Michaels Cos. (MIK) Misses Q3 EPS by 9c, Revenues Beat; Offers Q4 & FY EPS Guidance Below Consensus

Michaels Cos. (NASDAQ: MIK) reported Q3 EPS of $0.40, $0.09 worse than the analyst estimate of $0.49. Revenue for the quarter came in at $1.22 billion versus the consensus estimate of $1.26 billion.

“We are moving ahead on bringing our customer-centric, core \'Maker\' strategy to life, and we are encouraged by the early operational progress being made. Combining this with the sales gains from our recent opportunistic transaction tied to A.C. Moore exiting their retail business, we believe we are on the path to improved, consistent, financial performance over time,” said Mark Cosby, Chief Executive Officer.

“Our third quarter results did not meet our expectations and were impacted by specific factors which we are addressing. As we implement the initiatives that support our \'Maker\' strategy, we believe we will improve the trajectory of our business over time. Our strong balance sheet and substantial free cash flow generation provide a solid foundation from which we can reposition Michaels to drive long-term shareholder value,” Mr. Cosby added.

GUIDANCE:

Michaels Cos. sees Q4 2019 EPS of $1.21-$1.27, versus the consensus of $1.42.

Michaels Cos. sees FY2019 EPS of $2.07-$2.14, versus the consensus of $2.38. Michaels Cos. sees FY2019 revenue of $5.06-5.08 billion, versus the consensus of $5.18 billion.

The Company’s guidance for the fourth quarter and full-year fiscal 2019 excludes any restructure charges related to the Pat Catan’s store closures, any expenses associated with the transition of the Company’s former CEO, a write-off of an investment in a liquidated business, non-cash impairment charges associated with the Darice wholesale business, costs related to debt refinancing activities, and related tax adjustments.

For the fourth quarter of fiscal 2019, the Company expects:

• comparable store sales to be down 2%-3% reflecting current business trends, a shorter holiday selling season in the fourth quarter, and a potential negative impact from the liquidation of A.C. Moore retail locations;
• adjusted operating income to be between $271 million and $281 million;
• net interest expense to be approximately $38 million;
• the effective tax rate to be between 23% and 24%; and
• adjusted diluted earnings per common share to be between $1.21 and $1.27, based on diluted weighted average common shares of 147 million.

For fiscal 2019, the Company now expects:

• net sales to be between $5.06 billion and $5.08 billion;
• comparable store sales to be down approximately 2%;
• to open net 16 new Michaels stores, inclusive of 12 Pat Catan’s stores the Company plans to rebrand and reopen, and relocate 13 Michaels stores;
• adjusted operating income to be in the range of $565 million to $575 million;
• interest expense to be approximately $152 million;
• the effective tax rate to be between 23% and 24%;
• adjusted diluted earnings per share to be between $2.07 and $2.12, based on diluted weighted average shares of approximately 153 million; and
• capital expenditures to be approximately $125 million.

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

You May Also Be Interested In

• Gilead Sciences (GILD) Misses Q1 EPS by 288c
• Minerals Technologies (MTX) Tops Q1 EPS by 16c
• Edwards Lifesciences (EW) Tops Q1 EPS by 2c; offers guidance