Shares in Michael Hill International dropped hard after announcing an 11% fall in same store sales for the September quarter as the jewellery store chain moves away from discount pricing.
At the close, the shares were down more than 27% to $0.66.
The company says the fall in sales is partly attributable to underestimating marketing and promotional activities needed to support a strategic shift away from discount based pricing.
Sames store sales for the three months were down 11% to $106.69 million.
CEO Phil Taylor says the company increased its gross profit margin as it reduced its reliance on discounts.
“However, on review, this shift was not adequately supported by sufficient levels of marketing and promotional activities to drive top-line sales,” he says.
“We are confident that our strategy to improve gross margin as we reduce the level of discounting and price based events, is the right strategy and will ultimately result in a brand and product that are more valued by our customers.
“While the transition is proving more challenging than expected we remain committed to the strategy and have taken many learnings from the first quarter which we are confident will drive performance in the critical December quarter.”
Michael Hill International was founded by Sir Michael Hill in 1979 when he opened his first jewellery store in Whangarei, New Zealand.
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