Michaels looks to extend leadership in craft world
Roughly two months removed from an initial public stock offering, Michaels CEO Chuck Rubin said the company is on track to implement a multi-year strategic plan following the release of second quarter results that showed broad based sales strength and healthy margins.
Michaels returned to public ownership on July 2 when it sold 27.8 million shares at $17 to generate net proceeds of $446 million. The company, already the nation’s largest arts and crafts retailer with 1,264 stores, contends it is uniquely positioned to extend its lead in a fragmented market. Investors didn’t see it quite the same way initially with shares declining after they hit the market. However, the release of better than expected second quarter results may cause some to rethink their position.
"We are very pleased to build on our solid start to fiscal 2014 with another quarter of strong performance. Broad-based sales strength was accompanied by healthy margins and our characteristic expense discipline, even as we invested in our strategic initiatives,” Rubin said. "We are in the implementation phase of our multi-year strategic plan which is designed to not only improve the experience of our core enthusiast shopper but also to attract the under-served novice customer to Michaels, enabling us to further extend our leadership position within the fragmented arts and crafts industry.”
Sales increased 4.9% to $948 million and same store sales increased 3.2%, or 3.6% on a constant currency basis. Net income, excluding IPO related costs, increased to $30 million, or 15 cents, from $21 million, or 10 cents.
"We enter the back half of 2014 confident in our business, our outlook and our initiatives,” Rubin said. “While we will be lapping the huge success of Rainbow Loom, the Michaels' team is enthusiastic, energized and aligned on our priorities to serving our customers and maximizing our sales and margin performance."
Michaels expects to open 21 new stores during the second half of the year