IRVING, Texas, Sept. 27 /PRNewswire-FirstCall/ -- Michaels Stores, Inc.
(NYSE: MIK) today reported that it has updated its sales forecast for the
third quarter of fiscal 2006 and has issued guidance for the second half of
fiscal 2006. The Company currently expects the increase in same-store sales
for the third quarter to be at the high end of its previous guidance of 1%
to 3%, primarily due to better than anticipated same-store sales trends it
is experiencing quarter-to-date, including a 3.5% increase in August
same-store sales. In addition to better than anticipated sales performance,
the Company expects improved gross margin rates for the third quarter
compared to our previous forecast. For the second half of fiscal 2006, the
Company currently expects same-store sales to increase in the range of 2%
to 4%, and total net sales to increase in the range of 8% to 10%. Second
half gross margins are currently expected to increase approximately 100
basis points, and operating income is expected to increase approximately
20%, from $237.5 million in the second half of fiscal 2005. As disclosed in
its fiscal 2005 annual report on Form 10-K, the Company recorded a charge
of $15.0 million (net of income taxes of $8.9 million) in the fourth
quarter of fiscal 2005. This charge was recorded to reflect changes in
estimate related to deferred costs associated with preparing inventories
for sale and vendor allowance recognition.
The Company also announced that beginning tomorrow, September 28, 2006,
members of the senior management team will begin holding various financing
meetings related to its proposed transaction with Bain Capital, LLC and The
Blackstone Group.
Michaels Stores, Inc. is the world's largest specialty retailer of
arts, crafts, framing, floral, home decor, and seasonal merchandise for the
hobbyist and do-it-yourself home decorator. As of September 27, 2006, the
Company owns and operates 911 Michaels stores in 48 states and Canada, 165
Aaron Brothers stores, 11 Recollections stores, and four Star Wholesale
operations.
This news release 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,
and in our Quarterly Reports on Form 10-Q for the quarters ended April 29,
2006 and July 29, 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;
lawsuits asserted by our stockholders or others challenging the merger
transaction; disruptions from the merger transaction, including the
potential diversion of management's attention to completion of the
transaction and away from execution of existing business plans and the
potential loss of employees or business partners because of perceived
uncertainties; 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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