New Zealand Retailer Buys 17 Whitehall Stores

New Zealand specialty jeweler Michael Hill International on Friday announced plans to buy 17 Whitehall jewelry stores in Illinois and Missouri, marking the jeweler’s first foray into the U.S. market. Whitehall filed for Chapter 11 bankruptcy in June.

The retailer noted that it considers all of the Whitehall stores “prime locations that will provide a sound launching pad to the large U.S. market.” Most of the stores are clustered in and around Chicago, with two stores in St. Louis, Missouri.

“This grouping of stores fits with our historical pattern of building a concentration of stores in new markets to leverage efficiencies in logistics, marketing and management supervision,” the company said in a statement.

Michael Hill International added that this acquisition will test its retail model in the competitive U.S. market, albeit in the midst of a challenging economy.

The stores, the company said, are not expected to achieve profitability for several years; its short to medium term focus will be on honing its retail formula for future growth from this base, the statement read.

Michael Hill will pay approximately $5 million (NZ$7.0 million), in cash upon settlement, which is expected to take place by September 9.

This price “is attributed primarily to the inventory and will be set at an amount equal to 80 cents on the dollar on the cost price of the inventory held at the 17 locations on the settlement date,” the statement read.

Michael Hill will take possession of the stores as soon as possible following the satisfaction of all relevant conditions, subject to the approval of the U.S. Bankruptcy Court.