Post Earnings Coverage as Michaels Co.’s Q4 EPS Rose 9.2%

Upcoming AWS Coverage on FTD Cos. Post-Earnings Results

LONDON, UK / ACCESSWIRE / March 21, 2017 / Active Wall St. announces its post-earnings coverage on The Michaels Cos., Inc. (NASDAQ: MIK). The Company reported its fourth quarter fiscal 2016 (Q4 FY16) and full year fiscal 2016 (FY16) on March 07, 2017. The Irving, Texas-based Company’s quarterly net sales and diluted EPS increased 4.1% and 9.2% y-o-y, respectively. Register with us now for your free membership at:

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One of Michaels Cos.’ competitors within the Specialty Retail, Other space, FTD Cos., Inc. (NASDAQ: FTD), reported on February 21, 2017, results for the fourth quarter and full year ended December 31, 2016 on Tuesday, March 14. AWS will be initiating a research report on FTD Cos. in the coming days.

Today, AWS is promoting its earnings coverage on MIK; touching on FTD. Get our free coverage by signing up to:

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Earnings Reviewed

In Q4 FY16, Michaels Cos. reported net sales of $1.75 billion compared to $1.68 billion in Q4 FY15. However, net sales number for the reported quarter missed market expectations of $1.81 billion. Furthermore, comparable store sales decreased 1.0% in Q4 FY16, primarily driven by a decrease in customer transactions, which was partially offset by an increase in average ticket.

The arts and crafts retail chain stores reported net income of $195.32 million, or $0.95 per diluted share, in Q4 FY16 compared to $183.67 million, or $0.87 per diluted share, in the prior year’s comparable quarter. The Company adjusted net income for Q4 FY16 was $195.86 million, or $0.96 per diluted share, which came in above $185.15 million, or $0.88 per diluted share, reported in Q4 FY15. Results also beat Wall Street’s forecasts of $0.95 per diluted share.

During FY16, the Company’s net sales rose 5.8% to $5.20 billion from $4.91 billion in FY15. The Company’s net income for FY16 came in at $378.16 million, or $1.82 per diluted share, up from $362.91 million, or $1.72 per diluted share. Furthermore, the Company’s adjusted net income for FY16 stood at $389.61 million, or $1.88 per diluted share, versus $368.13 million, or $1.75 per diluted share, in FY15.

Operating Metrics

In Q4 FY16, Michaels Cos.’ gross profit improved 2.6% to $705.76 million from $687.64 million in the year ago same quarter. However, gross margin fell to 40.3% of net sales in Q4 FY16 from 40.9% of net sales in Q4 FY15. During the reported quarter, selling, general, and administrative expenses rose to $368.96 million, or 21.1% of net sales, from $362.99 million, or 21.6% of net sales in the previous year’s comparable quarter. For Q4 FY16, operating income came in at $336.56 million, or 19.2% of net sales, versus $324.19 million, or 19.3% of net sales, in Q4 FY15. Furthermore, the Company’s adjusted operating income during Q4 FY16 was $337.44 million, up from $324.19 million recorded in Q4 FY15.

During FY16, the Company inaugurated 32 new Michaels’ stores, 1 new Aaron Brothers store, and 3 new Pat Catan’s stores. Meanwhile, it closed 5 Michaels’ stores and 9 Aaron Brothers’ stores. Furthermore, the Company operated 1,223 Michaels’ stores, 109 Aaron Brothers’ stores, and 35 Pat Catan’s stores, as on January 28, 2017.

Cash Flow and Balance Sheet

In year ended January 28, 2017, net cash provided by operating activities increased to $564.42 million from $504.05 million in FY15. The Company generated free cash flow of $450.0 million in FY16 compared to $380.1 million FY15. Furthermore, capital expenditures in FY16 were $114.5 million versus $123.9 million FY15.

As on January 28, 2017, the Company had $298.81 million in cash and equivalents compared to a balance of $409.39 million as on January 30, 2016. Furthermore, the Company reported long-term debt of $2.72 billion in its books of accounts as on January 28, 2017, compared to $2.74 billion as on January 30, 2016.

Share Repurchases

During FY16, the Company repurchased 17.2 million shares for $400.7 million under its share repurchase authorization. The Company also bought back 4.8 million shares for $99.3 million after the end of FY16 and until the date of its earnings release, utilizing the remaining availability under the Company’s share repurchase authorization.

Earnings Outlook

In its guidance for full year FY17, Michaels Cos. expects total net sales growth range of 2.5% to 4.0% with comparable store sales growth range of flat to up 1.5%. The Company projects operating income range of $727 million to $760 million for FY17. While, diluted earnings for the upcoming quarter is forecasted to be in the range of $2.05 per common share to $2.17 per common share. Moreover, the Company’s intends to spend between $125 million and $135 million as Capital expenditures in FY17.

For Q1 FY17, the Company anticipates comparable store sales to be flat to down 1%. The Company forecasts operating income for Q1 FY17 to be between $141 million and $147 million. Furthermore, diluted earnings for Q1 FY17 are expected to be in the range of $0.38 per common share to $0.40 per common share.

Stock Performance

At the close of trading session on Monday, March 20, 2017, Michaels Cos.’ stock price slipped 1.49% to end the day at $21.87. A total volume of 928.39 thousand shares were exchanged during the session. The Company’s share price has gained 6.11% in the past one month and 6.94% on YTD basis. Shares of the company have a PE ratio of 11.87. Moreover, the stock currently has a market cap of $4.13 billion.

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