UPDATE: Michaels Posts Upbeat Q3 Earnings, Lifts Forecast

The Michaels Companies

posted a better-than-expected profit for the third quarter and raised its forecast for the year. For the year, Michaels now projects earnings, excluding special items, of $1.42 to $1.44 per share, versus its prior forecast of $1.38 to $1.42 per share. The Irving, Texas-based company posted a quarterly profit of $64 million, or $0.31 per share, versus a year-ago profit of $47 million, or $0.26 per share. Excluding special items, the company's earnings climbed to $0.31 per share from $0.27 per share. Its sales climbed 1.1% to $1.13 billion from $1.12 billion. However, analysts were expecting earnings of $0.26 per share on revenue of $1.1 billion. Its comparable store sales slipped 0.8% in the quarter, versus a 7.9% rise in the year-ago period. Gross profit dropped 50 basis points to 40.0% of net sales, versus 40.5% of net sales. Operating income gained 5.2% to $142 million from $135 million. During the quarter, Michaels opened 19 new Michaels stores, relocated 3 Michaels stores, opened 5 new Aaron Brothers stores and closed 1 Aaron Brothers store. Michaels ended the quarter with $194 million in cash, $3.34 billion in debt and around $588 million in availability under its asset-based revolving credit facility. Chuck Rubin, Chief Executive Officer, stated, "We are very pleased with our third quarter sales and earnings as our customers responded to our improved shopping environment, great exclusive product and compelling marketing events. As we look to the fourth quarter we are well positioned to make further progress on these initiatives and deliver to our customers an exciting in-store and on-line shopping experience." Michaels shares rose 7.54% to $23.39 in pre-market trading.