UPDATE: Michaels Cos. (MIK) Tops Q1 EPS by 1c; Comps Light of Expectations; Guides Q2 EPS Below Views

Michaels Cos. (NASDAQ: MIK) reported Q1 EPS of $0.36, $0.01 better than the analyst estimate of $0.35. Revenue for the quarter came in at $1.16 billion versus the consensus estimate of $1.17 billion.

Comps rose 0.9 percent, versus expectations of a 2.1 percent gain.

Executive Management Update

The Company announced today that Charles M. Sonsteby has been named to the newly created role of Vice Chairman of The Michaels Companies, Inc. Mr. Sonsteby currently serves as Chief Administrative Officer and Chief Financial Officer. In this new role, Mr. Sonsteby will assume executive responsibility for the growth and continued integration of Lamrite West, in addition to his current responsibilities. The Company has launched a search for a new Chief Financial Officer. Mr. Sonsteby will continue to serve as Chief Financial Officer until a successor has been named.

Guidance:

For fiscal 2016, the Company continues to expect:

• Comparable store sales to increase 2.2% to 2.7%;
• Total net sales growth, including revenues from Lamrite West, of 8.0% to 9.0%;
• Approximately 1.3% sales growth from 26 net new store openings, including 3 new Pat Catan’s stores;
• Lamrite West to generate $225 million to $250 million in revenues;
• Operating income to be in the range of $761 million to $786 million, excluding approximately $11 million to $12 million of integration costs and net non-recurring, inventory-related purchase accounting entries;
• Annual interest expense to be approximately $129 million;
• The effective tax rate to be approximately 37.0%;
• Diluted earnings per common share to be between $1.89 and $1.97, based on diluted weighted average common shares of approximately 209 million; (The Street sees FY16 EPS of $1.95.) and
• Capital expenditures of between $125 million and $135 million.

For the second quarter of fiscal 2016, the Company expects:

• Comparable store sales growth of 0.4% to 1.4%;
• Approximately 3 net new store openings;
• Operating income of $87 million to $93 million;
• Interest expense to be approximately $32 million;
• The effective tax rate to be approximately 37.1%; and
• Diluted earnings per common share of $0.16 to $0.18, based on diluted weighted average common shares of 208 million. (The Street sees EPS of $0.21.)

For earnings history and earnings-related data on Michaels Cos. (MIK) click here.

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