Michaels Companies Posts Upbeat Q4 Earnings, But Issues Weak Forecast

Michaels Companies, Inc. MIK reported better-than-expected earnings for the fourth quarter on Thursday. However, the company issued a weak outlook. The Irving, Texas-based company posted quarterly net income of $157 million, or $0.75 per share, compared to $133 million, or $0.74 per share, in the year-ago quarter. Its adjusted earnings rose 8.7% to $0.75 per share in the latest quarter, beating analysts' estimates of $0.74 per share. Its sales climbed 3.4% to $1.61 billion, versus analysts' expectations of $1.60 billion. Comparable store sales climbed 1.4% in the quarter, while comparable store sales climbed 2.2% on a constant currency basis. Its operating income rose 6.5% to $294 million in the quarter. Gross profit climbed 110 basis points to 41.2% of net sales, up from 40.1% of net sales. During the fourth quarter, the Company opened 2 new Michaels stores and closed 1 Aaron Brothers store. At the end of the quarter, it operated 1,168 Michaels stores and 120 Aaron Brothers stores. At the end of the quarter, inventory was $958 million. Chuck Rubin, Chief Executive Officer, said, "I am very pleased with our fourth quarter results, which reflect continued strong execution of our multi-year strategy. Our Holiday presentation leveraged the learnings from our store remodel program to showcase a larger and more cohesive offering, supported by engaging marketing. We achieved solid performance across categories and geographies as our customers recognized and responded to the improvements that we have put in place." For fiscal 2015, the company expects earnings of $1.65 to $1.71 per share on sales growth of 3.2% to 3.7%. Analysts had expected earnings of $1.72 per share. For the first quarter, the company projects earnings of $0.31 to $0.33 per share, versus analysts' estimates of $0.35 per share. Michaels Companies shares gained 1.34% to close at $29.20 yesterday.