Michaels Advances In Third Quarter

Despite the impact of this year’s hurricanes, Michaels Companies reported net sales and income growth in the third quarter as it prepared for the holiday season.

Net sales increased 1.1% to $1.24 billion in the third quarter ended October 28, from $1.23 billion in the third quarter of fiscal 2016, inclusive of an estimated $10 million in lost sales related to Hurricanes Harvey and Irma. The increase in net sales was primarily a result of a 1% increase in comparable store sales and sales from the operation of 16 new Michaels stores, net of closures, in fiscal 2017. The increase was partially offset by lower wholesale revenues.

Net income increased 4.3% to $79.8 million, compared to $76.5 million in the third quarter of fiscal 2016. Excluding net non-recurring, inventory-related purchase accounting adjustments, integration expenses associated with the acquisition of Lamrite West, and losses on early extinguishment of debt and refinancing costs, less related tax adjustments, adjusted net income for the third quarter of fiscal 2016 was $82.1 million.

Diluted earnings per share increased 18.9% to $0.44, from $0.37 in the third quarter of fiscal 2016. Adjusted diluted earnings per share in the third quarter of fiscal 2016 was $0.40.

“We are pleased we delivered third quarter operating income in line with our guidance and diluted EPS above our guidance. We are seeing nice momentum in our business, excluding the disruption from the hurricanes, and we are encouraged by the customer’s response to the improvements we have made, both in-stores and online, to make it easier for customers,” said Chuck Rubin, chairman and CEO, Michaels. “As we turn to the fourth quarter, we believe our holiday assortment is bigger and better than ever, and our teams are ready to serve customers, both in stores and online. We are pleased with the start to the quarter, although we recognize the heart of the season still lies ahead. We are excited about our plans, and we are confident the investments we’ve made to create an easier, more integrated omnichannel experience will drive continued momentum and deliver stronger financial results.”