IRVING, Texas, May 4 /PRNewswire-FirstCall/ -- Michaels Stores, Inc.
(NYSE: MIK) reported today that total sales for the first quarter were
$832.5 million, a 1.4% increase over last year's $821.0 million. Same-store
sales for the quarter decreased (3.0%) on a 1.6% increase in average
ticket, a (5.0%) decrease in transactions, and a 0.4% increase in custom
frame deliveries. A favorable Canadian currency translation added
approximately 0.4% to the average ticket increase for the quarter.
The Company reported that same-store sales results for the quarter were
affected by weakness in the yarn category, an increase in business
disruption relative to last year due to earlier merchandising resets, and
an overall reduction in store level inventory, particularly in discontinued
and clearance products.
Same-store sales of yarn in the first quarter declined approximately
38% versus the prior year period, which reduced overall Michaels Stores,
Inc. same-store sales in the quarter by approximately 2%. The Company has
also been impacted by additional business disruption as it has reset 15
merchandise categories during the first quarter of fiscal 2006 compared to
no merchandise resets in the first quarter of fiscal 2005. In addition,
throughout the quarter, overall average inventory available for sale per
Michaels store, excluding distribution centers, was approximately 5% lower
than the first quarter of fiscal 2005, with discontinued and clearance
inventory levels approximately 15% lower per store.
For the first quarter, the Southeast, Southwest, and Pacific zones
delivered the strongest relative same-store sales performances. The
Company's strongest domestic departmental performances came in General
Crafts, primarily due to Jewelry and Beads, Custom Floral, Apparel Crafts,
and Kids Crafts categories.
The Company continues to expect fiscal 2006 first quarter diluted
earnings per share to range from $0.38 to $0.40, inclusive of a number of
incremental items for 2006. The Company's first quarter results are
expected to include pre-tax expenses totaling approximately $1.7 million
for the former CEO's retirement payments and approximately $2.9 million on
a pre-tax basis of additional costs related to the Company's review of
strategic alternatives. The financial impact of the additional expenses and
lower than anticipated sales is expected to be fully offset by the better
than projected expansion of gross margin during the quarter. The Company
expects same-store sales growth in the second quarter of fiscal 2006 to
range from flat to an increase of 2% over the same period last year.
Incremental costs for the second quarter related to the Company's review of
strategic alternatives are estimated at approximately $4.5 million. As a
result, the Company currently forecasts second quarter diluted earnings per
share to range from $0.19 to $0.21, representing an increase of 58% to 75%
over the prior year period. Note that fiscal 2005 second quarter results
include a charge of $0.05 per diluted share related to the Company's early
redemption of its 91/4% Senior Notes in July 2005.
The Company also announced that it has repurchased 1,931,500 shares of
the Company's common stock during the first quarter of fiscal 2006 under
its stock repurchase plans at an average price, including commissions, of
$34.26 per share. As of May 4, 2006, under its repurchase plans, the
Company is authorized to repurchase approximately 2.6 million additional
shares plus such shares as may be repurchased with proceeds from the future
exercise of options under the Company's 2001 General Stock Option Plan.
As previously announced on March 20, 2006, the Company is continuing to
work with JPMorgan in its review of strategic alternatives to enhance
shareholder value including, but not limited to, a potential sale of the
Company. Consistent with prior communications, the Company does not intend
to disclose developments regarding its exploration unless, and until, its
Board of Directors has approved a specific transaction.
The Company plans to release its first quarter 2006 earnings results on
Wednesday, May 24, 2006, and will conduct a conference call at 4:00 p.m. CT
on that date, hosted by Michaels Stores President and CFO, Jeffrey Boyer
and President and COO, Gregory Sandfort. Those who wish to participate in
the call may do so by dialing 973-633-6740. Any interested party will also
have the opportunity to access the call via the Internet at
http://www.michaels.com . To listen to the live call, please go to the
website at least fifteen minutes early to register and download any
necessary audio software. For those who cannot listen to the live
broadcast, a recording will be available for 30 days after the date of the
event. Recordings may be accessed at http://www.michaels.com or by phone at
973-341-3080, PIN 6885485.
Michaels Stores, Inc. is the world's largest specialty retailer of
arts, crafts, framing, floral, wall decor, and seasonal merchandise for the
hobbyist and do-it-yourself home decorator. As of May 4, 2006, the Company
owns and operates 899 Michaels stores in 48 states and Canada, 165 Aaron
Brothers stores, 11 Recollections stores, and four Star Wholesale
operations.
This document may contain forward-looking statements that reflect our
plans, estimates, and beliefs. Any statements contained herein (including,
but not limited to, statements to the effect that Michaels or its
management "anticipates," "plans," "estimates," "expects," "believes," and
other similar expressions) that are not statements of historical fact
should be considered forward-looking statements and should be read in
conjunction with our consolidated financial statements and related notes in
our Annual Report on Form 10-K for the fiscal year ended January 28, 2006.
Specific examples of forward-looking statements include, but are not
limited to, forecasts of same- store sales growth, operating income, and
diluted earnings per share. Our actual results could differ materially from
those discussed in these forward- looking statements. Factors that could
cause or contribute to such differences include, but are not limited to:
our ability to remain competitive in the areas of merchandise quality,
price, breadth of selection, customer service, and convenience; our ability
to anticipate and/or react to changes in customer demand; changes in
consumer confidence; unexpected consumer responses to changes in
promotional programs; unusual weather conditions; the execution and
management of our store growth and the availability of acceptable real
estate locations for new store openings; the effective maintenance of our
perpetual inventory and automated replenishment systems and related impacts
to inventory levels; delays in the receipt of merchandise ordered from our
suppliers due to delays in connection with either the manufacture or
shipment of such merchandise; transportation delays (including dock strikes
and other work stoppages); changes in political, economic, and social
conditions; commodity, energy and fuel cost increases, currency
fluctuations, and changes in import duties; our ability to maintain the
security of electronic and other confidential information; financial
difficulties of any of our insurance providers, key vendors, or suppliers;
and other factors as set forth in our Annual Report on Form 10-K for the
fiscal year ended January 28, 2006, particularly in "Critical Accounting
Policies and Estimates" and "Risk Factors," and in our other Securities and
Exchange Commission filings. We intend these forward-looking statements to
speak only as of the time of this release and do not undertake to update or
revise them as more information becomes available.
This press release is also available on the Michaels Stores, Inc.
website (http://www.michaels.com ).
SOURCE Michaels Stores, Inc.
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CONTACT:
Lisa K. Klinger, Vice President - Treasurer
and Investor Relations of Michaels Stores, Inc., +1-972-409-1528,
or klingerl@michaels.com
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