Michaels closing 94 Aaron Bros. stores
Michaels Companies plans to shut down its 94 Aaron Brothers stores as the retailer reported lagging sales growth for the fourth quarter.
The largest arts and crafts retailer in the U.S. plans to make its Aaron Brothers banner a store-within-a-store and to provide custom framing in all Michaels stores.
The company said it will also rebrand Framerspointe.com, a company-owned online custom framing website, as AaronBrothers.com.
For the fourth quarter ended Feb. 3, Michaels reported a fourth-quarter profit of $202.9 million, or $1.11 a share, up from $197.4 million, or 95 cents a share, a year ago. Total fourth-quarter sales increased 8% to $1.89 billion from $1.75 billion. Same-store sales, or sales excluding new and closed stores in the past 12 months, increased 2.5%.
“Today, we reported record fourth quarter results driven by a strong holiday performance. Customers responded well to our efforts to make it easier to celebrate the season with an expanded offering of new and exclusive product, more compelling presentations, and strong value statements,” said Chuck Rubin, Chairman and CEO. “In fiscal 2017, we made meaningful progress against each of our strategic priorities, including: delivering a more seamless omnichannel shopping experience; offering trend-right assortments that deliver great customer value; and increasing customer engagement. As I look back at our financial performance for the full year, I am pleased that we delivered sales and earnings growth in-line with the guidance we provided at the beginning of the year and that we continued to generate strong, consistent cash flow.”
In fiscal 2017, Aaron Brothers net sales totaled approximately $110 million and had no material impact on the company’s operating income. The company expects the after-tax cost of implementing these changes will be in the range of $37 million to $42 million. The company anticipates the vast majority of the cost will be recognized in the first quarter of fiscal 2018.
“Building on the progress we made in fiscal 2017, in fiscal 2018 we will reinvest some of the benefits of tax reform to accelerate planned investments to drive future sales and earnings growth. We will invest to build a foundation to bring ecommerce fulfillment in-house; offer a more seamless omnichannel experience for customers; convert approximately 235 stores to our FMA format to create a more consistent, relevant layout; and strengthen our data analytic capabilities,” said Rubin. “While this acceleration will result in temporarily elevated levels of operating expense in fiscal 2018, I am confident these investments will position us to increase our market share and expand our leadership in the arts and crafts channel.”
The company’s guidance for fiscal 2018 assumes Aaron Brothers stores were closed as of the start of the fiscal year and excludes any restructuring charges.
For fiscal 2018, a 52-week year, the company expects:
- net sales will be between $5,217 million and $5,293 million
- comparable store sales to increase between 0% and 1.5%
- to open 19 new Michaels stores and relocate 17 Michaels stores
The company owns and operates 1,371 stores in 49 states and Canada under the brands Michaels, Aaron Brothers and Pat Catan’s.