BTIG Updates Ests on Michaels (MIK) Following Q2 Results; Sees Long-Term Opportunities as Intact
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BTIG affirms Michaels Cos. (Nasdaq: MIK) with a Neutral rating following Q2 results.
Analyst Alan Rifkin noted,
MIK should benefit in 2H16 from its merchandising initiatives, higher advertising spending (though flat as a percent of sales) and an extra shopping day in 4Q, but its comp outlook is tempered by the challenging macro environment. Promotional activity from competitors in both depth and frequency has also been more aggressive than anticipated.
Rifkin also commented:
- Lowering comp and sales estimates. While we are maintaining our EPS estimates, we are lowering our 2016 comp estimate to 1.3% from 2.2% and now expect sales growth of 7.2% from 8.5% previously.
- Long-term opportunities intact. While 2016 is shaping up to be below initial expectations, MIK continues to have LT opportunities in leveraging Lamrite’s China sourcing office for its $1B of procurement spending, growing the B2B business, and refreshing store layouts. Initial results from the new Michaels Rewards loyalty program also appear positive. E-comm is seen as potentially growing to a mid-to-upper single digit percentage of sales from zero just a few years ago.
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