Michael Hill jeweller gives up on US experiment

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The Michael Hill jewellery chain will wind up its US operations after a decade-long investment failed to build a profitable business as well as overhaul its Emma & Roe jewellery line.

Brisbane-based Michael Hill International said it expects the changes to improve profitability with a stronger investment focus on areas where it's getting best return.

It will close its nine US retail stores, which haven't generated enough traction to warrant greater investment, and shift the Emma & Roe product range into demi-fine jewellery with more sales online and a smaller bricks and mortar footprint.

It comes as the retailer wrote down Emma & Roe assets by about A$7 million, and said it was yet to figure out the financial impact of its US exit.

"We see these actions, along with an increased investment on improving the group's digital capabilities and e-commerce platform, as being the key pillars to driving ongoing sustainable business growth," chief executive Phil Taylor said.

Michael Hill launched the Emma & Roe brand in 2014, which targeted higher turnover with lower value items such as charms, bracelets, rings, pendants and interchangeable earrings.

The sub-brand has expanded to 30 stores since then, accounting for 5 per cent of group sales, but contributing a loss.

The retailer launched in the US in 2008 and started to scale up just before the global financial crisis, buying 17 stores in Illinois and Missouri from Whitehall Jewelers after the US firm filed for Chapter 11 bankruptcy.

But it closed half of those stores in 2010 and only renewed its aspirations in the world's biggest economy four years later, targeting the nation's top 100 malls.

"Our time in the highly competitive US jewellery market taught us a lot. However, our US operations have not gained sufficient traction," Mr Taylor said.

The retailer said its New Zealand, Australian and Canadian businesses continue to perform strongly.

The dual-listed shares rose 3 per cent to $1.39 on the NZX, having declined 6.7 per cent over the past 12 months.

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