Jeweller - July, Edition I 2020

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STATE OF THE INDUSTRY | Chains through the decade IN SUMM A RY History across Australia. Prouds increased its presence by an impressive 44 stores since 2010 (from 217 to 261), yet 43 Goldmark stores were closed (falling from 119 to 76) during the same period while 11 Angus & Coote stores got the chop. Myles Norman, general manager JPL, confirmed that some of the Angus & Coote and Goldmark ‘closures’ were stores that were converted to, and re-branded as, Prouds. Decline of Zamels However, the story is not as positive when it comes to The Jewellery Group, which owns Zamels and Mazzuchelli’s. In 2010 Zamels was Australia’s third-largest jewellery chain with 100 retail stores; however, by June 2020, a whopping 63 Zamels stores had closed. During the same period The Jewellery Group also closed two single store ‘brands’, Vivien’s and Budgens. In 2003 we asked: are there too many jewellery stores in the major shopping centre? After extensive research we found: 71 The number of major shopping centres in capital cities On a brighter note, Mazzucchelli’s had increased from 25 stores in 2010 to 30 in 2020, most of which are new locations, with one Zamels store (Chadstone, in Melbourne) being converted to Mazzucchelli’s. As a result, The Jewellery Group is now less than half the size it was in 2010, operating 60 stores, down from 127 (see chart 3). Many of the problems facing Zamels can be traced to the 2007 sale of the 53-year-old family business to Quadrant Private Equity. At the time, speculation valued the deal at between $75 million and $100 million. CHART 3: THE JEWELLERY GROUP 150 Zamels TABLE 4: FINE & FASHION CHAINS BY OWNERSHIP Chain Owner/Group Stores Prouds 261 Angus & Coote James Pascoe 122 Group Total 459 12,561 The number of specialty stores in the 71 centres Stores 100 50 0 2003 2007 2010 2017 2020 Goldmark 76 Michael Hill Michael Hill 156 156 Lovisa BB Retail Capital 140 140 Pandora Pandora 125 125 Colette* Colette 99 99 Zamels The Jewellery Group 37 67 Mazzucchelli's 30 667 The number of jewellery and watch stores Stores 30 20 10 Mazzuchelli's Wallace Bishop 38 Wallace Bishop Hardy Brothers 5 Shiels 36 Transworld Enterprises Graham's 6 Bevilles Bevilles 24 24 Salera’s Salera’s 20 20 Hoskings Hoskings 16 16 Gregory Gregory 15 15 Silver Shop Silver Shop 7 7 Regency Regency 6 6 Anthonys Anthonys 5 5 43 42 TOTAL 1224 1224 The above chart shows the updated chain store count as at June 2020. Note that a ‘chain’ is defined as 5 or more stores. *Colette is under administration. 5.3% Jewellery stores as a percentage of all stores 16% The percentage of overall retail sales at shopping centres 0 2007 2010 2020 With a total of 67 stores, The Jewellery Group is half the size it was in 2010. However, when the takeover was completed, industry sources suggested the final sale was closer to $48 million – a figure that many believed was still excessive. Five years later, that assessment was seemingly proved correct when Quadrant sold The Jewellery Group to one of the world’s largest jewellery manufacturers: Mumbai-based M Suresh Group DMCC. In November 2017, Jeweller reported: “In a stunning depreciation, Quadrant is tipped to be offloading the group for less than $20 million – a loss of around $30 million in just over four years.” At the time of the second sale, industry pundits questioned the logic of an Indian jewellery manufacturer operating CONTINUED ON PAGE 38 36 | July 2020
