The Michaels Companies Announces Second Quarter Fiscal 2020 Results

9/3/20

IRVING, Texas--(BUSINESS WIRE)--The Michaels Companies, Inc. (NASDAQ: MIK) today announced financial results for the second quarter fiscal 2020 ended August 1, 2020.

Ashley Buchanan, Michaels Chief Executive Officer commented, “Michaels strong second quarter results are a testament to the solid execution of our team in an unprecedented environment. We saw strong demand and customer engagement across our stores, and the multiple omnichannel touchpoints we introduced over the past few months. Looking ahead, we will continue to focus on serving our customers and executing to the pillars that underpin our Maker strategy: strengthening our retail foundation, modernizing our omnichannel experience and establishing our position as the Expert for the Maker.”

Mr. Buchanan added, “Strong performance combined with proactive cash management actions taken earlier this year resulted in outstanding quarterly free cash flow generation. We ended the second quarter in a strong liquidity position of $1.3 billion, approximately $100 million higher than at the start of the fiscal year. This gives us great confidence in our ability to navigate the current environment while advancing our strategic priorities and positioning Michaels for long-term growth. We look forward to sharing more details about our future direction and long-term expectations at our upcoming investor day later this month.”

Key Financial Results:

13 Weeks Ended
August 1, 2020
13 Weeks Ended
August 3, 2019
26 Weeks Ended
August 1, 2020
26 Weeks Ended
August 3, 2019
Net Sales$1,148.2M$1,033.7M$1,948.1M$2,127.4M
Comp. Store Sales12.0%0.3%(8.4%)(1.4%)
Operating Income (Loss)$53.3M$71.3M($7.4M)$164.0M
Net (Loss) Income($7.8M)$24.5M($71.3M)$62.2M
Diluted (Loss) Earnings per Share($0.05)$0.16($0.48)$0.39
Adjusted Operating Income1$105.8M$75.2M$45.1M$176.6M
Adjusted Net Income (Loss)1$44.7M$29.6M($31.6M)$78.6M
Adjusted Diluted Earnings (Loss) per Share1$0.30$0.19($0.22)$0.50
1 See additional information in this release for a reconciliation of non-GAAP financial measures to the respective GAAP measures.

Key Highlights

  • All stores reopened by the beginning of July. Michaels achieved positive second quarter comparable store sales of 12%, driven by strong demand both in our open stores and in e-commerce.
  • Second quarter e-commerce growth of more than 350% year over year was driven by enhanced and expanded omnichannel capabilities including curbside pick-up, same day delivery, ship from store, BOPIS, in-app purchases and more.
  • Paid down remaining $300 million of the $600 million revolver draw down done in the first quarter, resulting in full availability under the revolving credit facility.

Second Quarter Fiscal 2020 (13 weeks ended August 1, 2020):

  • The 11.1% increase in sales for the second quarter of fiscal 2020 compared to the same period in the prior year was due to a 12% increase in comparable store sales and sales related to 13 additional stores (net of closures) since the end of the second quarter of fiscal 2019, partially offset by a sales decline due to the closure of our wholesale business.
  • Operating income was $53.3 million compared to operating income of $71.3 million in the second quarter of fiscal 2019. Adjusted operating income for the second quarter of fiscal 2020 was $105.8 million compared to $75.2 million in adjusted operating income in the second quarter of fiscal 2019. A full reconciliation of Adjusted operating income is available within the tables of this press release.

Balance sheet and liquidity highlights:

  • The Company ended the second quarter of fiscal 2020 in a strong liquidity position of approximately $1.3 billion, inclusive of our cash balance of $651 million and our undrawn revolving credit facility.

Outlook:

Given the continued uncertainty due to the COVID-19 pandemic, including a dynamic and uncertain outlook for consumer spending patterns and associated government policies, the Company is not providing any additional financial outlook information at this time.

About The Michaels Companies, Inc.:

The Michaels Companies, Inc. is North America's largest specialty provider of arts, crafts, framing, floral, wall décor, and seasonal merchandise for Makers and do-it-yourself home decorators. The Company operates more than 1,270 Michaels stores in 49 states and Canada. Additionally, the Company serves customers through a variety of digital platforms including Michaels.com, Canada.michaels.com, consumercrafts.com and aaronbrothers.com. The Michaels Companies, Inc., also owns Artistree, a manufacturer of high-quality custom and specialty framing merchandise. For a list of store locations or to shop online, visit www.michaels.com or download the Michaels app.

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