Michael Hill Makeover kicks off

The next step in the Michael Hill International story[MHI.NZ] has happened with the opening of their new format store in Auckland's Queen Street yesterday.

A move towards a more sophisticated look inside and out is designed to take the company towards the higher end of the jewelry market and then hopefully higher margins.

This particular outlet is what the boffins call a "flagship" store and its charcoal and grey colours, along with its new lighting design is designed specifically to get those higher end punters in the door -revamps of retail stores tend to get more punters through the door, not this shopper though.

From Michael Hill himself on the reasons for the change:

“As the original high-end retailer in this part of Queen St, we’re delighted to be delivering a contemporary shopping experience to our customers.

“It’s important to move with the retail environment. As our customers evolve so too must we. This new store design has become the benchmark for all stores going forward, Hill said.



On the purchase his company made last year of bankrupt jewelry retailer Whitehall Jewelers:

"When you're opening in a new market and opening in a place like Chicago that has been particularly depressed you can't just roll out the old thing and expect it to work. It's really when you have to do things that you come up with your best."

Hill has himself said that the Chicago purchase was a mistake (listen to Michael Hill interview - You need to register first ) because of the price paid for it so it is either a very positive move by him to spend millions on the 17 United States stores or throwing good shareholder money after bad - I tend to think he knows what he is doing but having said that the US is a particularly hard market for outsiders to crack. Pumpkin Patch Ltd [PPL.NZ] has also had recent difficulties with its US operations, incurring significant losses, so this is a very tough market, especially in the current economic conditions.

The revamp of the company image comes in a year where underlying 2009 profit has been down by more than 45% and its share price hit because of the overall retail downturn.

Michael Hill shares closed even at NZ 72c yesterday.


Disclosure I own Michael Hill International shares in the Share Investor Portfolio.


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c Share Investor 2009

Time for high fives or time for a pause for thought?

A piece I stumbled upon while looking for something else - boy the internet can sidetrack me - got me thinking pessimistically again about the stockmarket and economy in general:

From EFT Guide, By Simon Maierhofer

A 50% rally, Warren Buffett, extreme levels of optimism, rallies based on vague reports of improvements, etc.; all the aforementioned are parallels between the 1929-1930 bear market rally and the rally from the March lows. If the parallels hold up, a mere rhyme to history (let alone a repeat), will wipe out millions of next eggs. Here’s how to avoid repeating your grand parent’s mistakes.It’s been said (and perhaps you are getting tired of hearing it) that those who don’t learn from history are doomed to repeat it.

If the parallels of the Great Depression continue to hold up as they have (and according to historical indicators they will), history doesn’t have to repeat itself to severely hurt investors. A mere rhyme to the Great Depression would be enough to wipe out tons of portfolios.But who cares about history when the market is up and the forecasts call for better days ahead. The Dow Jones (DJI: ^DJI) and S&P 500 (SNP: ^GSPC) have rallied over 55% while the Nasdaq (Nasdaq: ^IXIC) has soared nearly 70%. Wall Street is anxiously expecting another earnings season, which is expected to be predominantly good.

Reuters reports that “earnings optimism lift Wall Street” while Credit Suisse encourages their clients to buy bullish Alcoa options in advance of Alcoa’s (NYSE: AA) profit reports.

If there is one thing we should have learned from history, it’s that the bear strikes hardest when least expected. Pierre Corneille hit the nail on the head when he said that “danger breeds best on too much confidence.”

Black Monday’s or Thursday’s wouldn’t be called “black” if they were expected. Market tops are always marked by extreme levels of optimism.

In January 2009, with the Dow Jones slightly above 9,000, the ETF Profit Strategy Newsletter noticed elevated levels of optimism and warned of a severe decline with a target of Dow 6,700. Today, sentiment readings are even more extreme than they were in January. The implications are obvious.

If there is just one time you want to take a lesson from history, it is RIGHT NOW. The parallels between today and the Great Depression are numerous and strikingly similar. This 5-minute history lesson might be the best investment you’ll ever make. Continue article here

I was aware of the sucker rally of the 1930s that the author discusses but it certainly gets one thinking about where we might be right now and if the authors research and main points are accurate then it makes for grim reading.

The apparent economic "recovery" (green shoots my arse Mr Obama) that has led to markets skyrocket over the last six months is based on large amounts of State money borrowed from the Chinese or money simply being printed.

