Michaels reported a soft second quarter, with net income and net sales down as well as a slip in comps.
For the second quarter ended August 4, Michaels posted net income of $27.5 million, or 15 cents per diluted share, versus $35.6 million, or 19 cents per diluted share, in the year-earlier period. With one-time charges excluded, adjusted net income for the quarter was $26.4 million, or 15 cents per diluted share, versus $35.6 million, or 19 cents per diluted share, in the quarter a year prior. Michaels topped a 13 cents per adjusted diluted share consensus analyst estimate published by MarketBeat.
Comparable store sales slipped 0.4% year over year, or 0.5% on a constant currency basis. Net sales were $1.05 billion versus $1.07 billion in the fiscal 2017 quarter.
“We delivered second quarter results that were in-line with our expectations despite continued softness in the core arts and crafts industry,” said Chuck Rubin, chairman and CEO, Michaels. “Our sales trend improved as the quarter progressed, reflecting better merchandise in-stocks and enhanced omnichannel capabilities. In addition, we converted 238 stores to our flexible merchandising area format, launched Michaels Rewards in Canada, and tested a number of different promotional vehicles to learn more about what motivates our customer. Looking to the rest of fiscal 2018, we have raised our full year EPS guidance to reflect the net impact of higher than anticipated headwinds from distribution-related costs, a lower expected effective tax rate, and the impact of our accelerated share repurchase program. We are encouraged by recent sales trends and believe the investments we made in the first half of the year will help us deliver our revenue and earnings expectations for the second half of fiscal 2018.”