Its overseas success has not been replicated here
The recent resignation of Michael Hill’s longtime CEO Mike Parsell has brought up the issue of its performance in the United States.
Michael Hill has been very successful in Australia, New Zealand, and Canada. In the first two markets, it’s akin to Kay. Its charm brand, Emma & Roe (named in part for the founder’s daughter, now company chair) is also doing nicely.
In 2008, the company set its sights on the United States, scooping up 17 Whitehall stores. Parsell foresaw an eventual 800-store chain.
Still, despite a striking presentation—its stores are all purple—and refreshing commitment to attention-getting advertising, the company is still fine-tuning its approach, eight years after entering this market.
Its last half-year financial results, posted in February, said sales from its 10 U.S. stores generated $7.4 million in sales, but the division posted a $1.5 million loss. Comps grew only 0.6 percent.
The company’s recently appointed interim CEO, Phil Taylor, tells JCK that the company’s board won’t approve further U.S. expansion until the division sees a turnaround.
“I share Mike’s enthusiasm for the U.S. market and rest assured it will continue to get the attention it deserves,” he says. “We still see the U.S. as an exciting growth opportunity for Michael Hill. However, there is further work to do on adjusting our approach to retailing in that large and complex market.
“Considerable advancements has been made by our brand in the U.S. in recent years. However there is still some improvement left before our board will be comfortable with further growth and investment in the U.S. market,” he adds.
Its first stores featured fashion items, similar to how Michael Hill sells in Australia and New Zealand, but that was soon switched to bridal. It closed many of its original Midwest stores and it tried to acquire a beachhead in the Northeast.
But as a mall-based jeweler, it has to acquire locations in Triple-A shopping centers, and that can be expensive. “Everyone wants to be in those malls, because those are the only ones doing any business anymore,” says one knowledgeable source. “But they are expensive.”
And, of course, Signet currently dominates malls. Michael Hill also made its name overseas as a discounter—and one thing malls don’t need is another discounter.
This is also a pricey market to advertise in—and the Hill stores are located in different clusters across the United States.
Taylor admits that Michael Hill’s U.S. division remains a work in progress but says the company is committed to getting things right.
“Over the last five years we have refined our property portfolio and adjusted our product ranges. We already have the best people working for us, and customer service is exceptional. Our in-house credit division is delivering a great solution to our customers’ needs and is providing our stores with the platform for a lifetime customer experience. We will continue to adjust our approach to marketing given we only have a small base of stores spread over multiple markets. If we can crack this nut, I feel confident we will be able to press on with further growth in and around our existing store base in the coming year.”
(Photo courtesy of Michael Hill)
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