Michaels Explained

Michaels Stores, Inc.
Trade Name:Michaels
Type:Subsidiary
Foundation:[1]
Founder:Michael J. Dupey
Location:Irving, Texas, U.S.
Num Locations:1,252 (US, Canada) (January 2021)[2]
Industry:Retail
Key People:Ashley Buchanan (CEO)[3]
Products:Arts, crafts, framing, floral, wall décor, home decor, scrapbooking
Owner:The Michaels Companies
Website:Michaels Stores

Michaels Stores, Inc., more commonly known as Michaels, is a privately held chain of American and Canadian arts and crafts stores. It is North America's largest provider of arts, crafts, framing, floral and wall décor, and merchandise for makers and do-it-yourself home decorators.[2] The company is part of The Michaels Companies, founded in 2014 and headquartered in Irving, Texas. In addition to Michaels stores, The Michaels Companies operates Aaron Brothers Custom Framing store-within-a-store,[4] and Artistree, a manufacturer of custom and specialty framing merchandise. The company also develops over a dozen private brands sold in Michaels stores, including Recollections, Studio Décor, Bead Landing, Creatology, and Ashland.[2] [5] As of January 2021, there were 1,252 Michaels stores in 49 out of 50 states in the U.S., and Canada, with approximately $5.362 billion in sales for fiscal 2020.[2]

Retail History

In 1973, businessman Michael J. Dupey founded Michaels in Dallas, Texas when he converted a money-losing Ben Franklin five and dime store into an arts and crafts store.[6] [7] In 1982, Dallas businessman Sam Wyly bought a controlling interest in the company, which by then had 11 outlets with annual revenues around $10 million.[8] After the sale, Dupey founded MJ Designs, which was later bought out by The Michaels Companies.[7] In 1984, Michaels was first publicly traded (on NASDAQ) under parent entity The Michaels Companies, which operated 16 stores.[8] Over the next decade, the company bought craft and hobby stores in local and regional markets.[9] In 1994, Michaels Stores expanded acquired craft stores in the Pacific Northwest, including Treasure House Crafts, Oregon Craft & Floral Supply, and H&H Craft & Floral.[9] In the Midwest and Northeast, it bought Leewards Creative Crafts, a 101-unit store chain.[10] In 1995, Michaels Stores acquired Aaron Brothers Holdings, Inc., a specialty framing and art supply store. By 1996, Michaels' sales reached $1.24 billion with 450 stores.[11] In 2006, two private equity groups, Bain Capital and the Blackstone Group, purchased Michaels Stores for $6 billion, taking it private.[12] In May 2007, Martha Stewart and Michaels launched "Martha Stewart Crafts", an online resource for home "do-it-yourselfers" with how-to instructions, projects, and crafting products.[13] In the fall of 2008, Michaels Stores opened its 1,000th store.[14] In 2010, Michaels began a partnership with Chef Duff to feature the Duff Goldman Collection in its stores. The line includes baking products including fondant, sprinkle sets, color spray, cake tattoos, and color paste.[15]

In February 2011, Michaels and Aaron Brothers stores suffered a data compromise that affected their debit card terminals in 20 states. The company alerted customers who made PIN-based purchases between February 8 and May 6, 2011, that their data may have been exposed.[16] A class action lawsuit was filed against Michaels in the County Court of Passaic, New Jersey over the incident.[17] 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.[18] 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.[18] The filing, for a $500 million common stock issue,[19] 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 and net income was $176M.[20] In July, the IPO was "put on hold indefinitely" after CEO John Menzer suffered a stroke.[21]

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.[22] The Michaels Office of CEO was discontinued when Rubin assumed his position later in February and Sonsteby continued as CAO/CFO.[23] In June 2014, Michaels became a public company under newly formed parent The Michaels Companies.[24]

In 2020, Ashley Buchanan, formerly of Walmart, became the new CEO of Michaels. Later that year, Michaels introduced a new store concept at two locations in Texas, which features a new open layout built around "inspiration hubs", new "maker space" areas for instruction, and self-service pickup lockers for online orders. The company stated that aspects of this concept would be introduced at new and renovated locations in the future (such as its location in Regina, Saskatchewan, which in 2023 became the first Canadian location to adopt the format after having been closed following a fire).[25] [26] [27] In March 2021, The Michaels Companies agreed to be acquired by private equity company Apollo Global Management, taking the company private.[28] [29] [30]

