Bring­ing back the old shine

Jew­eller doesn’t need rad­i­cal re­vamp, says new CEO — but it does need to get mod­ern. By Aimee Shaw

Hawke's Bay Today - - Business -

We’ve got a solid busi­ness, it’s been suc­cess­ful for a num­ber of years, but we need to mod­ernise it and we need to be­come a con­tem­po­rary re­tailer.

Michael Hill In­ter­na­tional’s new­est re­cruit has two big jobs: lift the jew­ellery re­tailer’s share price and mod­ernise its brand.

As the com­pany’s re­centlyap­pointed chief ex­ec­u­tive, Daniel Bracken has had peo­ple to meet and stores to visit in his first few weeks in the job.

Bracken started in the role on Novem­ber 15, and says that so far ev­ery­thing has been as he ex­pected. He is mak­ing a start on vis­it­ing the com­pany’s 3000 or so em­ploy­ees and mak­ing sure ev­ery­thing is ready for a suc­cess­ful Christ­mas.

“It was sort of ‘get to know Daniel’ for the first cou­ple of days and then the last weeks were fo­cused on get­ting closer to un­der­stand­ing the per­for­mance of the busi­ness,” says Bris­bane-based Bracken.

He is now in Toronto, af­ter a week of vis­it­ing stores in

Aus­tralia. Early in the New Year he is sched­uled to visit New Zealand.

“The busi­ness has had a poor first quar­ter, the share price re­sponded ac­cord­ingly in a very neg­a­tive way and I see my key role for the six weeks prior to

Christ­mas . . . as align­ing ev­ery­one for the best-pos­si­ble sales re­sult.”

Michael Hill shares lost nearly a quar­ter of their value in Oc­to­ber, drop­ping from 98c to 74c when the com­pany an­nounced sales had fallen. The shares — listed on the New Zealand and Aus­tralian mar­kets — have since fallen fur­ther and to­day they are trad­ing around 66c — half of their value in Jan­uary.

The re­tailer’s sales fell to A$112.12 mil­lion in the three months ended Septem­ber 30, from A$122.9m in the same pe­riod a year ear­lier.

Af­ter the Christ­mas rush, Bracken will be get­ting stuck into build­ing the foun­da­tions to mod­ernise the busi­ness and boost that share price.

Michael Hill was founded in Whangarei in 1979 when Michael Hill and his wife Chris­tine opened their first store. There were 10 stores by 1987, the year the re­tailer listed on the New Zealand Stock Ex­change.

It ex­panded into Aus­tralia soon af­ter list­ing, Canada in 2002, then the US — a mar­ket it has since aban­doned.

The com­pany listed on the Aus­tralian Stock Ex­change in 2016, fol­low­ing a cor­po­rate re­struc­ture in which its head­quar­ters moved to Aus­tralia.

Michael Hill now has 306 stores in the three coun­tries.

Bracken says his first two or three years in the job will fo­cus on “re­tail fun­da­men­tals” like get­ting the right pro­mo­tional cal­en­dar and store in­cen­tives, and mod­ernising the busi­ness.

In Michael Hill’s case, “mod­ernising” will mean ac­cel­er­at­ing its dig­i­tal trans­for­ma­tion to be­come a con­tem­po­rary brand-led re­tailer that can cater for all of so­ci­ety, Bracken says.

“We’ve got a ma­jor fo­cus al­ready on our de­sign-led strat­egy, which is to move away from generic prod­uct and cre­ate an in­creas­ing large amount of Michael Hill unique dif­fer­en­ti­ated prod­uct. There’s been great work on that thus far, but we need to put the ac­cel­er­a­tor on that,” he says.

“Once we’ve got the foun­da­tions right, then we can start to look to whether we want to go into new mar­kets, whether we want to go be­yond the Michael Hill brand and have other brands in our port­fo­lio and other chan­nels we might we want to work in, but we’ve got to get the base­line of the busi­ness healthy — that’s my pri­or­ity and fo­cus cer­tainly for the next two years.”

Lon­don-born Bracken made the move to Aus­tralia to be­come chief ex­ec­u­tive at The Ap­parel Group, based in Syd­ney. He was there for three and a half years be­fore he was shoul­der-tapped to join depart­ment store Myer as chief mer­chan­dise and mar­ket­ing of­fi­cer and deputy CEO.

Be­fore Michael Hill, Bracken was chief ex­ec­u­tive of ASX-listed re­tail com­pany Spe­cialty Fash­ion Group, which op­er­ates re­tail­ers City Chic and Millers, among oth­ers.

“I was given a re­ally unique man­date when I went there, which was: ‘the busi­ness is bro­ken, how do we as quickly as pos­si­ble have a sig­nif­i­cant [in­crease] in share­holder value?’

“The board gave me al­most a white piece of pa­per and said ‘do what­ever you think is nec­es­sary to de­liver the best pos­si­ble out­come for our share­hold­ers . . . that’s re­ally unique and very rare in any­one’s ca­reer that they get such an op­por­tu­nity — par­tic­u­larly in a listed busi­ness.”

