Well-known jewellery chain Michael Hill has revealed it closed six stores in the past six months and scrapped senior management roles due to tough retail conditions.
In a trading update released by the stock market listed company, it described the six months to December 31, 2023 as a “challenging period for the business” as its profitability took a hit and is estimated to be down 45 to 39 per cent on the same period of 2022.
Of the six “underperforming” stores it closed, one was in regional WA, one in Queensland, one in Victoria, two in NSW and one in Canada.
In the statement, the company blamed economic conditions for “impacting consumer sentiment”, adding that its profit margin was affected by the inflated cost of gold and diamonds, and “aggressive competitor behaviour”, which led to a decision to “reduce operating costs, including the exit of a number of senior management roles”.
It did not reveal how many staff or which roles were affected.
Michael Hill also owns the more affordable Bevilles chain.
The company achieved sales of $362.8 million during the six months to December 31, 2023, which was up 4.1 per cent on the same period of 2022.
But it revealed its gross profit for the period was expected to be between $30-33 million, which represents a fall of 45 to 39 per cent from the gross profit of $54.5 million it posted in the second half of 2022.
Earlier in 2023 the company bought the more affordable Bevilles jewellery chain, and it opened four new Bevilles stores in Australia during the past six months.
Michael Hill CEO and managing director Daniel Bracken said profit margins were hit in the second half of 2023. Picture: Richard Walker.