Shares in listed jeweller, Michael Hill International slumped 27.4% to 66 cents on Monday after investors caught up with a late trading update delivered late on Friday.
The company said group revenue fell nearly 9% for the three months ending September 30 after it failed to market the brand’s shift from discount selling to a fuller priced model.
Sales at some stores were down 11% in the quarter and while online revenues grew 85% to $3.4 million that was nowhere near enough to offset the slump.
The sales slide was largest in the company’s major market, Australia.
“Australian same-store sales were 12.8% down. One store opened and three underperforming stores closed, giving a total of 169 stores trading on 30 September. Two more stores are planned to open ahead of the Christmas period.
“New Zealand same-store sales were 7.6% down. One store opened during the period, giving a total of 53 stores trading at 30 September.
“Canada same-store sales were 11.0% down. One store opened, giving a total of 84 stores trading at 30 September,” the company said in the update.
Chief executive Phil Taylor stands by the strategy and says “the transition is proving more challenging than expected” but management “have taken many learnings from the first quarter which will are confident will drive performance in the critical December quarter.”
In September Michael Hill announced Mr. Taylor will leave the company on November 15 due to health and will be replaced by Daniel Bracken.
“Gross margin lifted to 64.6% for the quarter (63.1% prior year), as a result of the strategy to strengthen and grow brand loyalty where our collections and products are increasingly valued by consumers.
“Three Michael Hill stores opened and three underperforming stores were closed during the period, giving a total of 306 Michael Hill stores trading at 30 September 2018.
“Four Emma & Roe stores closed during the quarter as planned and previously announced. Two Emma & Roe stores and the Emma & Roe website continue to trade,” directors added.
Monday’s fall means the company’s shares are down 46% so far in 2018.