The Michaels Companies, Inc.’s (NASDAQ:MIK) the stock changed 3.04% to recent value of $7.80. The company has 158.53 M of outstanding shares and 104.76M shares were floated in the market. The trading volume was recorded to 1.71 million shares as compared to average traded volume of 2.62 million shares. Analyst recommendation for this stock stands at 2.70.
The Michaels Companies, Inc. (MIK) recently stated diluted earnings per share for the first quarter of fiscal 2019 of $0.24, or $0.31 per adjusted diluted share not including a charge associated with closing the Pat Catan’s stores, costs related to the departure of the Company’s former Chief Executive Officer (“CEO”), and a write-off of an investment in a liquidated business. This compares to diluted earnings per share for the first quarter of fiscal 2018 of $0.15, or $0.39 per adjusted diluted share not including a charge associated with the restructure of Aaron Brothers and adjustments related to the Tax Cuts and Jobs Act of 2017 (the “Tax Act”). A reconciliation of non-GAAP financial measures to the respective GAAP measures is included in this release.
First Quarter Highlights
Net sales were $1,093.7M contrast to $1,155.5M in the first quarter of fiscal 2018. The decrease in net sales was primarily Because of the closure of the Pat Catan’s and the Aaron Brothers stores during fiscal 2018 and a decline in comparable stores sales. Comparable store sales reduced 2.9%Because of a decrease in consumer transactions partially offset by an raise in average ticket. The net sales decrease was partially offset by sales from the operation of 17 additional Michaels stores (net of closures) during the quarter. During the first quarter, the Company opened four new Michaels stores, closed two Michaels stores, and relocated seven Michaels stores. At the end of the first quarter of fiscal 2019, the Company operated 1,260 Michaels stores.
Gross profit was 38.2% of net sales in the first quarter of fiscal 2019 contrast to 39.5% in the first quarter of fiscal 2018. The 130 basis point decrease was primarily Because of higher distribution related costs, occupancy cost deleverage and a change in sales mix. The decrease was partially offset by benefits from our ongoing sourcing initiatives and a decrease in promotional activity.
Selling, general and administrative including store pre-opening costs and restructure charges (“SG&A”) was $324.9M in the first quarter of fiscal 2019 contrast to $377.6M in the first quarter of fiscal 2018. The $52.7M decrease in SG&A was primarily Because of a $47.5M restructure charge in the first quarter of fiscal 2018 and a decrease in expenses related to the closure of our Pat Catan’s stores and Aaron Brothers stores during fiscal 2018. The decrease was partially offset by $5.6M of expenses related to the departure of the former CEO.
Operating income was $92.7M contrast to $78.9M in the first quarter of fiscal 2018. Not Including the restructure charge associated with the closing of the Pat Catan’s stores and costs associated with the departure of the Company’s former CEO, adjusted operating income for the first quarter of fiscal 2019 was $101.4M. This compares to adjusted operating income in the first quarter of fiscal 2018 of $126.1M, not including the $47.5M restructure charge and $0.3M of operating profit from Aaron Brothers operations previous to closure.
Interest expense raised $2.8M to $37.4M, from $34.6M in the first quarter of fiscal 2018,Because of higher LIBOR rates associated with the Company’s variable rate Amended and Restated Term Loan Credit Facility and settlement payments associated with the Company’s interest rate swaps.
Other expense raised $4.8M to $3.1M from other income of $1.7M in the first quarter of fiscal 2018. The raise in other expense was Because of a $5.0M charge related to a write-off of an investment in a liquidated business.
Second Quarter and Fiscal Year 2019 Outlook:
The Company’s guidance for fiscal 2019 excludes any restructure charges related to the Pat Catan’s store closures, any expenses associated with the transition of the Company’s former CEO, and a write-off of an investment in a liquidated business.
For fiscal 2019, the Company expects:
- net sales will be between $5.19B and $5.24B;
- comparable store sales to raise between 0% and 1%;
- to open net 20 new Michaels stores, inclusive of up to 12 Pat Catan’s stores the Company plans to rebrand and reopen, and relocate 13 Michaels stores;
- adjusted operating income will be in the range of $625M to $650M which now reflects a 25% tariff rate;
- interest expense will be about $153M;
- the effective tax rate will be between 23% and 24%;
- adjusted diluted earnings per share will be between $2.29 and $2.41, based on diluted weighted average shares of about 158M; and
- capital expenditures will be about $135M.
For the second quarter of fiscal 2019, the Company expects:
- comparable store sales to be flat to down 1.5%;
- to open net one new Michaels store and relocate two Michaels stores;
- adjusted operating income will be between $65M and $70M;
- net interest expense will be about $38M;
- the effective tax rate will be about 20%; and
- adjusted diluted earnings per ordinary share will be between $0.13 and $0.16, based on diluted weighted average ordinary shares of 158M.
The P/E ratio was recorded at 3.87.The volatility in the previous week has experienced by 6.99% and observed of 5.71% in the previous month. Quick ratio for most recent quarter was 0.30 while current ratio for time period was 1.30.
Eric Cooper – Financial Results
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