Michael Hill: Determined to build an empire

Dominion Post

"That to me has probably been the biggest thrill of all, seeing ordinary people - not even with degrees most of them, I don't have a degree - to have risen to such heights in retail is just truly quite amazing."

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MICHAEL HILL doesn't do gloom. On the day the National Bank reported the biggest one-month fall in business confidence since its survey began, the jewellery retailer was sticking firmly to positive thoughts.

"I personally feel we'll have a very good Christmas ourselves, just because of where jewellery sits in the market," he said on Thursday. "Certainly we're not cutting back on advertising at all."

Looking on the bright side has become a Hill habit. Named Ernst & Young entrepreneur of the year 10 days ago, the 69-year-old multimillionaire did not get where he is today by being pessimistic.

"I'm a great believer that whatever you focus on, you can usually bring to pass. So if you focus on gloom, gloom's going to come your way. If you focus on positives, positives will come your way. Attitude plays a huge part."

Attitudes are also partly the motivation for finally entering the awards scheme after three decades building his eponymous jewellery empire.

"There's always a tall poppy syndrome in New Zealand," he said, "and one always feels embarrassed to have a go at something like that because you get classed as an egotist or whatever.

"There's a lot of people who could win that award who are far better than me - you could probably list dozens and dozens of them - but they won't stand up because they're embarrassed to do so. I think we've just got to get on with it in this country and get a few things moving, and that's probably the reason I'm talking to you.

"These times are a wake-up call for everybody and we need to soul search and work out what we need to do as a nation to move forward."

Hill shies away from making a blunt political statement, but it's hard to mistake the implication in his comments.

"I wouldn't really know who's going to win [the election]," he said, "but I do feel that if we're going to keep on the same formula we're on now, I think we're in for serious trouble."

Not a Labour man, then.

Still, regardless of who wins, it seems elections are bad for business. Hill can't wait for the election to be over - America's election particularly.

In September the company completed the $7.5 million purchase of 17 stores, mostly around Chicago, from bankrupt jewellery chain Whitehall, marking its first foray into the United States. It's a bold move when the US economy is spiralling into recession, but Hill has made his fortune on taking calculated risks.

His stock exchange statement announcing the purchase said the deal was a chance for the company "to test its retail model in the highly competitive US market, albeit at a time when the economy is challenging".

The size of the challenge is evident in latest sales figures. Same store sales in Canada, where the company opened for business five years ago, went backwards by 11% in the last quarter.

Of the global empire, only Australia produced same store sales growth, a modest 2%.

After a fine result in the year to June when profits rose 20% to $25m, the new numbers suggest this year will be a tough one.

For Hill, hard times go with the territory. "If one is not pressing the boundaries and pushing hard we're not actually learning anything, so therefore the company never becomes very strong. It's like a quick-growing tree and then the hurricane comes and that's the first one to blow over, whereas the strong hardwood tree or the oak, which takes years to grow, will withstand those strong winds.

"It's the same in our business. We were told we shouldn't go to Australia. Well, we had some hard knocks when we went to Australia but it was very good for the company.

"And we went to Canada and we found other things that made a difference to the company there, and then of course the same thing now we're in the States.

"By taking those moves we become a much stronger company and the model, which we've pushed out 250 times now, each time becomes a little bit better, a little bit more robust, a little bit more hurricane-proof."

Having a stress-tested business model, he said, should make shareholders feel pretty good. That the share price doesn't reflect the feel-good factor is a source of irritation.

"I've given up even looking at my own share price because it doesn't make any sense to real life at all. I mean if I looked at it I'd think there was something gravely wrong with the company, which there isn't. I mean it's bloody stupid."

Shares in Michael Hill International are trading around 70c, about 25% down on their recent high in August.

Unlike many who trade his shares, Hill remembers clearly the last time the market fell out of bed in 1987.

"I was in the IBM building in Edward St in Brisbane, and I was there with my present CEO [Mike Parsell] and my accountant and a few others, and we said `oh, there's a sharemarket crash'. That was all we discussed about it. We just carried on doing what we were doing and strategising and planning, and it really didn't affect us too badly at all."

Perhaps the lack of fuss over dramatic events stems from the genesis of his company, the result, as he tells it, of his just-built dream home in Whangarei burning down.

"That was the catalyst, strangely enough. It was the thing that made me want to pursue buying my uncle out, which he didn't want to do as it turned out, and gave me the energy to find a backer to start my business.

"From then on I've been driven by goals."

The new goal is to have 1000 stores and become a global brand. That's about a five-fold increase on the company's current total of 227 stores.

Having those big dreams, and inspiring people to achieve them, is what drives Hill.

"That to me has probably been the biggest thrill of all, seeing ordinary people - not even with degrees most of them, I don't have a degree - to have risen to such heights in retail is just truly quite amazing. And I've changed so many lives for the better.

"That drives you, that gives you the vigour to carry on."

Typically, having secured the Entrepreneur of the Year gong in New Zealand, Hill is aiming for the world title, decided at a shindig in Monte Carlo next May.

"I'm delighted and honoured to have achieved the target of entrepreneur [of the year] because the wonderful reason is I'm going to be going to Monte Carlo in May and I've got a one in 50 chance of pulling off the big award.

"You see, if you're an entrepreneur you're always taking calculated risks, and you're always gunning for something and you always want to win, and I guess it's in my nature.

"And the contacts made over there are just unbelievable. It'll just be so good for business and for networking that I can't wait."

- © Fairfax NZ News