Jewelry retailer Michael Hill International Ltd. said Friday it has agreed to buy 17 stores in Illinois and Missouri, its first entry into the U.S. retail market. This will add to the company’s inventory of 188 stores in New Zealand and Australia and 22 stores in Canada.
Michael Hill will pay $5 million for inventory and leases (“80 cents on the dollar”) currently owned by Whitehall Jewelers Holdings Inc., which is in chapter 11 bankruptcy, the Brisbane, Australia-based company said in a statement sent to the New Zealand Stock Exchange.
The majority of the stores are in the Chicago metro area, with two in St Louis. “Michael Hill International considers that it has secured 17 prime locations that will provide a sound launching pad to the large U.S. market,” the company said in a statement. “This grouping of stores fits with our historical pattern of building a concentration of stores in new markets to leverage efficiencies in logistics, marketing and management supervision.”
The agreement must be approval by the U.S. Bankruptcy Court. Michael Hill said it expects that the bankruptcy court will approve the transaction on Aug. 28.
“Michael Hill International views this as a strategic acquisition to test its retail model in the highly competitive U.S. market, albeit at a time when the economy is challenging,” the company said. “The company does not expect these stores to achieve profitability for several years but believes the opportunity presented by the Whitehall Jewelers acquisition was one which would enable Michael Hill International to enter this market on favorable terms. Our short to medium term focus will be on honing our retail formula for future growth from this base.”