Michael Hill International Ltd [NZX:MHJ] has seen a dramatic fall of over 20% on the New Zealand Stock Exchange in a single day.

Michael Hill is Australasia’s leading retailer of jewellery. Originally founded in Whangarei, it is now headquartered in Brisbane. It boasts a strong presence throughout Australia, New Zealand and Canada.

Michael Hill has a market capitalisation of $295 million, and the share price is currently sitting at $0.75.


So why has the Michael Hill share price fallen?

Michael Hill’s sharp slide has come on the back of last week’s scare on the US markets. The Dow Jones Industrial Average plunged by over 800 points, in what has been called one of the worst declines in financial history.

This fearful contagion spread worldwide, negatively affecting sentiments on the Australian and Kiwi markets as well. This has filtered down to Michael Hill’s share price, which saw a steep decline.

A secondary issue is Michael Hill’s decision to exit the US market earlier this year. In comparison to its success in Australia, New Zealand and Canada, Michael Hill’s presence in America has floundered. This has forced the company to liquidate its American assets, which sadly marks the end of a 10-year journey to gain a foothold in the USA.


Where can Michael Hill go from here?

Since its shock fall, the Dow Jones has shown signs of a distinct recovery. It has rallied by more than 300 points, which has offered investors much-needed relief.

What has happened is now largely perceived as a correction rather than a looming crash.

Once the overall mood stabilises, investors will realise that Michael Hill’s fundamentals are still solid. The company’s share price is likely to reverse its negative trend in the middle- to long-term.


Taylor Kee,

Editor, Money Morning New Zealand