Michaels Companies Q1 Earnings Miss Expectations

reported weaker-than-expected earnings for the first quarter on Thursday. The Irving, Texas-based company posted a quarterly profit of $66.7 million, or $0.32 per share, versus a year-ago profit of $45.4 million, or $0.25 per share. Its sales climbed 2.4 percent year-over-year to $1.08 billion from $1.05 billion, while sales gained 3.6 percent on a constant currency basis. Analysts were expecting earnings of $0.33 per share on revenue of $1.08 billion. Its same-store sales increased 0.3 percent in the quarter, while same-store sales climbed 1.4 percent on a constant currency basis. Its operating income gained 3.4 percent to $144 million. Gross profit widened 20 basis points to 41.0 percent of net sales, versus 40.8 percent of net sales in the year-ago quarter. During the quarter, the company opened 10 new Michaels stores and closed 1 Michaels store and 2 Aaron Brothers stores. At the end of the quarter, it operated 1,177 Michaels stores and 118 Aaron Brothers stores. Inventory at the end of the quarter totaled $985 million. Chuck Rubin, Chairman and Chief Executive Officer, stated, "We delivered another solid quarter, despite several headwinds such as foreign exchange rates, unfavorable weather early in the quarter and the previous year's Rainbow Loom(R) sales. Our teams remained focused on execution and maintaining expense discipline resulting in overall financial performance that was within the range of our expectations." For the current quarter, Michaels projects comparable-store sales growth of 1 percent to 2 percent and operating income of $88 million to $92 million. Michaels reaffirmed its guidance for the full year. The company expects FY15 earnings of $1.65 to $1.71 per share on net sales growth of 3.2 percent to 3.7 percent. Michaels shares rose 1.07 percent to close at $28.25 yesterday.