Lack of Marketing Hits Michael Hill

RAPAPORT... Michael Hill's sales fell 9% in the first fiscal quarter asthe retailer underestimated how much marketing it needed for its strategicshift away from discounting, the company said. Group revenue fell to AUD 112.1 million ($79.7 million), the jeweler reported Friday. While the Australia-based retailerbelieves the new approach will strengthen brand loyalty and raise the value ofits products, the move lacked the adequate marketing to support it,it added. Same-store sales - those at branches open for at least a year - slid 11%in the three months ending September 30. "During the quarter and in line with our strategy, the groupincreased gross profit margin as it reduced its reliance on discount-basedevents," said Michael Hill CEO Phil Taylor. "However, on review, this shift was notadequately supported by sufficient levels of marketing and promotionalactivities to drive top-line sales." Despite the challenging transition, the company willcontinue with its plan to reposition Michael Hill as an omni-channel brand thatstands out from others, Taylor added. Same-store sales in Australia, the jeweler's largest market,fell 13% to AUD 62.5 million ($44.5 million). During the period, one storeopened, and three closed, for a total of 169 locations at the end of thequarter. Sales in New Zealand slipped 8% to NZD 23.4 million ($15.2million), with a single store launch bringing the total in the country to 53.Sales in Canadian shops plunged 11% to CAD 21.8 million ($16.7 million), with atotal of 84 stores trading at the end of September. The group shut four Emma & Roe locations during theperiod, in line with its closure plan for the brand. Two shops continue tooperate, as does the Emma & Roe website. Heavy discounting at the remainingoutlets drove quarterly sales up to AUD 2.4 million ($1.7 million) from AUD 1.1million ($794,210) last year. Last month, Michael Hill announced that Phil Taylor would bestepping down as CEO. Daniel Bracken will take on the role on November 15. Image: Michael Hill store, Newmarket, Ontario, Canada. (LGA)