Michael Hill International has acquired Australian retail rival Bevilles in a strategic $45 million deal.
Michael Hill CEO Daniel Bracken said that Bevilles strength in gold and silver products would complement his company’s reputation for diamond jewellery.
“It has a completely different product proposition to the Michael Hill business, and is predominantly focused on gold, silver, and watches, whereas Michael Hill is predominantly diamonds,” he told The Australian Financial Review.
“The majority of Bevilles pricing sits below $500. We’ve stepped away from the mid-market, but we see that there’s still a big opportunity at that end of the market.”
The company is planning to open more than 80 new Bevilles stores by 2028, including expansion in New Zealand and Canada where Michael Hill already operates. Michael Hill operates 148 in Australia, along with 47 in New Zealand and 86 in Canada.
Turbulent times
Bevilles was founded in 1934 by Leo and Raie Beville, who owned a store in Melbourne’s Bourke Street.
Despite many media reports stating the company has been family-owned – rather than family-controlled – for three generations, Indian company Tara Jewels acquired a 49 per cent stake in October 2017.
This came three years after Bevilles entered voluntary administration in April 2014, when a proposed business restructure was presented to creditors. Representatives confirmed it owed $14 million as the first major jewellery retailer to fail in 18 years.
The collapse caught many in the industry by surprise, particularly as one year prior the company had announced a major rebranding project which included the rollout of ‘new-look stores’.
At the time Bevilles CEO Michelle Stanton told Jeweller a restructure plan would be proposed to creditors and assessed by appointed administrators PPB Advisory.
“Despite this being a very difficult decision, we believe this path offers the best possible outcomes for everyone. Under our proposed restructure, it is our family’s intent to reacquire the business and retain our 80-year-old brand,” she explained.
The Melbourne-based company had incurred trading losses of more than $10 million over the previous three years and total claims against it amounted to $14 million. This figure included related party loans of $3.65 million by Keith Beville ($1.4 million), son of founder Leo Beville, and Deidre Capital ($2.25 million).
In December 2015, the chain opened a new Melbourne CBD store, having exited the Bourke Street Mall in 2011 where it had been located for more than a decade. When the lease fell due Bevilles was ‘outbid’ by Swarosvki for the ‘flagship’ location. Swarovski was reported to have offered more than $1 million for the 105 square metre store.
At the time of publication Beville’s current store count is 26, being located in three states – Victoria, NSW, and South Australia.
This is an increase of two stores since Jeweller’s most recent State of the Industry Report which detailed Beville’s up-and-down history. In 2010 the company operated 29 stores and in 2014 the store count was forcibly reduced as a result of the voluntary administration; 11 stores closed, bringing to 16 the number of stores across the three states.
Moving forward
That aside, Bracken was confident in the brand’s future.
“Expanding the store network in Australia represents an extremely exciting opportunity for the group, as the Michael Hill brand continues its journey to elevate into a more premium positioning,” Bracken added.
“I’m looking forward to our two teams working together to deliver the group strategy.”
Bevilles employees will reportedly be offered new employment contracts with Michael Hill. The transaction is expected to be completed in the current quarter. CEO Michelle Beville will retain an ambassadorial position for the next two years.
Michael Hill chair Robert Fyfe said in the immediate aftermath of the acquisition, expansion would be the top priority.
“It ticks so many boxes, especially in the current economic environment as customers seek out value for money,” he said.
“The Bevilles store network is under-penetrated and ready for growth, and Michael Hill will partner with Bevilles to provide expertise to grow the store portfolio, and unlock synergies.”
The deal is subject to approval by the Australian Competition and Consumer Commission and the Fair Work Commission.
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