Post Earnings Coverage as The Michaels Cos Q3 Topline Rise 5%
Upcoming AWS Coverage on Zumiez Post-Earnings Results
LONDON, UK / ACCESSWIRE / December 12, 2016 / Active Wall St. announces its post-earnings coverage on The Michaels Cos., Inc. (NASDAQ: MIK). The Company posted its third quarter fiscal 2016 (Q3 FY16) earnings on December 06, 2016. The Irving, Texas-based Company's net sales and gross profit increased 5.0% and 0.2% y-o-y. Register with us now for your free membership at: http://www.activewallst.com/register/
One of Michaels Cos.' competitors within the Specialty Retail, Other space, Zumiez Inc. (NASDAQ: ZUMZ), reported on December 01, 2016, its results for the third quarter ended October 29, 2016. AWS will be initiating a research report on Zumiez in the coming days.
Today, AWS is promoting its earnings coverage on MIK; touching on ZUMZ. Get our free coverage by signing up to
http://www.activewallst.com/registration-3/?symbol=MIK
http://www.activewallst.com/registration-3/?symbol=ZUMZ
Earnings Reviewed
In Q3 FY16, Michaels Cos. reported net sales of $1.23billion compared to $1.17 billion in Q3 FY15. However, net sales number for the reported quarter missed market expectation of $1.28 billion. The rise in net sales is primarily attributed to acquisition of Lamrite West in February 2016 and 19 additional net new stores during the quarter. However, comparable stores net sales fell 2% y-o-y in Q3 FY16, primarily due to decline in customer transactions which was partially offset by an increase in average ticket.
The arts and crafts retail chain stores reported net income of $76.46 million, or $0.37 per diluted share, in Q3 FY16 compared to $76.80million, or $0.37 per diluted share, in the prior year's comparable quarter. Wall Street had expected the Company to report Q3 FY16 net earnings of $0.43 per diluted share.
During Q3 FY16, the Company inaugurated 14 new Michaels' stores compared with 10 new Michaels' store openings in Q3 FY15. Furthermore, the Company operated 1,221 Michaels' stores, 112 Aaron Brothers' stores, and 35 Pat Catan's stores at end of Q3 FY16.
Operating Metrics
In the three months ended October 29, 2016, Michaels Cos' gross profit improved marginally to $466.61 million from $465.60 million in the year ago same quarter. However, gross margin fell to 38.0% of net sales in Q3 FY16 from 39.8% of net sales in Q3 FY15. During the quarter, selling, general, and administrative expenses rose 3.4% to $320.3 million, or 26.0% of net sales, from $309.7 million, or 26.4% of net sales in the previous year's comparable quarter. For Q3 FY16, operating income came in at $146.32 million, or 11.9% of net sales, compared to $155.85 million, or 13.3% of net sales, in Q3 FY15.
Cash Flow and Balance Sheet
In the nine months ended October 29, 2016, net cash provided by operating activities surged to $136.52 million from $17.87million in the first three quarters of FY15. As on October 29, 2016, the Company had $149.97 million in cash and equivalents compared to a balance of $114.75 million as on October 31, 2015. Furthermore, the Company reported long-term debt of $2.73 billion in its books of accounts as on October 29, 2016, compared to $2.90 billion as on October 31, 2015.
Share Repurchases
During Q3 FY16, Michaels Cos repurchased 1.2 million shares for $29.5 million under its share repurchase program announced in March 2016. Furthermore, in December 2016, the Company's Board of Directors authorized repurchase of additional common stock, amounting to $300 million. As of December 06, 2016, the total shares repurchase authorization balance stood at approximately $343.5 million.
Earnings Outlook
In its guidance for Q4 FY16, Michaels Cos expected comparable store sales growth to be flat to down 1.5% with adjusted operating income in the range of $335 million to $348 million. Adjusted diluted earnings for the upcoming quarter are projected to be in the range of $0.94 per common share to $0.98 per common share.
For full year FY16, the Company anticipates comparable store sales to be approximately flat with total net sales growth in the range of 5.8% to 6.2%. The company forecasts adjusted operating income for FY16 to lie between $724 million and $737 million. Furthermore, adjusted diluted earnings for FY16 are expected to be in the range of $1.86 per common share to $1.90 per common share.
Stock Performance
Michaels Cos.' share price finished last Friday's trading session at $23.53, marginally down 0.97%. A total volume of 1.06 million shares exchanged hands. The company's share price has gained 4.90% in the past month and 6.42% on YTD basis. The stock currently has a market cap of $4.89 billion.
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