Is Michaels finally turning around?
The Michaels Companies, Inc. says softness in the arts and crafts industry is easing, as the retailer lifted earnings estimates for the year.
The arts and crafts retailer beat fiscal second-quarter earnings expectations, but reported a surprise decline in same-store sales. Net income for the quarter ended Aug. 4 fell to $28.3 million, or 15 cents a share, from $49.5 million, or 19 cents a share, in the same period a year ago. Revenue slipped to $1.05 billion from $1.07 billion. Same-store sales declined 0.4% compared with expectations of flat same-store sales.
“We delivered second quarter results that were in-line with our expectations despite continued softness in the core arts and crafts industry. Our sales trend improved as the quarter progressed, reflecting better merchandise in-stocks and enhanced omnichannel capabilities. In addition, we converted 238 stores to our flexible merchandising area format, launched Michaels Rewards in Canada, and tested a number of different promotional vehicles to learn more about what motivates our customer,” said Chuck Rubin, Chairman and CEO. “Looking to the rest of fiscal 2018, we have raised our full year EPS guidance to reflect the net impact of higher than anticipated headwinds from distribution-related costs, a lower expected effective tax rate, and the impact of our accelerated share repurchase program. We are encouraged by recent sales trends and believe the investments we made in the first half of the year will help us deliver our revenue and earnings expectations for the second half of fiscal 2018.”
For the fiscal third-quarter, the company expects adjusted EPS of 42 cents to 45 cents. For fiscal 2018, the company expects adjusted EPS of $2.29 to $2.42.
Michaels operates more than 1,200 stores in 49 states and Canada under the brands Michaels, Aaron Brothers and Pat Catan’s. Additionally, the company serves customers through Michaels.com, consumercrafts.com and aaronbrothers.com.