Michaels Reports Earnings Up 74%<MIKE.O> 7 cents above estimates. I will be watching MIKE tomorrow morning from about 8:15 for signs of trading higher. Due to negative market sentiment lately, it might not gap up much in the morning. Either way MIKE will be high priority
'watch list' candidate for tomorrow.
Michaels Reports Earnings Up 74%
IRVING, Texas, May 27 /PRNewswire/ -- Michaels Stores, Inc. (Nasdaq: MIKE) today reported net income for the first quarter of $5.5 million, or $0.18 per diluted share, compared to net income of $3.2 million, or $0.12 per diluted share, in the same period last year. Sales for the first quarter of 1998 increased by 5% to $335.8 million from $321.3 million the prior year with a same-store sales increase of 2%.
Michael Rouleau, President and Chief Executive Officer, said, "We are pleased with our earnings increase for the quarter. Despite disappointing April sales, we were able to continue to improve our gross margin rates. A mandated change in the accounting method for new store opening costs, although planned for, exerted a slightly negative influence on our profitability compared to last year, and as we have previously stated, our test of a new advertising strategy was costly. We reacted quickly and switched back to our proven advertising strategy at the beginning of May. So far, the results have been as we expected, with weekly same-store sales increases mirroring our 1997 trend of mid-to-high single digits. We hit a very minor bump in the road in the first quarter but it did not derail us and we are aggressively moving ahead, laying the cornerstones necessary for Michaels' long-term future."
Rouleau continued, "By the end of the first quarter, we had successfully implemented new warehouse management software in two of our distribution centers and began implementing the initial phase of our corporate merchandising system. In conjunction with new store systems under development, this technology provides the framework for a sophisticated inventory management system and will allow us to begin development on a perpetual inventory system. Our new distribution center in Lancaster, California, is on schedule to open this summer, and we have continued to increase the utilization of our distribution network. A year ago we were replenishing slightly over 6,000 basic items from our distribution centers and today we are over 10,000 with a goal of 15,000 by year-end."
Michaels will host a conference call today at 4:00 p.m. CDT to discuss the results. To participate, dial 1-800-399-0029. Michaels' next sales release will be the announcement of May sales on June 4.
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