An increasingly crowded crafting market, pressure from Amazon and a challenging February took a bite out of Michaels’ financial results in the first quarter of 2017. But despite a rough start, the retailer is determined to bounce back.
Despite flat total sales of $1.16 billion that were less than expected, and comp-store sales that dipped 1.2%, there was progress in the quarter. Paper crafting delivered nice comp growth, driven by the continued popularity of planners and the retailer’s expanded offering of Cricut machines and accessories. Michaels also saw good growth in kid's crafts, driven by the very popular slime trend. And although it’s still a small part of the retailer’s business, e-commerce continued to deliver very strong double-digit sales growth.
As Michaels tackles the rest of the year and assesses its long-term priorities, chairman and CEO Chuck Rubin discussed several initiatives to get the company back on track. Arguably one of the most essential ones is its plans to lower product cost and keep a competitive edge over its competitors. The retailer is not only determined to best its brick-and-mortar competition but also tackle the online behemoth Amazon with the launch at the end of the quarter of a new price guarantee program. If a customer finds a lower price on an identical in-stock item elsewhere, even online, Michaels will beat it by 10%.
Another is to beef up its online presence. Michaels is working to make its website easier to navigate and expanding the assortment shoppers can find there. Later this summer it also plans to launch its first mobile app, designed to provide customers with store-specific online product search and in-store way finding. “These new capabilities combined with buy online/pick-up in store will help us connect our e-commerce platform with the in-store experience,” Rubin said. “We supported the launch with unique members-only incentives, digital and social media content as well as in store launch event.”
Bolstering these measures, of course, are the products themselves. Michaels has plans to expand its selection of exclusive Martha Stewart craft paint as well as its assortment of ArtMinds, its private brand in outdoor décor paint, stains and finishes. Michaels is also adding new exclusive brands Siser heat transfer vinyl and expanding its assortment of Cricut machines and accessories in stores and online. The retailer is also leveraging another exclusive partnership and expanding its wedding category in stores and online with the addition of new SKUs designed by David Tutera — a celebrity wedding planner and host of the television show of My Fair Wedding. Michaels will devote 7.5 ft. of space in stores for SKUs Tutera developed exclusively for the retailer and will carry Tutera’s entire bridal collection on michaels.com.