- Net Income Up 41% -
- EPS Climbs 40% to $.42 -
IRVING, Texas, May 26 /PRNewswire-FirstCall/ -- Michaels Stores, Inc.
(NYSE: MIK) today reported record earnings for its first quarter ended
May 1, 2004. Net income for the quarter was $29.3 million compared to net
income of $20.8 million in the same period last year, a 41% increase. Diluted
earnings per share for the quarter were $.42 compared to $.30 in the same
period last year, a 40% increase. Total sales for the first quarter increased
11% to $725.9 million from $656.4 million for the same period last year. For
the quarter, same-store sales were up 6% and operating margins, as a percent
of sales, increased 120 basis points to 7.2%.
Michael Rouleau, President and Chief Executive Officer, said, "We are very
pleased with our sales and earnings performance for the first quarter. Our
better-than-expected same-store sales were driven, in part, by the
implementation of our new perpetual inventory and automated replenishment
systems which helped us maintain higher store-level in-stocks versus last
year. We were also affected by a more favorable retail environment. During
the first quarter, we continued the accelerated clearance markdown program we
began in the third quarter of fiscal 2003, resulting in a slight reduction in
our gross profit as a percent to sales compared to the first quarter last
year. Importantly, solid cost controls in the quarter allowed us to fully
leverage our strong sales growth and expand our operating margin to a record
first quarter level."
Rouleau continued, "We expect another year of record earnings for fiscal
2004. We now expect full year diluted earnings per share to increase 15% to
20% over last year's $2.54. On a quarterly basis, diluted earnings per share
are expected to increase 10% to 15% in the second quarter, 15% to 20% in the
third quarter, and 10% to 15% in the fourth quarter. Same-store sales in each
of the next three quarters and for the year are expected to increase 3% to 5%.
Within the second quarter, we currently expect same-store sales to increase
approximately 3% in May and 8% to 10% in June, but to decline 2% to 4% in July
due to a shift in the timing of the Fourth of July and related changes in our
promotional calendar."
The Company also announced that between February 1, 2004, the start of the
fiscal year, and May 11, 2004, it has repurchased approximately 500,800 shares
of its common stock under its stock repurchase plans at an average price of
$48.24 per share. As of May 26, 2004, under certain repurchase plans, the
Company is authorized to repurchase approximately 2.4 million additional
shares plus any shares that may be repurchased with proceeds from the exercise
of options under its General Stock Option Plan.
A conference call will be held at 4:00 p.m. CT today to discuss first
quarter earnings results. 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 replay will be available for 30 days after the
date of the event. Replay may be accessed at http://www.michaels.com or by
phone at 973-341-3080, PIN 4251247.
The Company plans to release its May 2004 sales results on Thursday,
June 3, 2004 at 6:30 a.m. CT. Any interested party may view the Company's
press release at http://www.michaels.com .
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 26, 2004, the Company owns and
operates 819 Michaels stores in 48 states and Canada, 158 Aaron Brothers
stores, located primarily on the West Coast, two ReCollections stores in the
Dallas/Fort Worth Metroplex, and three wholesale operations.
Certain statements contained herein which are not historical facts are
forward looking statements that involve risks and uncertainties, including,
but not limited to, estimation risks, customer demand and trends in the arts
and crafts industry, related inventory risks due to shifts in customer demand,
the effect of economic conditions, the impact of competitors' locations or
pricing, the availability of acceptable locations for new stores, difficulties
with respect to new information system technologies, supply constraints or
difficulties, the results of financing efforts, the effectiveness of
advertising strategies and other risks detailed in the Company's Securities
and Exchange Commission filings. The Company intends these forward-looking
statements to speak only as of the time of this release and does 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 ).
-- Tables Follow --
Michaels Stores, Inc.
Consolidated Statements of Income
(In thousands, except per share data)
(Unaudited)
Quarter Ended
May 1, May 3,
2004 2003
Net sales $725,852 $656,388
Cost of sales and occupancy expense 465,628 420,548
Gross profit 260,224 235,840
Selling, general, and administrative expense 205,701 194,594
Store pre-opening costs 2,483 1,753
Operating income 52,040 39,493
Interest expense 5,328 5,071
Other (income) and expense, net (789) (856)
Income before income taxes 47,501 35,278
Provision for income taxes 18,169 14,464
Net income $29,332 $20,814
Earnings per common share:
Basic $0.43 $0.31
Diluted $0.42 $0.30
Dividends per common share $0.12 $---
Michaels Stores, Inc.
