Michaels' profit jumps despite exchange rates, weather

The Michaels Companies overcame weak same store sales growth to deliver strong profit growth in the first quarter.

The Texas-based retailer reported that for the first quarter ended May 2 its net income increased to $67 million or 32 cents per share from $47 million or 25 cents per share in the prior-year quarter. Net sales for the quarter grew 2.4% to $1.08 billion from $1.05 billion in the same quarter last year. Same store sales increased by 0.3%.

Chuck Rubin, chairman and CEO, said: "We delivered another solid quarter, despite several headwinds such as foreign exchange rates, unfavorable weather early in the quarter and the previous year's Rainbow Loom sales. Our teams remained focused on execution and maintaining expense discipline resulting in overall financial performance that was within the range of our expectations."

Looking ahead to the second quarter, the company expects same store sales to be up 1% to 2%. For fiscal 2015, the company continues to expect earnings in the range $1.65 to $1.71 per share, on projected total net sales growth of 3.2 to 3.7% or 4.4 to 4.9% on a constant currency basis and a same store sales increase of 1.5 to 2%.

Rubin added: “As we move into the seasonally low-volume second quarter, we remain dedicated to consistent execution of our strategic plan. Our customers are responding well to our focus on improving the store environment, having trend right merchandise and use of a variety of marketing approaches. This gives us confidence in our outlook for the remainder of the year and we are reiterating our fiscal 2015 guidance."

The company opened 10 new Michaels stores and closed one Michaels store and two Aaron Brothers stores during the first quarter of fiscal 2015, compared with opening eight Michaels stores and three Aaron Brothers closures in the first quarter of 2014. At the end of the first quarter, the company operated 1,177 Michaels stores and 118 Aaron Brothers stores.