Michaels

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This article is about the U.S. crafts retail chain. For persons named Michaels, see Michaels (name). For other uses, see Michaels (disambiguation).
Michaels Stores, Inc.
Public
Traded as NASDAQ: MIK
Industry Retail
Founded 1976; 48 years ago (1976)
Dallas, Texas, U.S.
Headquarters Irving, Texas, U.S.
Products Retail-Arts, Crafts, Scrapbooking, Home Decor
Revenue Increase US$4.2 Billion (2011)
US$176 million (2011)
Owner Bain Capital, Blackstone Group, Highfields Capital Management
Number of employees
 43,700
Slogan "Where Creativity Happens"
Website www.michaels.com
A location in Eden Prairie, MN

Michaels Stores, Inc. is a North American arts and crafts retail chain. It currently operates more than 1262 stores (consisting of 1,145 Michaels stores in 49 US states and Canada and 118 Aaron Brothers stores) as of May 31, 2014.[2] In addition, Michaels produces 10 exclusive private brands including Recollections, Studio Decor, Bead Landing, Creatology, Ashland, Celebrate It, Art Minds, Artist's Loft, Craft Smart and Loops & Threads. The corporate headquarters are located in Irving, Texas.

The average Michaels store now contains 40,000 different products in 18,200 square feet (1,700 m²) of selling space. The stores sell a selection of arts, crafts, framing, floral, wall décor, bakeware, beads, scrapbooking and seasonal merchandise for hobbyists and do-it-yourself home decorators.

Michaels is the largest such chain in the United States. Competitors include Hobby Lobby, Ben Franklin Stores, Jo-Ann Stores, AC Moore and several smaller chains. Canadian competitors include DeSerres.

In April 2012, Michaels filed for a $500 million initial public offering (IPO), but it was put on hold due to the chief executive's illness. In June 2014, the IPO was scheduled again.

History

Framing counter of a Michaels store in Springfield, Virginia

In 1976, Dallas businessman Michael J. Dupey opened Michaels in the former Northtown Mall in Dallas, Texas. The location closed in the 1990s and is now a technology building.[3][unreliable source?]

In 1982, Dallas businessman Samuel Wyly bought controlling interest in Michaels,[4] when the company's annual revenues were around $10 million.[5] After the sale, Dupey founded MJ Designs which was later bought out by Michaels.

In 1984, the Michaels chain was first publicly traded. At the time it had 16 stores.

In 1994, Michaels acquired the Treasure House Crafts chain in the Northwest United States. It also acquired Oregon Craft & Floral Supply, as well as H&H Craft & Floral.[6] In July 1994, Michaels acquired Leewards Creative Crafts, a 101-unit store chain, which gave Michaels a "solid footing" in the Midwestern and Northeastern regions of the United States.

In 1995, Michaels acquired Aaron's Brothers Holdings, Inc., a specialty framing and art supply store.

In 1996, sales were $1.24 billion and the company opened its 450th store.[5] By 2003, the company's annual sales were in excess of 3 billion dollars.

Michaels Store located in Saugus, Massachusetts

In 2006, two private equity groups, Bain Capital and the Blackstone Group, purchased the company for $6 billion.[4] The two own equal shares[5] and 93 percent between them. Highfields Capital Management owns another 6.2 percent of the company.[7]

Michaels opened its 1000th store in Texas in the fall of 2008.

In 2010, Michaels Arts and Crafts started bringing back a revised class program. These classes include beading, knitting, crocheting, scrapbooking, painting, and cake decorating. In addition, Michaels introduced two bi-monthly do-it-yourself craft nights allowing customers to bring their projects into the store where Michaels provides tools, supplies, and a workspace for crafting. Bead Night for jewelry makers and Crop Night for the scrapbooker both launched in 2010.

