Michael Hill Jeweler to Close Its U.S. Stores, Exit Market

Michael Hill Jeweler, the Brisbane, Australia–based chain that entered the U.S. market with considerable fanfare in the summer of 2008, now plans to close its nine stores here and exit the market entirely.

It’s the end of nearly 10 years of struggle for the company, which has up until now seen success in every market it’s entered and once envisioned an 800-store chain of its distinctive purple-hued stores in America.

In its latest half-year results, it said that its U.S. sales had fallen 10 percent, even as its sales in Canada and New Zealand rose, and sales in Australia were flat.

In a statement, the company called the U.S. division “loss-making” and dubbed the American retail market “challenging.”

The U.S. business “has struggled to provide a return for the group despite significant investment into developing a viable business model,” it said.

The decision to close its operations here was not a surprise; last week, CEO Phil Taylor told a local newspaper the company’s U.S. operations were an ongoing topic of discussion by management and the board.

“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,” he added. “This has been very difficult to replicate in the U.S.”

The company first set up shop in America in August 2008, when it bought 17 stores in the Midwest that were originally part of the now-defunct Whitehall Jewelers chain. It quickly learned that formulas that worked elsewhere were an odd fit for the United States. While Michael Hill was known for selling gifts in Australia and New Zealand, it had to reorient its selection to bridal to match local preferences.

In the decade since its debut, it closed 11 of those original 17 stores while attempting clusters elsewhere. It now has six in Illinois, one store in the Mall of America, and two near New York City. It shut a store in Columbus, Ohio, last year.

The nine stores will remain open as the company negotiates an exit to its U.S. operations.

“Our time in the highly competitive U.S. jewelry market taught us a lot and helped to strengthen our core business including the development of our bridal collection strategy and the development of our Professional Care Plan,” said CEO Phil Taylor in a statement. “However, our U.S. operations have not gained sufficient traction in recent years and the level of capital required to scale-up the business is not warranted under current trading conditions.”

(Image courtesy of Michael Hill Jeweler)

JCK News Director

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