Michaels’ maker-oriented marketing strategy combined with the homebound consumer lifestyle seems to be paying off with strong third quarter results.
Net sales in the third quarter ended October 31 came in at $1.4 billion versus $1.2 billion in the previous third quarter. Michaels delivered a 16.3% increase in third quarter comparable store sales, driven by strong demand in both stores and e-commerce. Third quarter e-commerce growth of more than 128% year over year was driven by enhanced and expanded omnichannel capabilities including curbside pick-up, same day delivery, ship from store, buy online, pick-up in store, or BOPIS, in-app purchases and more.
Net income in the third quarter was $111 million and $0.74 diluted earnings per share compared with net income of $28.7 million and $0.19 diluted earnings per share in the previous third quarter.
The company also said that during the fourth quarter it will pay approximately $10 million in one-time holiday bonuses to both full-time and part-time team members as a thank you for their work this year during unprecedented times.
Ashley Buchanan, Michaels CEO, said, “Michaels delivered strong third quarter results highlighted by comparable store sales growth of 16.3%, which was driven by robust consumer demand, improved retail execution and continued progress against our strategic initiatives. Our expanded omnichannel capabilities, Maker-centric branding, and increasingly personalized marketing resonated well with customers. We also benefited from progress we made on our ongoing efforts around strategic inventory management, streamlined store operations and a disciplined approach to pricing and promotions. Importantly, we strengthened our balance sheet by paying down $150 million in debt and increased our financial flexibility by refinancing and significantly extending the maturity of our term loan.”
Buchanan added, “Our Maker strategy underpins the work we are doing to innovate and elevate the customer experience as we transform Michaels into a leading omnichannel specialty retailer. We have strengthened our core business and put Michaels in a much stronger position today— operationally, financially, and strategically— than at the start of this year and I would like to extend my gratitude to every single Michaels team member whose hard work has enabled these results. While the operating environment continues to evolve, we look forward to building on our progress as we continue to drive toward sustainable growth over the long term.”