Jewellery chain owner Michael Hill International Ltd said yesterday it expected the lossmaking exit from its US business and repositioning of the Emma & Roe stores would cut December half-year ebit (earnings before interest & tax) from $A40 million in 2016 to $A15 million.
Chief executive Phil Taylor said: “As the company continues to negotiate with landlords to determine Emma & Roe’s future store footprint and its approach to exiting its operations in the US, it is not yet in a position to provide detail on the timing or final cash costs associated with these closures.
“However, the company believes it is appropriate to provide an update in respect of the accounting treatment & expected ebit (earnings before interest & tax) impact of the closure announcement for the purposes of the 31 December 2017 half-year accounts. Following receipt of management accounts reflecting actual trading results for the half-year to December 2017 and preliminary work regarding its half-year accounts for the 6 months ended 31 December 2017, the company expects to report ebit of about $A15 million in the half-year accounts for the year ended 31 December 2017.
“This includes the impact of the one-off, accounting recognition of the US and Emma & Roe store closures of about $A20 million, as determined in accordance with applicable accounting standards. This compares to a prior year ebit result for the half-year to 31 December 2016 of $A40 million. The key contributing factors were the deterioration in the performance of the US and Emma & Roe businesses….
“Despite the one-off accounting impacts from store closures, the decisive actions taken to reduce the Emma & Roe store footprint and exit the US are critical to strengthening the foundations of Michael Hill International as we focus on building significant long-term value in our core businesses across Australia, New Zealand & Canada.”
Michael Hill, based in Brisbane and listed on both the ASX & NZX, will release its half-year results on 22 February.
The company ended 2017 with 347 stores – 317 Michael Hill, 30 Emma & Roe. Only one of the Emma & Roe stores is outside Australia – at Westfield Manukau in Auckland. It has 53 stores in New Zealand, 172 in Australia, 83 in Canada, and will close its 9 stores in the US.
31 January 2018: Hill concedes defeat in US, will reposition second brand
Attribution: Company release.