Michael Hill cut about 60% of its brands to focus on two names and returned to growth, with full-year sales of A$654.7 million and EBIT guided up as much as 57%. The lesson for operators is that focus beats a crowded portfolio you cannot properly market.
The Take: Michael Hill just made a boring decision look smart. It cut most of its brands, focused the marketing on the two that earn attention and went back to growth. Owning fewer things you can market properly beats owning more things you cannot.
The pattern: In April the jeweller's new chief executive Jonathan Waecker axed about 60% of the group's brands, retiring Medley, TenSevenSeven and other side ventures to leave two names, Michael Hill and Bevilles. The stated reason was to move quickly and put capital, management and marketing where the return is clearest. Fewer brands means fewer campaigns to fund, fewer systems to run and fewer places for attention to leak away.
Follow the money: It worked. Full year sales came in at A$654.7 million, up 2% on the prior year, with earnings before interest and tax guided as much as 57% higher at the top of the range. Australian same-store sales rose 4.8% and Canada hit a record 7%. Growth returned across the board in the same year the portfolio shrank, which is the part worth sitting with.
Share of its brand portfolio Michael Hill cut to focus on two names
The trade-off: Focus is not free either. Killing a brand means writing off the money you sank into it and admitting the experiment did not pay. Most owners will not do that, which is exactly why the ones who will tend to pull ahead. Attention is the scarce resource, and a business spreading it thin across six half-marketed brands is beaten by one pointing all of it at two. The hard part is rarely the strategy. It is the ego cost of shutting down something you launched.
For Australian operators: