New Zealand-born jewellery group Michael Hill has let go of some senior management roles as it faces elevated costs of gold, diamonds and “aggressive” retail trading conditions.
It is not known how many roles were dropped, or in which departments. Michael Hill declined to comment further when contacted by Ragtrader.
The news comes as the global retailer recorded a 4.1% growth in global sales for the first half of FY24, at $362.8 million. This was driven by a 10.2% sales growth in the Australian market, which was weighed down by a 10.3% drop in New Zealand - its smallest market in terms of sales.
Michael Hill’s Canada market remained flat at 0.6%.
The jeweller also axed six underperforming stores in the Michael Hill brand, taking its total network to 272. However, four new Bevilles stores were opened in the Australian market, upping that brand’s network to 30 overall.
Michael Hill also launched its high-end jewellery brand TenSevenSeven online in late 2023, with its first store expected in the first of 2024.
While the sales trend for the core Michael Hill brand improved through the half, the jeweller reported that sales were still negative to the record first half of FY23.
“Whilst the first half was definitely a challenging period for our business with sales for the core Michael Hill brand down, we are encouraged by our performance against the broader jewellery sector,” Michael Hill managing director and CEO Daniel Bracken said.
"Clearly margin was under pressure from both input costs and promotional activity, and inflationary forces saw elevated costs across many aspects of the business, which together impacted EBIT for the half.”
The group’s comparable earnings before interest and tax (EBIT) is expected to be in the range of between $30 million to $33 million.
“As a result, the company has taken direct actions to reduce operating costs, including the exit of a number of senior management roles.”
The group’s margins were also affected due to higher input costs for gold and diamonds, expected to slip into the range of 61% to 62% for the half.
Meanwhile, digital sales represented 8% of total group sales for the half, and have reportedly returned to growth, with inventory levels in-line with management expectations.
“Even though consumers continue to monitor their discretionary spend, our multi-brand strategy puts us in a strong position to continue taking market share from our competitors as we expand the Bevilles network and elevate the Michael Hill brand,” Bracken said.