Jewellery retailer Michael Hill posted a drop in first quarter sales as it restructures its business and tries to shift away from discount pricing.

The jewellery chain posted an 8.8 per cent decline in sales from continuing operations to $112.12 million in the three months ending September 30, from $122.9 million in the previous corresponding period. The retailer’s same-store sales fell 11 per cent.

Michael Hill has restructured its business this year, exiting the US and closing its Emma & Roe sub-brand, stating that it wants to focus on being an omnichannel brand. Four Emma & Roe stores were closed, with two remaining as the retailer winds up the unit.

Phil Taylor, who stepped down from his position as company chief executive, said Michael Hill is moving in the right direction but more spending on marketing and advertising should have accompanied the shift away from discounting.

Taylor said the transition may have been more challenging than expected but the company remains committed to its strategy.

He was confident that the strategy will drive stronger performance in the December quarter.

“We are confident that our strategy to improve gross margin as we reduce the level of discounting and price based events, is the right strategy and will ultimately result in a brand and product that are more valued by our customers,” Taylor said.

“While the transition is proving more challenging than expected we remain committed to the strategy and have taken many learnings from the first quarter which we are confident will drive performance in the critical December quarter.”

Taylor will be staying on for six months to help smooth the transition. Daniel Bracken, former head of Specialty Fashion Group, will be filling his role.

The jewellery chain opened three stores and closed three others for the quarter, leaving the total unchanged at 306 as of September 30.

Michael Hill has 169 stores in Australia and plans to open another two before the holidays. Michael Hill has 53 stores in New Zealand and 84 in Canada.