Earnings Warning Sends Michaels Shares Tumbling
Basch, Mark, The Florida Times Union
Michaels Stores Inc. last week wiped out a good year for its shareholders by announcing that earnings for the rest of this fiscal year will be a bit lower than expected.
The Texas-based arts and crafts retailer, which has a distribution center in Jacksonville, did not announce a drastic drop, saying that earnings for the fiscal year ending Feb. 3 are projected to be $2.40 a share, lower than analysts' previous forecasts of $2.58. That $2.40 would still be a 20 percent increase over last year.
But in a touchy market, that announcement sent the stock reeling. It fell $15.63 last Wednesday to $19.81 on volume of 10.4 million shares, about 25 times its normal daily volume.
That put the stock below its 1999 closing price of $28.50 and well below its 2000 high of $49.63, set in August.
"Recently we have seen significantly softer sales trends which we attribute to general economic conditions and uncertainties," said a statement by Michaels Chief Executive Officer Michael Rouleau.
"We are well prepared for the fourth quarter. However, if there is a continuation of these trends, our fourth-quarter earnings will be negatively impacted," he said.
Michaels said earnings for the third quarter ending Oct. 28 will be about 40 cents a share, below analysts' forecasts of 45 cents. The results will be released on Nov. 21.
The company owns and operates 619 Michaels stores in 48 states, Canada and Puerto Rico and 112 Aaron Brothers stores.
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