Michaels reported fairly solid fourth quarter and fiscal year sales results, while profits were down amid charges related to store closings.
Net sales were $1.78 billion, compared to $1.89 billion in the fourth quarter of fiscal 2017. The decrease in net sales in the fourth quarter of fiscal 2018 was primarily due to the extra week in the fourth quarter of fiscal 2017, the closure of all 94 full-size Aaron Brothers stores in the first quarter of fiscal 2018, and a 0.4% decline in comparable store sales. The sales decrease was partially offset by sales from the operation of 20 additional Michaels stores during the quarter. During the quarter, the company also closed 36 Pat Catan’s stores.
Net income was $181.4 million, compared to $203 million in the fourth quarter of fiscal 2017. Excluding the restructure charges net of taxes in the fourth quarter of fiscal 2018 and tax adjustments related to the Tax Act in the fourth quarter of fiscal 2017, adjusted net income was $227.1 million, compared to adjusted net income of $217.5 million in the fourth quarter of fiscal 2017. Diluted earnings per share for the fourth quarter of fiscal 2018 was $1.15, an increase of 3.6% compared to $1.11 per diluted share in the fourth quarter of fiscal 2017.
In fiscal 2018, net sales were $5.27 billion, compared to $5.36 billion in fiscal 2017. The decrease in net sales was partially offset by the operation of 20 additional Michaels stores during the year and a 0.8% increase in comparable store sales.
Net income in the fiscal year was $319.5 million, compared to $390.5 million in fiscal 2017. Adjusted net income for fiscal 2018 was $404.2 million, compared to adjusted net income of $405.1 million in fiscal 2017. Earnings per diluted share was $1.86, compared to $2.10 per share in fiscal 2017.
“As expected, we saw nice momentum in the quarter resulting from investments we made earlier in the year, including enhancements made to Michaels.com and the Michaels app; the launch of buy online, pick up in store in all U.S. stores; a new promotional tool to help us manage discounts more effectively; and the conversion of 238 additional stores to our flexible merchandising area format. On a calendar shifted basis, comparable store sales increased 1.4%, our best performance of the year, and adjusted operating profit, adjusted net income and adjusted diluted earnings per share were all within the guidance range we provided for the quarter,” said Denise Paulonis, evp/CFO, Michaels.