IPO

In March, 2012, Reuters reported that JPMorgan Chase and Goldman Sachs were "the leads on what could be one of the year's largest IPOs in the retail sector", with one source saying the IPO would be registered in April. None of the owners or bankers would comment by name on the record. Reuters further reported that Michaels posted earnings before interest, income taxes, depreciation and amortization of $661 million in 2011 and had total debt of $3.5 billion as of January 28, 2012.[7] The filing, for a $500 million common stock issue,[8] came on March 30. The ticker would be MIK on the NYSE. A report on the filing put the company's debt at $3.8 billion and said 2011 revenue was $4.2 billion (+4% year-to-year) and net income was $176M.[9]

In July 2012, the IPO was "put on hold indefinitely" after CEO Menzer had a stroke.[10]

In June 2014, a $528m IPO valuing the company overall at $3.86bn. was announced, with pricing expected late in the month. "Bain and Blackstone ... will own about 40 per cent of the company each after the IPO" and the company will still have a "$3.7bn debt pile, which includes $1.6bn of variable rate debt", according to the Financial Times.[11]

Management

In April 2012, Chief Executive John Menzer suffered a stroke. The IPO was postponed in July 2012[10] and later in the month Menzer retired.[12]

In Menzer's absence, Lew Klessel, Bain managing director, and Charles Sonsteby, Michaels’ chief administrative officer and chief financial officer, served in a temporary Office of CEO. In February 2013, Chuck Rubin was appointed CEO. Rubin was president and CEO of personal-care specialty retailer Ulta Beauty at the time of his appointment and had previously been with Office Depot and Accenture. The Michaels Office of CEO was discontinued when Rubin assumed his position later in February and Sonsteby continued as CAO/CFO.[13]

Products

Michaels logo used from 1984-2009

Michaels sells a variety of arts and crafts products, including scrapbooking, beading, knitting, rubber stamping, home decor items, floral items, kids' crafts, paints, framing, greenery, baking and many seasonal items. Michaels produces 10 exclusive private brands sold throughout its stores including Recollections, Studio Decor, Bead Landing, Creatology, Ashland, Celebrate It, Art Minds, Artist's Loft, Craft Smart and Loops & Threads. In April 2007, Martha Stewart teamed up with Michaels to launch a line initially available exclusively at Michaels called "Martha Stewart Crafts." The line features over 650 different products for the craft enthusiast. In May 2010, Michaels was the first retailer[citation needed] to feature Chef Duff's Duff Goldman Collection in its store. The baking line features more than 70 products including fondant, sprinkle sets, color spray, cake tattoos and color paste.

Data compromise

On May 5, 2011, Michaels sent an email alert to its customers revealing that its debit card terminals in 20 states had been compromised. Customers who made PIN-based purchases between February 8 and May 6, 2011 may have had their data exposed.[14] A class action lawsuit was filed against Michaels in the County Court of Passaic, New Jersey over the incident.[15]

On January 25, 2014, Michaels warned of a possible second hacking of its customers' data and urged shoppers to keep an eye on their card statements for fraudulent activity.[16]

See also

Notes

  1. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  2. ↑ http://investors.michaels.com/
  3. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  4. ↑ 4.0 4.1 "The 400 Richest Americans: #354, Samuel Wyly", Forbes magazine, September 21, 2006
  5. ↑ 5.0 5.1 5.2 Rigoni, Gene. "Sam Wyly 'Innovates To Opportunity' Time And Time Again", Monroe Street Journal, Stephen M. Ross School of Business, University of Michigan, January 13, 1997
  6. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  7. ↑ 7.0 7.1 Oran, Olivia, and Greg Roumeliotis, "Blackstone, Bain prepare Michaels Stores IPO", Reuters, March 27, 2012. Retrieved 2012-03-27.
  8. ↑ sec.gov
  9. ↑ "Arts & crafts retailer Michaels ...", Seeking Alpha Market Currents, March 30, 2012. Retrieved 2012-03-30.
  10. ↑ 10.0 10.1 Dezember, Ryan, and Telis Demos, "IPO for Crafts Retailer Michaels on Hold Indefinitely", July 6, 2012. Retrieved 2012-12-12.
  11. ↑ "Bain and Blackstone ready to float Michaels", Financial Times, June 16, 2014. Retrieved 2014-06-16.
  12. ↑ Halkias, Maria, "Michaels CEO John Menzer resigns, months after suffering stroke", Dallas News, 20 July 2012. Retrieved 2013-02-17.
  13. ↑ "Rubin to Become Michaels CEO", HFN, 02/15/2013. Retrieved 2013-02-17.
  14. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  15. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  16. ↑ Lua error in package.lua at line 80: module 'strict' not found.

External links


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