Michael Hill first big retail casualty of coronavirus pandemic shutdown

Jeweller Michael Hill is the first major national retailer to close in an effort to protect its workers and customers from COVID-19.

The Shaver Shop CEO Cameron Fox Picture: Ian Currie

Jeweller Michael Hill International is the first major national retailer to close in an effort to protect its workers and customers from the coronavirus, with more ­publicly listed retail groups to follow, withdrawing their guidance and postponing dividends as the health crisis rattles the economy.

Michael Hill, which has 300 stores across Australia and New Zealand, has suspended operation and stood down 2500 staff.

The jeweller said in Australia “the current social distancing guidelines are not consistent with the day to day conduct of our business”, and consumers were also focused on more serious issues.

New Zealand, meanwhile, has moved to an essential services-only shutdown.

The company said it had decided to postpone its 1.5c-a-share interim dividend for six months, reporting a fall in foot traffic as its Canadian stores shut indefinitely.

Two other prominent Australian retailers have pulled their earnings guidance in the wake of the pandemic, but in the short term there has been an uplift in consumers grabbing for stock.

Furniture chain Nick Scali and baby furniture and equipment chain Baby Bunting have reported positive sales momentum and a pick-up in activity by Chinese suppliers.

Nick Scali decided to postpone payment of its interim dividend to the end of the year.

And Nick Scali and Baby Bunting joined other retailers in withdrawing earnings guidance amid the uncertainty that is closing the travel and hospitality ­industries and dramatically slowing the economy.

Many retailers are scrapping or delaying dividend payouts to ensure they have enough cash reserves to withstand the economic upheaval.

Shaver Shop has reported a sudden slide in its sales, with in-store sales slumping by almost a quarter, and has cancelled its interim dividend and withdrawn its earnings guidance for 2020.

A “material deterioration” in trading conditions was reflected in a decrease in like-for-like sales (including online) of about 11 per cent. The decline in like-for-like sales in its bricks-and-mortar stores was 23 per cent, it said.

Shaver Shop said it was withdrawing its 2020 earnings guidance and had cancelled its interim dividend of 2.1c a share, set to be paid on April 23.

Nick Scali said recent feedback from suppliers suggested supply chain issues were subsiding and delivery times were beginning to return to normal.

“The company expects this will continue to improve over the coming months,” the company said. It said for the first two months of 2020 written sales orders growth was 3 per cent on a comparable-store basis. But in the past 10 days, Nick Scali had seen considerable reductions in store traffic and sales orders, which it expected to hit revenue.

Because of the speed and volatility of the pandemic, Nick Scali said it could not give an earnings outlook for 2020. It would also need to push back paying its interim dividend.

“The company currently has $39m of cash on hand and $34m of gross debt outstanding, ­secured on a non-recourse basis against the property it owns, with no further loans on the balance sheet,” it said.

Michael Hill shares closed down 14.5 per cent at 23.5c and Shaver Shop closed down 23 per cent at 23c.