Michaels Companies Inc. (NASDAQ: MIK) reported its second quarter results and beat analysts expectations in both earnings and revenue. Among other retailers, Michaels was among to the few to beat the trend downward trend that many retailers have been facing.
Michaels posted revenue of $1.07 billion, a 1.2 percent increase from $1.06 billion year over year, as well as beating $1.06 billion estimate by Thomson Reuter analysts. The company posted a net income of $35.6 million, or an EPS of $0.19, 11.8 percent increase from $0.17 year over year, and beating an estimate of $0.16 by Thomson Reuters analysts.
The company says in the earnings call that the results were primarily drive by the operation of 10 additional stores during the quarter. During the quarter, the company opened five new Michaels stores and closed three Aaron Brothers stores. At the end of the second quarter, the company operated 1,230 Michaels stores, 101 Aaron Brothers stores, and 35 Pat Catan's stores.
"Today, we reported record second quarter sales and earnings per share results which were above our initial guidance," said Chuck Rubin, Chairman and Chief Executive Officer. "Our efforts to create a more experiential, omnichannel shopping experience, improve our value perception, and leverage our customer analytics are gaining traction earlier than we initially expected.
The arts and crafts retailer also purchased 5.4 million shares, or $101.4 million, under its share repurchase authorization during the second quarter. The remaining share for future repurchases is approximately $398.6 million. The share repurchase program does not have an expiration date, and the timing and an a number of shares that can be repurchased.
"Looking ahead to the rest of the year, we believe our sales and profitability trends will continue to improve, as we pursue our Vision 2020 strategy and as our customer continues to respond positively to the enhancements we are making to offer more value, more trend-right product, and a more integrated, omnichannel experience," added Mr. Rubin. "Additionally, the unique headwinds we experienced in the second half of fiscal 2016 should provide for easier comparisons in the second half of this year."
For the third quarter, Michaels’ expects comparable store sales to increase 1.2 percent to 2.2 percent as well as opening nine new Michaels locations, but at the same time relocating five of them. The company believes that EPS will be in the range of $0.41 and $0.43. Thomson Reuters analysts’ consensus estimates for $0.42 in EPS and $1.26 billion in revenue.
For the rest of the fiscal year, Michaels expects net sales to grow 2.8 percent to 3.8 percent. As well as EPS in the range of $2.11 and $2.16 The company expects comparable store sales to increase 0.5 percent to 1.5 percent.