School supplies drive sales gains at Michaels

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School supplies drive sales gains at Michaels

By Gina Acosta - 11/30/2017

Sales of school supplies drove growth at Michaels Companies in the third quarter, which posted traffic and comp increases in both the brick-and-mortar and online channels.

In a third quarter conference call with analysts,  Chuck Rubin, Chairman and Chief Executive Officer of Michaels, said that the Halloween and Christmas categories were also strong sellers in the quarter.

For the period ended Oct. 28, total net sales at Michaels increased 1.1%. Same store sales increased 1%, including the negative impact of approximately 80 basis points related to lost sales from hurricanes. Operating income was $153.9 million. And diluted EPS  was 44 cents, including the negative impact of approximately $0.01 related to hurricanes.

"We are pleased we delivered third quarter operating income in-line with our guidance and diluted EPS above our guidance. We are seeing nice momentum in our business, excluding the disruption from the hurricanes, and we are encouraged by the customer's response to the improvements we have made, both in-stores and online, to make it easier for customers to MAKE," said Chuck Rubin, Chairman and Chief Executive Officer. "As we turn to the fourth quarter, we believe our holiday assortment is bigger and better than ever, and our teams are ready to serve customers, both in stores and online. We are pleased with the start to the quarter, although we recognize the heart of the season still lies ahead. We are excited about our plans, and we are confident the investments we've made to create an easier, more integrated omnichannel experience will drive continued momentum and deliver stronger financial results."

Rubin said during the call that "online sales are accelerating and during the third quarter, they were double the online sales during the third quarter of 2016. This was driven by increased traffic and higher conversion rates. We believe e-commerce is an important complement to our brick-and-mortar experience, and we believe our e-commerce penetration will grow to the high single digits as part of our total sales."

During the quarter, the company opened eight new Michaels stores and one new Pat Catan's store. The company also closed one Michaels store and three Aaron Brothers stores during the quarter. In the third quarter of fiscal 2016, the company opened 14 new Michaels stores and closed two Michaels stores.

At the end of the third quarter, the Company operated 1,237 Michaels stores, 98 Aaron Brothers stores, and 36 Pat Catan's stores.

For fiscal 2017, a 53-week year, the company expects:

  • total net sales growth of 2.9% to 3.2%, or 2.7% to 3% on a constant currency basis
  • same store sales to increase 0.6% to 0.9%, or 0.4% to 0.7% 
  • to open 18 new stores, including 17 new Michaels stores and one new Pat Catan's store; relocate 12 Michaels stores; and close 17 stores, including 15 Aaron Brothers stores and two Michaels stores

 

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