By RNZ

Jewellery company Michael Hill is set to grow its portfolio across the Tasman after agreeing to buy an Australian chain for $45 million.

The NZX-listed company has entered into a binding agreement, subject to certain conditions, to take over the family-owned jewellery and watch retailer Bevilles.

Bevilles has 26 stores across three Australian states and caters to the lower end of the jewellery market.

Michael Hill chair Rob Fyfe said Bevilles was the “perfect complementary brand” for the company to expand.

“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 the Michael Hill team will partner with Bevilles to provide expertise to grow the store portfolio, and unlock synergies,” Fyfe said.

The deal would be funded from existing cash reserves and borrowing.

Michael Hill said there was a “substantial” opportunity to roll-out stores in the short and medium term, with ambitions to have 80 to 100 Bevilles stores by 2028.

It was also eyeing expanding the Bevilles brand to Canada and New Zealand, where Michael Hill currently operates.

The acquisition is expected to be completed in the current quarter, subject to conditions including regulatory approvals, contract and lease transfers, and enough Bevilles employees accepting job offers.

Bevilles was expected to generate $60 million to $65m in sales with underlying earnings of $7.5m - $8.5m in the 2023 financial year.

“Bevilles is a highly profitable business, with clearly defined market positioning and a talented and highly capable team,” Michael Hill chief executive Daniel Bracken said.

In recent years, Michael Hill has positioned itself as a “premium” brand and it said the acquisition of Bevilles complemented that strategy, as it would allow Michael Hill to continue winning over higher end customers, without Bevilles eating into its sales.

“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 said.

Bevilles operates currently in NSW, Victoria and South Australia.