When Michaels Companies Inc. (NASDAQ: MIK) released its most recent quarterly results before the markets opened on Thursday, the arts and crafts chain said that it had $0.40 in earnings per share (EPS) and $1.22 billion in revenue. That compared with consensus estimates of $0.49 in EPS and $1.26 billion in revenue, and the fiscal third quarter of last year reportedly had $0.48 in EPS and $1.27 billion in revenue.
During the latest quarter, net sales decreased 3.9% year over year, primarily due to a 2.2% decrease in comparable store sales, the closure of Pat Catan’s stores during the fourth quarter of 2018 and a decrease in wholesale revenue. The decrease was partially offset from sales related to 18 additional Michaels stores (net of closures) since the end of the quarter.
Also in this time, the company opened 13 new Michaels stores (11 of which were former Pat Catan’s stores converted to the Michaels brand), closed one Michaels store and relocated five Michaels stores. At the end of the third quarter, the company operated 1,274 Michaels stores.
Looking ahead to the fiscal fourth quarter, the company expects to see EPS in the range of $1.21 to $1.27 with comparable sales down 2% to 3%. Consensus estimates call for $1.42 in EPS and $1.79 billion in revenue for the quarter.
CEO Mark Cosby commented:
Our third quarter results did not meet our expectations and were impacted by specific factors which we are addressing. As we implement the initiatives that support our ‘Maker’ strategy, we believe we will improve the trajectory of our business over time. Our strong balance sheet and substantial free cash flow generation provide a solid foundation from which we can reposition Michaels to drive long-term shareholder value.
Shares of Michaels traded down about 11% to $6.45 on Thursday, in a 52-week range of $4.96 to $17.27. The consensus price target is $9.05.
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