Products

Michaels Stores sell a variety of arts and crafts products, including scrapbooking, beading, knitting, rubber stamping, home décor items, floral items, kids' crafts, paints, framing, greenery, baking, and many seasonal items.[31] Michaels produces a number of private brands including Recollections, Studio Decor, Bead Landing, Creatology, Ashland, Celebrate It, Art Minds, Artist's Loft, Craft Smart, Loops & Threads, Make Market, Foamies, LockerLookz, Imagin8, and Sticky Sticks.[32] Michaels also offers custom framing through its Aaron Brothers Custom Framing store-within-a-store[33] and online.[34] Online, customers can upload, edit and print photos from their computer or social media sites. They can then select and customize the size, surface, frame, and mat.[35] Michaels also develops over a dozen private brands sold in Michaels stores, including Recollections, Studio Décor, Bead Landing, Creatology, and Ashland.[2] [5]

Notes and References

  1. Web site: The Michaels Companies, Inc.: Private Company Information - Bloomberg . www.bloomberg.com . May 15, 2019 . March 31, 2019 . https://web.archive.org/web/20190331205917/https://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=253239221 . live .
  2. Web site: Form 10-K Michaels Companies, Inc. 2021 . www.sec.gov . March 9, 2021 . May 18, 2021 . May 19, 2021 . https://web.archive.org/web/20210519053503/https://sec.report/Document/0001558370-21-002630/ . live .
  3. Web site: Michaels | 2020 Fortune 500 . Fortune . 2021-03-19 . 2021-03-16 . https://web.archive.org/web/20210316230257/https://fortune.com/company/michaels-cos/fortune500/ . live .
  4. News: Crafts retailer Michaels to close nearly all Aaron Brothers stores . March 22, 2018 . Reuters . September 19, 2019 . en . August 5, 2019 . https://web.archive.org/web/20190805152926/https://www.reuters.com/article/us-michaels-compans-aaronbrothers-idUSKBN1GY09E . live .
  5. Web site: Acquisition to help craft retailer Michaels expand B2B capabilities . Kezar . Korrie . March 17, 2016 . Dallas Business Journal . January 16, 2019 . March 19, 2017 . https://web.archive.org/web/20170319193942/http://www.bizjournals.com/dallas/news/2016/03/17/acquisition-to-help-craft-retailer-michaels-expand.html . live .
  6. News: Jarzemsky . Matt . Michaels Stores files for $500 mln IPO . November 30, 2017 . MarketWatch . March 30, 2012 . December 1, 2017 . https://web.archive.org/web/20171201081825/https://www.marketwatch.com/story/michaels-stores-files-for-500-mln-ipo-2012-03-30 . live .
  7. Web site: Halkias . Maria . Michael J. Dupey: Created craft superstore concept with Irving-based Michaels chain . Dallas Morning News . May 5, 2010 . September 4, 2023 . April 20, 2021 . https://web.archive.org/web/20210420154033/https://www.dallasnews.com/news/obituaries/2010/05/05/michael-j-dupey-created-craft-superstore-concept-with-irving-based-michaels-chain/ . live .
  8. Book: Pedersen . Jay P. . International directory of company histories. Vol. 67. . February 2, 2005 . St. James Press . 1558625127 . January 22, 2019 . January 17, 2019 . https://web.archive.org/web/20190117122318/http://www.fundinguniverse.com/company-histories/michaels-stores-inc-history/ . live .
  9. News: Goldfield . Robert . Craft store veteran to challenge competitors with new superstore . July 26, 2015 . . March 14, 1999 . April 30, 2017 . https://web.archive.org/web/20170430002752/http://www.bizjournals.com/portland/stories/1999/03/15/story3.html . live .