Consolidated Balance Sheets
(In thousands, except share data)
(Unaudited)
May 1, January 31, May 3,
2004 2004 2003
ASSETS
Current assets:
Cash and equivalents $381,352 $341,825 $211,040
Merchandise inventories 906,655 892,923 857,181
Prepaid expenses and other 40,031 29,198 21,574
Deferred and prepaid income taxes 20,990 19,426 20,348
Total current assets 1,349,028 1,283,372 1,110,143
Property and equipment, at cost 825,928 808,230 731,548
Less accumulated depreciation (434,257) (420,313) (368,995)
391,671 387,917 362,553
Goodwill 115,839 115,839 115,839
Other assets 14,850 14,519 13,907
130,689 130,358 129,746
Total assets $1,871,388 $1,801,647 $1,602,442
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $214,454 $172,708 $166,944
Accrued liabilities and other 190,040 194,395 160,162
Income taxes payable --- 2,377 10,160
Total current liabilities 404,494 369,480 337,266
9 1/4% Senior Notes due 2009 200,000 200,000 200,000
Deferred income taxes 28,241 28,241 21,513
Other long-term liabilities 38,184 36,628 31,498
Total long-term liabilities 266,425 264,869 253,011
670,919 634,349 590,277
Commitments and contingencies
Stockholders' equity:
Preferred Stock, $0.10 par value,
2,000,000 shares authorized; none
issued --- --- ---
Common Stock, $0.10 par value,
150,000,000 shares authorized;
shares issued and outstanding of
68,586,669 at May 1, 2004,
67,997,567 at January 31, 2004,
and 66,566,841 at May 3, 2003 6,859 6,800 6,657
Additional paid-in capital 510,542 495,910 480,982
Retained earnings 681,477 660,365 523,479
Accumulated other comprehensive
income 1,591 4,223 1,047
Total stockholders' equity 1,200,469 1,167,298 1,012,165
Total liabilities and stockholders'
equity $1,871,388 $1,801,647 $1,602,442
Michaels Stores, Inc.
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Quarter Ended
May 1, May 3,
2004 2003
Operating activities:
Net income $29,332 $20,814
Adjustments:
Depreciation 21,678 19,854
Amortization 98 100
Other 291 283
Changes in assets and liabilities:
Merchandise inventories (13,732) (47,763)
Prepaid expenses and other (10,833) (2,935)
Deferred income taxes and other 919 297
Accounts payable 41,746 72,180
Income taxes payable 3,588 (12,295)
Accrued liabilities and other (6,660) (19,517)
Net change in assets and
liabilities 15,028 (10,033)
Net cash provided by
operating activities 66,427 31,018
Investing activities:
Additions to property and equipment (25,834) (13,746)
Net proceeds from sales of
property and equipment 9 5
Net cash used in
investing activities (25,825) (13,741)
Financing activities:
Proceeds from stock options exercised 14,236 1,257
Repurchase of Common Stock (7,798) (25,968)
Cash dividends paid to stockholders (8,220) ---
Proceeds from issuance of Common
Stock and other 707 443
Net cash used in
financing activities (1,075) (24,268)
Net increase (decrease) in cash and
equivalents 39,527 (6,991)
Cash and equivalents at beginning of period 341,825 218,031
Cash and equivalents at end of period $381,352 $211,040
Michaels Stores, Inc.
Summary of Operating Data
(Unaudited)
Quarter Ended
May 1, May 3,
2004 2003
Michaels stores (A):
Retail stores open at beginning of period 804 754
Retail stores opened 14 18
Retail stores opened (relocations) 12 5
Retail stores closed --- (1)
Retail stores closed (relocations) (12) (5)
Retail stores open at end of period 818 771
Aaron Brothers stores:
Retail stores open at beginning of period 158 148
Retail stores opened --- 5
Retail stores open at end of period 158 153
ReCollections stores:
Retail stores open at beginning of period 2 ---
Retail stores opened --- ---
Retail stores open at end of period 2 ---
Star Wholesale stores (A):
Wholesale stores open at beginning of period 3 2
Wholesale stores opened --- ---
Wholesale stores open at end of period 3 2
Total store count at end of period 981 926
Other operating data:
Average inventory per Michaels
store (in thousands) $1,026 $1,059
Comparable store sales increase 6% 2%
(A) Opening store counts reflect a reclassification of our Los Angeles
combination wholesale-retail store from a Michaels store to a Star
Wholesale store. Beginning in fiscal 2004, our Los Angeles wholesale-
retail store will be managed as part of our Star Wholesale concept.
SOURCE Michaels Stores, Inc.
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Related links:
http://www.michaels.com
Company News On-Call:
http://www.prnewswire.com/comp/115769.html
CONTACT:
Jeffrey N. Boyer, Executive Vice President -
Chief Financial Officer, +1-972-409-1581, or Christopher J.
Holland, Vice President - Finance, +1-972-409-1667, both of
Michaels Stores, Inc.
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