Crafts retailer Michaels Companies posted strong quarterly results on Thursday as its e-commerce push fueled same-store sales growth despite the coronavirus pandemic.
Michaels’ comparable sales, a key retail metric, rose 12.0% in the second quarter, while net sales increased 11.1% to $1.15 billion. E-commerce sales jumped 350% as the company enhanced and expanded omnichannel capabilities including curbside pick-up, same-day delivery, ship from store, and in-app purchases.
Adjusted diluted earnings of 30 cents per share topped analysts’ consensus estimate, which looked for a loss of eight cents.
CEO Ashley Buchanan attributed the sales growth in part to “the multiple omnichannel touchpoints we introduced over the past few months.” She also noted that Michaels “ended the second quarter in a strong liquidity position of $1.3 billion, approximately $100 million higher than at the start of the fiscal year.”
“This gives us great confidence in our ability to navigate the current environment while advancing our strategic priorities and positioning Michaels for long-term growth,” she added.
Michaels’ shares, however, fell 14.7% to $9.58 in trading Thursday as the company declined to provide guidance for the current quarter or the full year, citing “the continued uncertainty due to the COVID-19 pandemic.”
“Investors may have been turned off by the lack of guidance and clarity on the second half of the year, a sign of uncertainty and that [Michaels’] growth rate could slow as the economy normalizes,” The Motley Fool said.
The comparable sales gain drove an increase in Michaels’ operating income, which rose 41% to $105.8 million in the quarter ended Aug. 1. Cost controls also helped lower selling, general, and administrative spending from 35.5% of net sales to 29.8%.
Michaels has 1,273 stores in the U.S. and Canada. It recently launched a new MichaelsPro program that offers bulk sizes of items to “makerpreneurs” who make gifts and décor items for a living.
“We will continue to focus on serving our customers and executing to the pillars that underpin our Maker strategy: strengthening our retail foundation, modernizing our omnichannel experience, and establishing our position as the Expert for the Maker,” Buchanan said.
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