The Michaels Companies

The Michaels Companies, Inc. is an American company that is North America's largest provider of arts, crafts, framing, floral & wall décor, and merchandise for makers and do-it-yourself home decorators.[5] The company was founded by Michael J. Dupey in Dallas, Texas. The Michaels Companies' corporate headquarters are located in Irving, Texas.[6][7]

This article is about the US company that includes Michaels Stores and other subsidiaries. For persons named Michaels, see Michaels (surname).
The Michaels Companies, Inc.
TypePublic
NASDAQ: MIK
S&P 600 Component
IndustryRetail, wholesale arts, crafts, framing, floral, wall décor, and merchandise for makers and do-it-yourself home decorators
Founded1973 (1973)[1][2]
FounderMichael J. Dupey
HeadquartersIrving, Texas, U.S.
Number of locations
1,274 (US, Canada) (2019)[3]
Key people
Ashley Buchanan (CEO)[4]
Revenue US$5.072 billion (2019)[3]
US$515.04 million (2019)[3]
US$272.6 million (2019)[3]
Total assets US$3.838 billion (2019)[3]
Total equity US$−1.446 billion (2019)[3]
Number of employees
44,000 (2019)[3]
Subsidiaries
  • Michaels Stores
  • Darice
  • Artistree
WebsiteThe Michaels Companies
Michaels Store located in Saugus, Massachusetts

The Michaels Companies, Inc. owns and operates more than 1,250 Michaels stores.

In addition to operating stores, The Michaels Companies operate subsidiaries Aaron Brothers Custom Framing store-within-a-store,[8] Artistree - a manufacturer of high quality custom and specialty framing merchandise; and Darice, a wholesale distributor to the craft, gift, and décor industry.[9]

As of August 2018, the company reported that in addition to its Michaels Stores brand, it produces over a dozen private brands including Recollections, Studio Décor, Bead Landing, Creatology and Ashland.[5] Michaels competitors include Hobby Lobby, Ben Franklin, Jo-Ann Stores, and several smaller chains. In November 2019, The Michaels Companies, Inc. announced that they would reopen up to 40 A.C. Moore stores after its bankruptcy and liquidation.

The Michaels Companies

The Michaels Companies, Inc.'s retail brands include over 1,200 Michaels Stores; Aaron Brothers Custom Framing store-within-a-store;[10] Artistree, a manufacturer of high quality custom and specialty framing merchandise, and Darice, a wholesale distributor to the craft, gift and décor industry. The Michaels Companies also produce fifteen private brands including Recollections, Studio Decor, Bead Landing, Creatology and Ashland. The corporate headquarters are located in Irving, Texas.

History

In 2006, two private equity groups, Bain Capital and the Blackstone Group, purchased The Michaels Companies for $6 billion, taking it private.[11]

In June 2014, The Michaels Companies completed its initial public offering on the NASDAQ and began trading under the symbol MIK.[12]

In February 2016, the company completed the acquisition of Lamrite West, Inc. Lamrite operates an international wholesale business under the Darice brand name ("Darice") and 36 arts and crafts retail stores located primarily in the Midwest under the Pat Catan's brand name.[9]

In August 2016, The Michaels Companies acquired Hancock Fabrics' intellectual property and customer database as part of its bankruptcy and liquidation.[13]

In 2017, it became a Fortune 500 company.[14]

In January 2019, the company announced the closure of the Pat Catan Stores, a dozen or more of which will be reopened under the Michaels Stores name. In November 2019, The Michaels Companies, Inc. announced that they would reopen up to 40 A.C. Moore stores after its bankruptcy and liquidation.[15]

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.[16] 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.[16] The filing, for a $500 million common stock issue,[17] 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.[18]

In July 2012, the IPO was "put on hold indefinitely" after CEO John Menzer suffered a stroke.[19] In June 2014, a $528 million IPO valuing the Company overall at $3.86 billion 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.[12]

