Michaels beats Street in Q1; shifts CFO

Specialty arts and crafts retailer The Michaels Companies Inc. exceeded Wall Street expectations for profit and sales in a generally strong first quarter of fiscal 2016.



Michaels reported net income of $70.76 million, a 6% increase from $66.74 million the same quarter a year earlier. Improvements in gross profit helped boost net income.



Net sales also fared well, rising 7% to $1.16 billion from $1.08 billion. The addition of retail and wholesale revenue from Michaels’ $150 million purchase of arts and crafts company Lamrite West in February 2016, along with the opening of 24 net new stores, aided sales growth. Same-store sales rose 0.9%.



In an executive move, CFO and CAO Charles M. Sonsteby has been named to the newly created role of vice chairman. In this role, Sonsteby will assume executive responsibility for the growth and continued integration of Lamrite West, in addition to his current responsibilities. The company has launched a search for a new finance chief and Sonsteby will continue to serve as CFO until a successor has been named.



For the second quarter, Michaels expects approximately three net new store openings and same-store sales growth of 0.4%-1.4%. For the full fiscal year, the retailer anticipates opening 26 net new stores, including three new Pat Catan’s stores. Total net sales, including $225 million-$250 million in revenues from Lamrite West, are expected to grow 8%-9%. Same-store sales are expected to increase 2.2% to 2.7%.



“I am pleased with our overall financial performance for the first quarter,” said Chuck Rubin, chairman and CEO. “From a comparable store sales standpoint, the quarter got off to a strong start. We saw a very positive customer response to our Easter and spring assortment before trends softened in April, resulting in a comp shortfall for the quarter versus our initial expectations.”