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Michael Hill shuts 300 stores indefinitely as virus pressures mount
By Dominic Powell
ASX-listed jewellery seller Michael Hill has become the first major Australian retailer to close its doors in light of the coronavirus pandemic, putting the jobs of thousands of workers at risk.
In a statement to investors on Tuesday morning, Michael Hill said it had been monitoring the effect of COVID-19 on its key trading markets, which include Australia, Canada and New Zealand.
Jeweller Michael Hill will shut its Australian store network indefinitely due to COVID-19.
The government's new strict social distancing guidelines, which require four square metres to be provided per person in any enclosed space, were "not consistent with the day-to-day conduct of our business", the retailer said.
"The drop off in trade the company has experienced in Australia also reflects a customer base that is, of course, focused on more immediate issues," it said.
Retailers around the country have experienced a massive reduction in trade in recent weeks, with the hardest hit being in the discretionary sector. Some executives reported that sales had dived as much as 50 per cent.
Due to this, Michael Hill said it would close its 165 Australian stores immediately and for an indefinite period. Stores in New Zealand will also be shut immediately, as the country moves into full lockdown.
The company's Canadian stores were already shut down on March 20, and will now continue to be shut indefinitely. Its online store will continue to operate.
Michael Hill employs around 2500 staff members across its 300 stores globally, who will now be stood down with access to leave entitlements and directed to access unemployment schemes such as Newstart.
Around 1300 of those employees are in Australia and an additional 300 work in the company's head office, where it is also planning job cuts in order to reduce costs.
"The board and management team have acted swiftly today following the extraordinary circumstances that are impacting the Australian and New Zealand retail markets," company chair Emma Hill said.
"Whilst it is clear that the suspension of our store networks is necessary for the safety and wellbeing of our people and our customers – we know also that this will be a time of great uncertainty for them too, and we are doing our best to provide them with the support that they need through this difficult time."
Gerard Dwyer, national secretary of the Shop, Distributive and Allied Employees' Association (SDA), said it was up to the government to step in and support retail workers as spending "falls off a cliff".
The union is calling on the federal government to implement a wage subsidy for retailers and to "take another look" at the UK's decision to pay 80 per cent of wages to keep businesses running. Mr Dwyer said stood-down workers should also be granted immediate access to JobSeeker payments.
"In the absence of government support flowing through to businesses and workers right now, shops across the nation are shutting their doors, we must all work now to ensure that is not forever," he said.
Michael Hill will take a range of "urgent" measures to preserve cashflow including suspending its 1.5 cent dividend, which was set to be paid on Friday, for six months. Shares fell 18 per cent to 22 cents following the news.