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Michaels to Attract Canada Customers With New E-commerce Site

Zacks Equity Research

The Michaels Companies, Inc. MIK has officially launched its e-commerce website in Canada to offer customers seamless shopping experience. Online shoppers can now order and easily avail more than 22,000 items from art supplies to home decor, seasonal merchandise and much more at Michaels.ca.

Notably, Michaels’ ‘Buy Online Pick Up in Store’ (BOPIS) capability across Canada enables customers to shop, select the convenient store and pick up the ordered items the same day. Moreover, all its products bought online are eligible for free returns at any of its stores nationwide. They are also entitled to receive offers and perks on signing up for Michaels Rewards in stores, online or its app.

We note that Michaels remains focused on integrating its e-commerce and in-store operations to enhance the omni-channel experience. In second-quarter fiscal 2019, sales from e-commerce business remained sturdy backed by higher traffic and conversion rate. Moreover, it continues to gain from omni-channel capabilities like BOPIS, which is also a cost-effective way of fulfilling online orders as it eliminates shipping costs.

In the fiscal second quarter, BOPIS contributed nearly 44% to online sales and was about two-thirds of online orders. Furthermore, the company completed a major step in the evolution of its e-commerce business by exiting third-party fulfillment providers for online orders. It now has in place a new order management system, supported by an in-house customer care team to manage all online transactions. All online orders are now fulfilled by Michaels stores or its own distribution center.

Backed by these concerted efforts in the e-commerce space, the company is likely to witness solid top-line growth.

On the store front, Michaels remains committed to expansion and remodeling efforts to boost margins and profitability. As part of its 2019 priorities, the company remains focused on expanding assortments in key growth-driving categories and de-emphasizing on slower moving categories. Additionally, Michaels doubled the space for assortments of tools and technology as part of its first category expansion in all stores. These endeavors are likely to help the company enhance its leadership in the DIY (do-it-yourself) category.

Further, the company remains on track to expand its assortments in craft storage, jewelry and art categories. Meanwhile, it expects to downsize in categories like bakeware, ready-made frames and more traditional paper crafting supplies, which display little customer interest. Management expects these changes in assortments to boost sales in the second half of fiscal 2019.


Price Performance & Zacks Rank

Impressively, shares of this leading arts and crafts specialty retailer have gained 2% in the past three months against the industry’s 22.8% decline. Michaels currently carries a Zacks Rank #3 (Hold).

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