DOW JONES NEWSWIRES
Michaels Stores Inc.'s fiscal fourth-quarter net income climbed
40% on lower interest and tax costs as sales and margins continued
to weaken.
"Our focus during the fourth quarter was on driving sales and
maximizing gross margin dollars while effectively clearing through
our seasonal merchandise," said Chief Executive Brian C. Cornell,
who is leaving to become chief executive of Wal-Mart Stores Inc.'s
(WMT) Sam's Club.
He said traffic improved in December and the core
arts-and-crafts business held up while sales of more expensive,
more discretionary items such as seasonal and home decor fell.
For the quarter ended Jan. 31, the retailer acquired in 2006 for
about $6 billion by Bain Capital LLC and Blackstone Group LP (BX),
reported net income of $74 million, up from $53 million a year
earlier. The prior-year quarter's results included a $22 million
goodwill write-down, while interest costs dropped 24% and income
taxes slumped 69%.
Revenue slid 2.5% to $1.3 billion as same-store sales fell 5.6%
on fewer transactions and a 5% decline in the average amount
spent.
Gross margin fell to 36.3% from 40% on more promotional
spending, while average inventory per Michaels store rose 2.3%,
partly because of the timing on inventory resets.
As of Jan. 31, the company had 1,170 stores, up 3.6% from a year
earlier.
-By Kathy Shwiff, Dow Jones Newswires; 201-938-5975;
Kathy.Shwiff@dowjones.com