Banks and financial institutions in the US, which have made up a large part of the rally, have better looking balance sheets thanks to the aforementioned handouts, not for any concrete economic reasons.

Lets not even go into the massive debt that many Western countries have on their balance sheets - personal and State.

I don't think things are as bad or necessarily the same as what was experienced during the Great Depression - it very well could be worse I suppose - and I have been buying stocks ( 1 2 3 ) before the current rally but the general message from the writer is one that should be taken on board as an added risk factor when considering any type of investment in the current cycle of economic uncertainty.

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c Share Investor 2009

Kathmandu No.1 but IPO should get the Bullet

It pains me to say this but the Kathmandu IPO (initial public offering) Juggernaut seems to have gained a massive head of steam since the media took the bait from the present owners of the company, Goldman Sachs JB Were's Hauraki Equity No 2 Fund and Australia's Quadrant Private Equity, who wish to rid themselves of it.

It reminds me of the frenzy of activity by owners of Burger Fuel Worldwide [BFW.NZ] in 2007 as they tried to push their IPO onto anyone that would listen to them and failed as the surface gloss of the brand vanished when people realised the numbers behind the IPO didn't stack up.

Many trees have died since in the writing of a number of Kathmandu IPO stories.

Here is another one.

The biggest Google search at present to hit the Share Investor Blog is for the term "Kathmandu IPO". Most of the traffic is coming from Australia, then New Zealand and then individuals in the United States.

The company makes and sells great outdoor gear but the health of the company is not good at present - lower sales, profit and very high debt levels. This is certainly not a recipe for long term investment success and is bound to end in tears for those blinded by the publicity machine rolled out by brokers and the usual suspects.

My biggest fear is that the owners media assault will manage to extract good money from those only too willing or ignorant enough to own a part of a recognised brand no matter how dubious the quality of the investment.

If you are interested, please think again and if you really do want to get a piece of the action buy Kathmandu shares on market when they have been given a chance to reach their true value based on fundamentals rather than on glossy IPO documents, and media/management spin.

And hey, lets be careful out there!


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c Share Investor 2009

Baby Sophia Stranded in Bangkok

Parents of surrogate born daughter battle to bring her home - Video

Little Sophia Anne is back home and well. Thank you to all those that supported us, you will always be in our thoughts.

After much stress and strain over the last 4 weeks Sophia is allowed to come home. Thank you to all those who commented, gave moral and practical help. We will be forever in your debt.

These buggers left it to the very last moment this Friday to make a decision which meant I had to rush across Auckland and Komla across Bangkok to put the finishing touches to it.

It was cruel, vile, petty, political, public and had Monty pythonesque moments when I thought we would continue with the same monotonous, dangerous, bureaucratic treadmill forever.

We pay these people to work for us but they work against us instead.

Not even a whisper of the word sorry was uttered.

Our country is truly in a mess when its citizens can be punished in this way.

I have really lost faith in our leaders over this and the other nonsense they are up to.

I haven't been able to write much lately about the usual financial topics because of my travels to Thailand and what I was doing there.

My wife and I are proud parents of a 2 and a half week old girl Sophia. Our first child. She was born using a surrogate.

The only problem is that my wife and child may be stuck in Bangkok because of bureaucracy at New Zealand Immigration and a couple of other government agencies.

What is supposed to be a time of joy has been turned into one of despair, loneliness anxiety and doubt as we have had to cope with dealing with New Zealand Immigration.

Instead of bonding with our girl we have been arguing with the state.

Sophia has a Thai passport and got it in less than 3 days. She is allowed to leave that country but NZ immigration will not give her a Visa to enter New Zealand.

I have done my best considering all the ambiguous, wrong information we have been given and have gone as far as the Immigration Minister, Jonathon Coleman but they have refused her entry.

We have done everything by the book but to no avail, we are stuck in a bureaucratic black hole where no law applies to our case and the minister will not rectify things by either using commonsense and setting a precedent for such cases by letting her in, or changing the law under urgency.

Our last port of call was the media, so if you want to see the detail of our case have a look at the Campbell Live video above, originally screened at 7.00pm Friday 28 to see my interview.

I would be grateful for any support with comments below, it just might help us.

There is something even more practical you can do to help us though. Email or phone your MP and ask them nicely to see sense. Tell your friends as well. You can find your local MP and their contact details here

All our love back at you all,

Darren & Komla