown that they are prepared to make cathartic decisions. For example, what they did by closing Emma & Roe, what they did pulling out of the American market,’’ Wilkinson said.

‘‘I applaud their decisiveness, moving early and decisively on these sorts of decisions.’’

Discretionary items, such as jewellery, are decisions that people can park until better economic conditions, he said.

‘‘When you have a business like Michael Hill making these decisions, it is very telling for the retail sector,’’ Wilkinson said.

Michael Hill International has been approached for further comment.

‘‘When you have a business like Michael Hill making these decisions, it is very telling for the retail sector.’’ Chris Wilkinson

First Retail Group chief executive