300 200 Chains through the decade | STATE OF THE INDUSTRY 100 ZOOMING OUT A HISTORY LESSON: TWISTS & TURNS 0 CHART 4.1: 300 Pascoes Group Chart 2003 2007 2010 2020 Angus & Coote Goldmark Prouds While the New Zealand based James Pascoe Ltd (JPL) represents the largest retail footprint across Australia – controlling Prouds, Angus & Coote and Goldmark chains – that wasn’t always the case. As previously noted, the 2010 State of the Industry Report (SOIR) listed JPL with a combined total of 469 stores across its three chains, falling to 459 this year. The accompanying chart shows the growth of the three chains since 2003, but it should be recognised that JPL acquired Angus & Coote (A&C) and Goldmark in 2007 in a $76 million deal. The acquisition included three other jewellery chains which were part of A&C and which no longer operate. A&C was established in 1895 and was listed on the Australian Stock Exchange (ASX) in 1952. At the time of the JPL takeover – which required approval from the Australian Competition and Consumer Commission (ACCC) – A&C operated the Edments, Dunklings and Amies chain, as well as Goldmark. At the time of Jeweller’s first chain store research and analysis in 2003, A&C operated 254 stores (Goldmark 114, Amies 34, Dunklings 26, Edments 25, A&C 55) and according to research firm IBISworld, the company had 12 per cent of the jewellery and watch store business. The deal was controversial not only because it required ACCC approval, but also because it was a ‘reverse takeover’ – named for when a smaller company attempts to acquire a larger company. JPL announced the takeover move in January 2007 when it had around 174 Prouds stores in Australia and when the ASX-listed A&C accounted for around 246 stores. In addition, Prouds was only the third-largest group at the time of the reverse takeover; Kleins, a fashion jewellery franchise, was the second-largest chain/group, with 182 stores. In another interesting twist, reminiscent of recent history, in May 2008 Kleins was placed into receivership after collapsing with $20 million in debt. Two months later the company was liquidated after administrator James Stewart, of Ferrier Hodgson, said he was being forced to close the business. “Despite 46 expressions of interest and eight indicative offers being received, once parties proceeded to due diligence it was clear that no-one was confident about returning the business to profitability, considering the risks and financial commitment required,” Stewart said. In November 2008 Prouds went on to re-brand Amies in Queensland, Dunklings in Victoria and Edments in South Australia and Western Australia as Angus & Coote stores, which helps explain the increase from 41 stores in 2007 to 133 in 2010, and finally 122 this year. And in one final twist, of the 1,224 chain stores across Australia in 2020, 50 per cent are owned and ‘controlled’ by the Kiwis: James Pascoe Ltd and Michael Hill International. 200 100 0 Pascoes Group Chart CHART 4.2: Angus & Coote Goldmark ABOVE JAMES Prouds PASCOE LIMITED STORES BY BRAND 500 The above chart shows the growth of the three James Pascoe Ltd (JPL) chains stores over the past 17 years. It should be 400 noted that Angus & Coote and Goldmark were not part of JPL in 2003; they were acquired in 2007 in a reverse takeover 300 deal of Angus & Coote. 200 100 0 2003 2007 2010 2020 ‘03 ‘07 ‘10 ‘20 Total Stores LEFT JPL TOTAL STORES The combined total of stores for the three James Pascoe Ltd chains since 2003. 2003 CHART 4.3: 2007 2010 2020 Australian chains with New Zealand ownership (By Brand) 10% Chain by Brand Stores ANGUS & COOTE 122 STORES Angus & Coote (JPL) 122 Goldmark (JPL) 76 Prouds (JPL) 261 Michael Hill (MHI) 156 Other 609 TOTAL 1224 OTHER 50% 609 STORES NZ-OWNED in % 50% Australian chains with New Zealand ownership (By MICHAEL Group) HILL 13% 156 STORES Chain by Group Stores James Pascoe (JPL) 459 Michael Hill (MHI) 156 Other 609 TOTAL 1224 NZ-OWNED in % 50% OTHER 50% 609 STORES JPL 38% 459 STORES MHI 13% 156 STORES PROUDS 21% 261 STORES GOLDMARK 6% 76 STORES ABOVE The pie charts show the number of New Zealand owned/controlled jewellery chains trading in Australia by brand name and by group owned. They account for 50 per cent of stores. July 2020 | 37
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