Michaels Stores is crafty. The nation's #1 arts and crafts retailer owns and operates about 1,075 Michaels Stores across the US and Canada. Michaels sells some 35,000 products, including art and hobby supplies, décor, frames, needlecraft kits, party and seasonal products, and silk and dried flowers. It also offers 10 private brands, including Artist's Loft, Art Minds, and Craft Smart. It provides framing and art supplies though some 130 Aaron Brothers stores in California, Texas, and half a dozen other states. The company's Artistree subsidiary manufactures frames and molding for Michaels and Aaron Brothers stores. Michaels Stores, owned by Bain Capital Partners and The Blackstone Group, has filed to go public.
The company in March 2012 filed to raise $500 million in an initial public offering as its private equity owners seek to cash out. Bain and Blackstone Group took Michaels private in a deal valued at nearly $6 billion in 2006. In its IPO filing the company did not specify the number of shares it plans to sell or the price range. In April the CEO of Michaels, John Menzer, suffered a stroke. He resigned in July. The company is searching for a permanent replacement while it makes due with an office of the CEO shared by two senior executives.
Michaels Stores has been a strong performer despite tough economic times in North America. Demand for the retailer's core offering of arts and crafts supplies depends largely on discretionary spending, which has remained strained even as the recession ended. Still, Michaels Stores posted $4.2 billion in sales in fiscal 2012 (ends January), up from $4.0 billion the year before. The revenue lift was driven by a 3.2% increase in same-store sales and $51 million in incremental sales from new stores. Profitability increased as well, due to improved margins on merchandise sold and the company's global sourcing initiatives. Michaels is selling more of its own-brand merchandise, which has helped to boost margins.
A national chain in an industry where local shops and regional chains are typical, Michaels Stores is expanding. The fast-growing company's management believes that the North American market can support between 1,400 and 1,600 Michaels Stores, leaving plenty of room for future store growth. (Michaels, which often operates in suburban locales, opened its first urban store in Manhattan in late 2009 as a test case for its expansion into big cities.) Over the past four years the chain has added about 100 locations despite the weak economy. While the Michaels chain is growing -- it expects to open as many as 50 new stores in fiscal 2013, including its first stores in Québec -- the company is closing Aaron Brothers locations as their leases expire. Aaron Brothers' store count has fallen from about 165 in 2005 to 130 at present. No new Aaron stores are planned and 5 to 15 are expected to close going forward.
As it right-sizes its retail footprint, Michaels Stores is luring its crafty shoppers online by expanding its Web-based offerings. In late 2010 it acquired an online scrapbooking application developed by Chicago-based ScrapHD. The application enables users to create digital scrapbooks that can be printed at home and bound into a book. Added to the MiDesign section of Michaels' website, the application was relaunched in 2011.
Michaels Stores' customers, who are predominantly married women, can order prints and posters, buy arts and crafts supplies, and find arts and crafts tips on the Michaels website. Employees teach in-store craft classes to generate interest and boost sales.
Bain Capital and Blackstone Group own 93% of the company's shares. – less
338 salaries reported
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339 salaries reported
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