  10. Web site: Schmeltzer . John . DALLAS CHAIN CRAFTS MERGER WITH LEEWARDS . Chicago Tribune . May 11, 1994 . 2019-01-17 . 2019-01-17 . https://web.archive.org/web/20190117122302/https://www.chicagotribune.com/news/ct-xpm-1994-05-11-9405110212-story.html . live .
  11. Web site: Sam Wyly 'Innovates To Opportunity' Time And Time Again . https://web.archive.org/web/19970614191353/http://www.umich.edu/~msjrnl/backmsj/011397/wyly.html . dead . June 14, 1997 . Monroe Street Journal . January 13, 1997 .
  12. Web site: Michaels Stores Announces Completion of Merger Agreement with Bain Capital and Blackstone Affiliates . October 31, 2006 . Blackstone.com . Blackstone . January 16, 2019 . November 19, 2018 . https://web.archive.org/web/20181119171800/https://www.blackstone.com/media/press-releases/article/michaels-stores-announces-completion-of-merger-agreement-with-bain-capital-and-blackstone-affiliates . dead .
  13. Web site: BRIEF-Sequential Brands and Michaels Cos announce partnership for Martha Stewart Crafts brand . March 2, 2017 . Reuters . May 18, 2021.
  14. Web site: Chain Store Age Staff . Michaels crafts up new logo, opens 1,000th store . Chainstoreage.com . Eagle Operating Corp . January 16, 2019 . September 22, 2008 . January 17, 2019 . https://web.archive.org/web/20190117125300/https://www.chainstoreage.com/news/michaels-crafts-new-logo-opens-1000th-store/ . live .
  15. Web site: Vozzella . Lauren . Ace of homemade cakes . The Baltimore Sun . January 14, 2019 . June 25, 2010 . January 17, 2019 . https://web.archive.org/web/20190117065930/https://www.baltimoresun.com/news/bs-xpm-2010-06-25-bs-fo-duff-goldman-products-20100624-story.html . live .
  16. News: Retailer Michaels Stores confirms payment card data breach . April 17, 2014 . Reuters . May 18, 2021 . May 19, 2021 . https://web.archive.org/web/20210519053504/https://www.reuters.com/article/us-michaelsstores-cybercrime/retailer-michaels-stores-confirms-payment-card-data-breach-idUSBREA3G27N20140417 . live .
  17. News: Class Slams Michaels for Data Breach . Fry . Chris . July 14, 2011 . Courthouse News Service . August 7, 2011 . March 19, 2012 . https://web.archive.org/web/20120319024944/http://www.courthousenews.com/2011/07/14/38153.htm . live .
  18. Web site: Exclusive: Blackstone, Bain prepare Michaels Stores IPO . Oran . Olivia . Roumeliotis . Greg . March 26, 2012 . Reuters . January 17, 2019 . January 17, 2019 . https://web.archive.org/web/20190117174131/https://ca.reuters.com/article/businessNews/idCABRE82P11120120326 . live .
  19. Web site: sec.gov . 2019-01-17 . 2017-08-27 . https://web.archive.org/web/20170827131759/https://www.sec.gov/Archives/edgar/data/740670/000104746912003646/a2208573zs-1.htm . live .
  20. Web site: Arts and crafts retailer Michaels Stores has filed for a $500M IPO under the ticker MIK . Seeking Alpha . March 30, 2012 . May 18, 2021.
  21. Web site: IPO for Crafts Retailer Michaels on Hold Indefinitely . Dezember . Ryan . Demos . Telis . June 6, 2012 . The Wall Street Journal . January 17, 2019 . January 17, 2019 . https://web.archive.org/web/20190117071530/https://blogs.wsj.com/deals/2012/07/06/ipo-for-crafts-retailer-michaels-on-hold-indefinitely/ . live .
  22. Web site: Ulta CEO leaving to join Michaels . March 20, 2013 . biz journals.com . January 17, 2019 . February 17, 2013 . https://web.archive.org/web/20130217003328/http://www.bizjournals.com/chicago/news/2013/02/14/ulta-ceo-leaving-to-join-michaels.html . live .
  23. http://www.hfnmag.com/business-finance/rubin-become-michaels-ceo "Rubin to Become Michaels CEO"
  24. Web site: Michaels I.P.O. Prices at $17, at Low End of Range . Alden . William . June 26, 2014 . . January 17, 2019 . December 12, 2018 . https://web.archive.org/web/20181212084747/https://dealbook.nytimes.com/2014/06/26/michaels-i-p-o-prices-at-17-at-low-end-of-range/ . live .
