Why the Michael Hill International Ltd share price is sinking

Michael Hill International Ltd (ASX: MHJ) is a jewellery chain with more than 300 stores across Australia, New Zealand, Canada and the US, also encompassing the Emma & Roe brand. 

Pre-tax earnings for the 6 months to December 17 are expected to be around $15 million when Michael Hill releases its half year results on February 22 – a landslide drop of 62.5%% from the 6 months to December 2016 EBIT of $40 million. 

Michael Hill’s US exit coincides with plans to reposition the flailing Emma & Roe brand with attempts to move the product line online. 

The company has called the changes a “cut your losses” move, with Michael Hill’s US stores and Emma & Roe shopfronts booking a combined loss of $12 million in the last financial year. 

Michael Hill executives hope the repositioning will free up resources to help the jewellery stalwart’s share price get back on the incline. 

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Motley Fool contributor Carin Pickworth has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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