The Michaels Companies debuted in June 2014 on the NASDAQ under the symbol MIK and raised about $472 million in its initial public offering, using the funds to pay down debt.[20]

Management

In April 2012, Chief Executive John Menzer suffered a stroke.[21] The IPO was postponed in July 2012[22] and later in the month Menzer retired.[23]

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.[24] The Michaels Office of CEO was discontinued when Rubin assumed his position later in February and Sonsteby continued as CAO/CFO.[25]

In April 2015, Rubin was named chairman, in addition to his title of CEO. In August 2016, The Michaels Company promoted Denise Paulonis to the position of chief financial officer, with Charles Sonsteby retaining the title of vice chairman.[26] In October 2017, Charles Sonsteby retired from his position as Vice Chairman of the Company.[27][28]

In October 2019, Mark Cosby was named CEO of the Michaels Companies after being named interim CEO in February 2019.[29][30]

In August 2020, The Michaels Companies added new talent to its C-suite to prepare the group for long-term profitable success. It has appointed Michael Diamond as the new head of finance, effective September 1, 2020.[31]

Michaels Stores
Michaels in Markham, Ontario
Logo from 1984 to 2009.

History

In 1973, Dallas businessman Michael J. Dupey founded Michaels in Dallas, Texas.[6][7] In 1982, Dallas businessman Sam Wyly bought a controlling interest in the company, when there were 11 outlets with annual revenues around $10 million.[32] After the sale, Dupey founded MJ Designs, which was later bought out by The Michaels Companies.[7]

In 1984, the company was first publicly traded (on NASDAQ) as a separate company, The Michaels Companies, which operated[32] 16 stores.[32] Over the next decade, the company bought craft and hobby stores in local and regional markets.[33] In 1994, The Michaels Companies acquired craft stores in the Pacific Northwest, including Treasure House Crafts, Oregon Craft & Floral Supply, and H&H Craft & Floral.[34] In the Midwest and Northeast, it bought Leewards Creative Crafts, a 101-unit store chain.[35] In 1995, Michaels acquired Aaron Brothers Holdings, Inc., a specialty framing and art supply store. By 1996, Michaels' sales reached $1.24 billion with 450 stores.[36] In the fall of 2008, the Michaels Companies opened its 1,000th store.[37] In 2010, Michaels Arts and Crafts launched craft classes, including instruction in beading, jewelry making, knitting, scrapbooking, painting and cake decorating.

In February 2011, Michaels suffered a data compromise that affected its 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.[38] A class action lawsuit was filed against Michaels in the County Court of Passaic, New Jersey over the incident.[39] On January 25, 2014, Michaels alerted customers of a hacking-based data breach of customer data.[40]

In 2015, Michaels announced a partnership with online DIY craft design and video company Darby Smart aimed at "making crafting simpler and more accessible."[41] In 2016, Michaels launched a loyalty program for customers in the Dallas-Fort Worth area and expanded it the following year to include customers nationwide.[42] Michaels launched a relationship with Elizabeth Jean "Busy" Philipps in fall 2017, resulting in a digital video series called The Make Off, in which Busy competes in a crafting competition against other celebrities. In 2018, The Make Off series was nominated for a Webby Award. That year the company also embarked on media partnerships with Good Morning America and Nickelodeon around the concept of promoting screen-free activities for children and teens.

As of August 4, 2018, The Michael's Companies operated 1,251 Michaels stores in 49 out of 50 states in the U.S. and reported approximately $5.362 billion in sales for fiscal 2017.[43]

In July 2020, the company downsized its headquarters but remains in Irving, Texas.[44][45]

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.[46] 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.[47]

The company also offers custom framing through its Aaron Brothers Custom Framing store-within-a-store[48] and online.[49] 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.[50]

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.[51]

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.[52]

In March 2018, the company announced its partnership with TV design personalities Drew and Jonathan Scott of HGTV's Property Brothers for a custom frame collection.[50]

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