  25. Web site: First Look: Michaels unveils new concept stores . 2023-03-17 . Chain Store Age . 9 September 2020 . en . 2023-03-17 . https://web.archive.org/web/20230317173104/https://chainstoreage.com/first-look-michaels-unveils-new-concept-stores . live .
  26. Web site: 2020-09-09 . Michaels redesigns Plano and McKinney stores to test a new shopping environment . 2023-03-17 . Dallas News . en . 2023-03-17 . https://web.archive.org/web/20230317171602/https://www.dallasnews.com/business/retail/2020/09/09/michaels-redesigns-plano-and-mckinney-stores-to-test-new-shopping-environment/ . live .
  27. Web site: 2023-03-17 . Regina's Michaels craft store celebrates reopening following fire . 2023-03-17 . CTV News Regina . en . 2023-03-17 . https://web.archive.org/web/20230317171532/https://regina.ctvnews.ca/regina-s-michaels-craft-store-celebrates-reopening-following-fire-1.6317758 . live .
  28. Web site: Thomas . Lauren . March 3, 2021 . Crafts retailer Michaels will go private in $3.3 billion deal with Apollo Global . March 3, 2021 . CNBC . March 4, 2021 . https://web.archive.org/web/20210304172724/https://www.cnbc.com/2021/03/03/crafts-retailer-michaels-to-be-bought-by-apollo-global-for-5-billion.html . live .
  29. Web site: April 15, 2021 . Apollo Announces Completion of the Tender Offer for Shares of The Michaels Companies . May 18, 2021 . Yahoo . May 19, 2021 . https://web.archive.org/web/20210519053505/https://money.yahoo.com/apollo-announces-completion-tender-offer-120000512.html . live .
  30. Web site: March 3, 2021 . Michaels will be acquired by a private equity firm in a $5 billion deal . May 18, 2021 . The New York Times . March 4, 2021 . https://web.archive.org/web/20210304211516/https://www.nytimes.com/2021/03/03/business/michaels-will-be-acquired-by-a-private-equity-firm-in-a-5-billion-deal.html . live .
  31. Web site: We visited Hobby Lobby and Michaels to see which was a better arts-and-crafts store, and there was an obvious winner . Tyler . Jessica . Business Insider . October 17, 2019 . October 7, 2019 . https://web.archive.org/web/20191007161512/https://www.businessinsider.com/hobby-lobby-vs-michaels-best-craft-store-2018-9 . live .
  32. Web site: Michaels Crafts Private Brands Top 60% of Net Sales My Private Brand. Durham. Christopher. en-US. October 7, 2019.
  33. Web site: Michaels is closing its Aaron Brothers stores and rebranding its framing departments . Halkias . Maria . March 22, 2018 . Dallas Morning News . January 23, 2019 . January 17, 2019 . https://web.archive.org/web/20190117013344/https://www.dallasnews.com/business/retail/2018/03/22/michaels-closing-aaron-brothers-stores-rebranding-framing-departments . live .
  34. Web site: Halkias . Maria . Michaels launches new online store for custom framing . Dallas Morning News . October 25, 2017 . January 23, 2019 . January 17, 2019 . https://web.archive.org/web/20190117065931/https://www.dallasnews.com/business/retail/2017/10/25/michaels-launches-new-online-store-custom-framing . live .
  35. Web site: Halkias . Maria . Arts and crafts retailer Michaels partners with HGTV's Property Brothers to boost framing business . DallasNews.com . Dallas Morning News, Inc. . January 14, 2019 . March 1, 2018 . January 17, 2019 . https://web.archive.org/web/20190117013357/https://www.dallasnews.com/business/retail/2018/03/01/arts-crafts-retailer-michaels-partners-hgtvs-property-brothers-boost-framing-business . live .

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