The Michaels Companies is closing all of its Pat Catan’s stores in the fourth quarter of fiscal 2018. Pat Catan’s is a 36-store retail supplier of arts and crafts in Ohio and surrounding states.
The company intends to rebrand up to 12 of the closed Pat Catan’s stores and reopen them under the Michaels banner.
“We continue to make progress against our long-term strategy to increase market share and expand our leadership position within the arts and crafts industry. In support of this strategy, in 2016 we acquired Lamrite West, a privately-held company in Ohio with a wholesale division, a small sourcing office in China and a small retail chain called Pat Catan’s Arts & Crafts Stores, which was operated as outlets for the wholesale business,” said Chuck Rubin, chairman and CEO of The Michaels Companies. “Over the last three years, we have delivered value through the significant expansion of our China-based sourcing team and the growth of our wholesale business. However, the Pat Catan’s retail business has struggled in the face of industry headwinds.”
“After a comprehensive review, we have decided to close all of the Pat Catan’s retail stores. We expect to rebrand and reopen up to 12 stores as new Michaels stores in fiscal 2019, and we will continue to maintain a support center and distribution center in Strongsville, Ohio to support our growing wholesale business. We believe these changes will provide more value for customers and shareholders by enabling us to leverage a more consistent merchandise assortment and eliminate duplicative retail operating expenses,” added Rubin.
Pat Catan’s fiscal 2018 net sales are projected to be approximately $111 million with no material impact on the consolidated company’s adjusted operating income, excluding the impact of any restructuring charges related to the Pat Catan’s store closures. The company expects the one-time after-tax cost of implementing these changes will be in the range of $44 million to $48 million, consisting primarily of costs associated with the termination of the remaining lease obligations, the write-off of fixed assets, costs associated with liquidation, and employee-related expenses. The company anticipates the majority of the costs will be recognized in the fourth quarter of fiscal 2018.