Michael Hill finds US market tough going
As the song goes, diamonds are a girl’s best friend.
However, this doesn’t seem to be ringing true for Michael Hill’s United States customers, as it struggles to gain traction in one of the biggest markets in the world.
The New Zealand jewellery manufacturer has reported a 10 per cent decline in sales in the US for the six months to December 31, 2017.
Michael Hill chief executive Phil Taylor said the US market was ‘‘difficult’’ and the fine-jewellery sector was not performing well.
While no decision had been made to withdraw from the US market, the company’s performance there was an ‘‘ongoing topic of discussion by management and the board’’, Taylor said.
‘‘For us, it is especially challenging at such a small scale with only nine stores, across three states.
‘‘Our proven retail model that has served us well in New Zealand, Australia and Canada has relied on achieving scale, and, in particular, with our marketing activity. This has been very difficult to replicate in the US.’’
Sales in the US had been declining over the past 18 months, Taylor said.
‘‘Good progress was made on the US business post-GFC from 2010 through to 2016, but we have hit the wall in gaining further traction on top-line sales since that time.’’
Despite the company’s struggles in the US, Canada was performing well, with seven new stores opening, and sales increasing by 4.8 per cent, for the six months to December last year.
In addition, its New Zealand business also saw sales increase by 3.4 per cent during the same period, while Australian store sales were flat for the half year.
The company said the pace of further store openings around the world would be dictated by the availability of suitable locations and ‘‘satisfactory’’ lease terms.
Michael Hill International was founded by Sir Michael Hill in 1979 when he opened his first jewellery store in Whangarei.
The group has 347 stores globally, including 317 Michael Hill stores in Australia, New Zealand, Canada and the US, and 30 Emma & Roe stores in Australia and New Zealand.
The group’s global headquarters, including its wholesale and manufacturing divisions, are in Brisbane.
Sales are up in Michael Hill’s New Zealand division.