Bringing back the old shine
Jeweller doesn’t need radical revamp, says new CEO — but it does need to get modern. By Aimee Shaw
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 Brisbanebased 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.”