Michaels Q2 revenue miss, but raises full-year outlook
Despite reporting declining second-quarter earnings and sales, The Michaels Companies’ gave an upbeat outlook for its full-year earnings as it expressed confidence that sales trends in its core categories were improving.
The arts and crafts retailer’s net income fell to $27.5 million, or 15 cents per share for the quarter ended Aug. 4, down from $35.6 million, or 19 cents per diluted share, in the year-ago period. This came in just above analysts’ estimates of 13 cents.
Revenue fell slightly to $1.05 billion from $1.07 billion. This just missed estimates of $1.06 billion.
Same-store sales slipped 0.4%, however, this was partially offset by sales from 21 additional Michaels stores during the quarter and an increase in wholesale revenue. This missed forecasts of flat same-store sales.
The company said it expects third-quarter comparable store sales will increase between 1.5% and 3.0%; and adjusted operating income will be in the range of $131 million and $138 million. It also expects adjusted diluted EPS will be between $0.42 and $0.45.
“We delivered second quarter results that were in-line with our expectations despite continued softness in the core arts and crafts industry,” said Chuck Rubin, Chairman and CEO.
“Our sales trend improved as the quarter progressed, reflecting better merchandise in-stocks and enhanced omnichannel capabilities,” he added. “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.”
Looking ahead, the company plans to end fiscal 2018 with an increase of comparable store sales between 0% and 1.5%. Adjusted EPS will be between $2.29 and $2.42.
The company also expects to open 19 new Michaels stores (net of closures) and relocate 21 Michaels stores. All estimates are contingent on Aaron Brothers stores being closed as of the start of the fiscal year, and excludes the restructuring charge, provisional tax adjustments, and any one-time costs associated with debt refinancing, according to the company.
“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,” Rubin said.
Michaels owns and operates more than 1,200 stores in 49 states and Canada under the Michaels, Aaron Brothers and Pat Catan’s banners.
The arts and crafts retailer’s net income fell to $27.5 million, or 15 cents per share for the quarter ended Aug. 4, down from $35.6 million, or 19 cents per diluted share, in the year-ago period. This came in just above analysts’ estimates of 13 cents.
Revenue fell slightly to $1.05 billion from $1.07 billion. This just missed estimates of $1.06 billion.
Same-store sales slipped 0.4%, however, this was partially offset by sales from 21 additional Michaels stores during the quarter and an increase in wholesale revenue. This missed forecasts of flat same-store sales.
The company said it expects third-quarter comparable store sales will increase between 1.5% and 3.0%; and adjusted operating income will be in the range of $131 million and $138 million. It also expects adjusted diluted EPS will be between $0.42 and $0.45.
“We delivered second quarter results that were in-line with our expectations despite continued softness in the core arts and crafts industry,” said Chuck Rubin, Chairman and CEO.
“Our sales trend improved as the quarter progressed, reflecting better merchandise in-stocks and enhanced omnichannel capabilities,” he added. “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.”
Looking ahead, the company plans to end fiscal 2018 with an increase of comparable store sales between 0% and 1.5%. Adjusted EPS will be between $2.29 and $2.42.
The company also expects to open 19 new Michaels stores (net of closures) and relocate 21 Michaels stores. All estimates are contingent on Aaron Brothers stores being closed as of the start of the fiscal year, and excludes the restructuring charge, provisional tax adjustments, and any one-time costs associated with debt refinancing, according to the company.
“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,” Rubin said.
Michaels owns and operates more than 1,200 stores in 49 states and Canada under the Michaels, Aaron Brothers and Pat Catan’s banners.