When he joined Spe­cialty Fash­ion Group, its mar­ket cap­i­tal­i­sa­tion was A$20m, and when he left the busi­ness in Oc­to­ber it was over A$250m, com­pared with Michael Hill’s cur­rent cap­i­tal­i­sa­tion of about $250m.

The brief at Michael Hill was not to turn the com­pany around. At least not so ex­plic­itly.

“We’ve got a solid busi­ness, it’s been suc­cess­ful for a num­ber of years, but we need to mod­ernise it and we need to be­come a con­tem­po­rary re­tailer. We need to move away from hav­ing generic prod­uct to be­ing a brand de­sign-led busi­ness,” he says. “We’re for­tu­nate enough to have a fam­ily that’s still highly in­volved and en­gaged in the busi­ness, the cre­ativ­ity and in­no­va­tion run very deeply through the blood of the Hill fam­ily.

“We have a unique dif­fer­en­tia­tor through the fam­ily and we need to now ex­pand it and build on that.”

Bracken says Michael Hill’s strat­egy to fo­cus on high-mar­gin sales and im­prove its use of other sales chan­nels, such as on­line, was signed off by the board at least six months be­fore he joined the com­pany.

In Jan­uary, Michael Hill re­struc­tured its busi­ness and an­nounced it would get out of the US af­ter 10 years, shut­ting down all nine of its stores in that coun­try, and would quit its Emma & Roe re­tail chain af­ter de­clin­ing sales. Bracken says those de­ci­sions were good ones.

“The strat­egy to exit the Emma & Roe brand and with­draw from Amer­ica were the right things to do be­cause they were dis­trac­tions, and we don’t want to be dis­tracted from run­ning our core busi­ness as well as we pos­si­bly can.”

It’s un­likely that the com­pany will make a re­turn to the US in the fu­ture. “You don’t put your hand back in the fire,” says Bracken.

“It didn’t work, and I know from my own per­sonal ex­pe­ri­ence that the US is a very, very dif­fi­cult mar­ket to be a suc­cess­ful re­tailer in — it’s the most so­phis­ti­cated and chal­lenged re­tail mar­ket in the world. Would it be more log­i­cal for us to go into an Asian ter­ri­tory? Quite pos­si­bly. But again, we haven’t done the work yet.”

The fa­ther of three de­scribes his man­age­ment style as: en­er­getic, in­spir­ing and clear-vi­sioned.

“I’ve put in place an in­creased fo­cus on trad­ing the busi­ness and what does that mean? That means how we’re run­ning our pro­mo­tional cal­en­dar, how much fo­cus there is on mar­ket­ing and com­mu­ni­ca­tions to our cus­tomers, how we’re in­cen­tivis­ing our staff over key trad­ing pe­ri­ods and how we in­ter­nally as a man­age­ment team re­new and as­sess our own per­for­mance,” he says.

Bracken grew up in Hamp­stead, north­west Lon­don, and com­pleted a busi­ness man­age­ment de­gree at Univer­sity Col­lege in cen­tral Lon­don.

“I didn’t have a clue about what I wanted to do, so I did a gen­eral man­age­ment de­gree and through that I got a place­ment in the sup­ply chain, at a sup­plier for Burberry,” he says. “I then went to work for that busi­ness for two or three years, then Burberry ap­proached me to come and join them.”

Af­ter work­ing in Burberry’s ac­ces­sories depart­ment, Bracken later ran the chil­dren’s wear busi­ness be­fore mov­ing into the role of global trans­for­ma­tion leader for the group. By the time he left Burberry af­ter 17 years, he was vice-pres­i­dent of strat­egy for the global busi­ness.

Bracken left Burberry be­cause he wanted to be a chief ex­ec­u­tive.

“I was re­ally for­tu­nate, my ca­reer was re­ally var­ied and con­stant, ev­ery two or three years I got a pro­mo­tion and got to do some­thing dif­fer­ent. I think that’s what stood me in such good stead when I then be­came CEO, be­cause I had such a broad set of ex­pe­ri­ences.”

New Zealand is an im­por­tant mar­ket for Michael Hill, he says.

“Our An­tipodean her­itage is re­ally, re­ally a key part of the fu­ture suc­cess of this busi­ness, and some­thing I don’t think we’ve nec­es­sar­ily lever­aged enough — it’s some­thing I cer­tainly plan to lever­age go­ing for­ward,” he says.

Bracken, who also holds Aus­tralian cit­i­zen­ship, is fa­mil­iar with Aotearoa. He’s vis­ited a few times, in­clud­ing a trip to Auck­land a few weeks ago, and was in Queen­stown for part of his re­cruit­ment process.

“This is a great busi­ness, I’m hon­oured and priv­i­leged to be the CEO — it’s the first time the com­pany’s re­cruited ex­ter­nally,” says Bracken.

“I’m re­ally ex­cited by what we’re go­ing to do here over the next cou­ple of years.”

Daniel Bracken is the first out­sider to lead Michael Hill In­ter­na­tional.

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