Coronavirus: Three Michael Hill stores closing, more closures expected

Three New Zealand Michael Hill stores will not be reopening, with more closures expected.

In an update to the New Zealand Stock Exchange, Michael Hill International confirmed three New Zealand stores, five Australian stores and a single store in Canada won't be reopening. It referred to the stores as "underperforming" and said more closures "across all markets" are likely "based on store performance and the outcome of landlord negotiations".

The locations of the closing stores aren't revealed in the update.

The decision comes amid the COVID-19 pandemic which has severely affected businesses around the globe. Michael Hill had 301 stores worldwide suspend operations from late March.

"The Company still anticipates an ongoing impact on revenue and profitability due to the uncertainty of the economic landscape. Accordingly, we have been negotiating with all our landlords to reach reasonable commercial arrangements that reflect the reality of the consumer marketplace and trading conditions," the update said.

In New Zealand, the majority of stores had to close for at least four weeks under the country's alert level 4 lockdown restrictions. While a wage subsidy scheme was in place to cushion the blow, businesses have struggled to afford rent and other expenses while not operating. 

The NZX update confirmed 25 Kiwi stores will reopen on Saturday with the rest planned to follow over the next two weeks. Most businesses have been able to reopen since Thursday under alert level 2 provided they follow strict health and safety protocols. 

Michael Hill said among the health and safety measures it will be introducing is increased use of contactless payments, perspex screens for transacting with customers, more cleaning, and stickers on the floor to ensure social distancing.

Stores in Australia are reopening as allowed under state guidelines, but in Canada stores remain closed. They may reopen there in late May. 

"As we reopen stores, we are placing the utmost importance on the safety of our employees and customers. We look forward to enabling our customers to celebrate their love, style their wardrobe and find their memorable gift in a safe store environment as we all navigate through these unprecedented times," chief executive Daniel Bracken said.

The update said Michael Hill has seen a "significant boost" in online sales, with digital sales during the last three weeks "outperforming the prior record digital sales week from Christmas 2019".

Several digital initiatives have been rolled out, like a virtual appointment service in Australia, an online video hub to provide customers with the latest product information, and an interactive shopping catalogue.

"The surge in our digital sales signals a notable shift in consumer behaviour in the jewellery category. We have been quick to respond and harness this opportunity, with the implementation of a number of digital initiatives to continue to attract new customers and maintain the momentum," Bracken said.

"I'm very proud of the agility of our team to roll out so many digital initiatives in such a short period of time."

The company said it was "committed to maintaining a lean operating model and an absolute focus on costs during the crisis recovery period". This will include the "controlled stand-up of retail and corporate employees", accessing government wage subsidy programmes, and reviewing inventory levels for "return to vendor or for repurposing".

Bracken recently underwent surgery and will have a reduced workload while recovering, but the Board is confident he will be able to fulfil his duties during this time, so it won't appoint an acting CEO.