Jeweller Michael Hill exits the US and mulls Emma & Roe's future

Jewellery chain Michael Hill International (ASX: MHJ) will pull out of its loss-making US stores and  also assess the future of its Emma & Roe shops as part of a major strategic review.

In its half yearly trading update to 31 December, 2017, US segment sales declined by 10 per cent while same-store sales in Australia remained flat.

"Our time in the highly competitive US jewellery market taught us a lot and helped to strengthen our core business," says Michael Hill International CEO Phil Taylor.

"However, our US operations have not gained sufficient traction in recent years and the level of capital required to scale-up the business is not warranted under current trading conditions."

The retailer also says its fledgling brand Emma & Roe and its US operations accounted for five per cent of revenue in the last financial year with a combined earnings loss of about $12 million.

Michael Hill expects to complete its review of Emma & Roe, an upmarket brand which has 30 stores, by the end of February and will reposition its viable stores and confirmed there will be store closures as part of the restructure.

The restructure of Emma & Roe will involve rebranding it as a "demi-fine" jeweller for customers who "seek stylish yet affordable items to accessories their wardrobe". The company says it aims to allow customers to achieve their "desired look but at a lower price".

"This approach will commence with a smaller, more concentrated store footprint to allow the company to be more agile in trialling the new concept," Taylor says.

"While disappointed with the past results of Emma & Roe, it's important that the company maintains its vibrant culture of innovation in order to expand its reach and engage with new and emerging customer segments."

Once the US stores are closed, Michael Hill says it expects to have more than 300 stores globally including 172 in Australia, 53 in New Zealand and 83 in Canada.