Michaels Cos. (MIK) Misses Q1 EPS by 1c

Michaels Cos. (NASDAQ: MIK) reported Q1 EPS of $0.32, $0.01 worse than the analyst estimate of $0.33. Revenue for the quarter came in at $1.08 billion versus the consensus estimate of $1.08 billion. The company also reiterated its fiscal year 2015 outlook.

Comparable store sales increased by 0.3% or 1.4% on a constant currency basis.

Chuck Rubin, Chairman and Chief Executive Officer, stated, "We delivered another solid quarter, despite several headwinds such as foreign exchange rates, unfavorable weather early in the quarter and the previous year's Rainbow Loom® sales. Our teams remained focused on execution and maintaining expense discipline resulting in overall financial performance that was within the range of our expectations."

Second Quarter and Fiscal Year 2015 Outlook:

The Company continues to expect fiscal 2015 total net sales growth of 3.2% to 3.7% or 4.4% to 4.9% on a constant currency basis and a comparable store sales increase of 1.5% to 2.0% or 2.7% to 3.2% on a constant currency basis. Operating income is expected to be in the range of $700 million to $720 million and fully diluted earnings per share is expected to be $1.65 to $1.71. This guidance is based on opening approximately 30 net new and/or relocated stores during fiscal year 2015.

The guidance range also includes the impact of paying off the remaining balance of $180.9 million PIK Notes called on May 6, 2015. In the second quarter of fiscal 2015, the Company will record approximately $6 million of debt extinguishment costs, which consists of a 2% redemption premium and approximately $2 million of unamortized debt issuance costs.

Annual adjusted interest expense is forecasted to be $141 million. This reflects the $10 million interest savings from paying off the PIK Notes. The effective tax rate is now expected to be approximately 37% for the full fiscal year 2015. The diluted weighted average shares for calculating fully diluted earnings per share are now anticipated to be 211 million for the full fiscal year 2015.

For the second quarter of fiscal 2015, we expect comparable store sales to be up 1% to 2% or 2.3% to 3.3% on a constant currency basis, and operating income of $88 million to $92 million. The diluted weighted average shares for calculating fully diluted earnings per share are anticipated to be higher at 211 million for the second quarter of 2015.

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

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