Michaels Q3 Profit Jumps 36% - Update

(RTTNews) - Michaels Companies Inc. (MIK) Thursday reported a 36 percent jump in profit for the third quarter, as revenues increased and operating costs dropped, with both earnings and revenues trumping Wall Street estimates.

The Irving, Texas-based company's third-quarter profit rose to $64 million or $0.31 per share from $47 million or $0.26 per share last year. On average, 15 analysts polled by Thomson Reuters expected earnings of $0.26 per share for the quarter. Analysts' estimates typically exclude special items.

The arts-and-crafts retailer said its sales for the third quarter grew 1.1 percent to $1.13 billion from $1.12 billion a year ago. Comparable store sales were down by 0.8 percent compared with an increase of 7.9 percent last year, which reflected the success of the Rainbow Loom product. Wall Street expected revenues of $1.09 billion for the period.

Gross margins dropped to 40.0 percent from 40.5 percent last year, hurt by slightly lower product margins, higher occupancy costs, and investments in e-commerce. Selling, general and administrative expense, as a percent of sales, decreased 100 basis points to 27.4 percent from 28.4 percent last year.

Looking forward to the full year, the company now expect adjusted earnings of $1.42 to $1.44 per share and sales growth of 3 to 3.3 percent. Analysts currently estimate earnings of $1.41 per share. Earlier, the company expected earnings of $1.38 to $1.42 per share and sales growth of 1 to 2 percent.

Chief Executive Chuck Rubin said, "As we look to the fourth quarter we are well positioned to make further progress on these initiatives and deliver to our customers an exciting in-store and on-line shopping experience."

For the fourth quarter, the company expects earnings of $0.71 to $0.73 per share and sales growth of 1.3 to 2.3 percent. Analysts currently estimate earnings of $0.75 per share for the quarter.

MIK is currently trading at $21.63, down $0.12 or 0.55%, on the Nasdaq.