Michaels Companies Inc (NASDAQ: MIK) stock lost over 17.5% on 14 Jun, (as of 11:57 AM GMT-4; Source: Google finance). Net sales fell on the back of the closure of all 94 full-size Aaron Brothers stores in the first quarter of FY18. Comparable store sales increased 0.4% (flat on a constant currency basis) due to an increase in average ticket, partially offset by a decrease in customer transactions.
The company has reported net income of $26.9 million for the first quarter 2018, compared to $72.2 million in the first quarter of FY 17. Excluding the $47.5 million one-time restructuring charge, $0.2 million of income from Aaron Brothers operations prior to closure, and $8.1 million of provisional adjustments related to the Tax Act, adjusted net income for the first quarter of FY18 is $70.9 million.
MIK in the first quarter of FY 18 has reported the adjusted earnings per share of 39 cents, while adjusted revenue was $1.16 billion in the first quarter of FY 18 compared to $1,158.6 million in the first quarter of FY17. During the quarter, MIK opened six new Michaels stores, closed one Michaels store, and relocated nine Michaels stores. At the end of the first quarter, MIK operated 1,243 Michaels stores, 3 Aaron Brothers stores and 36 Pat Catan’s stores.
For FY18, MIK expect the net sales to be in the range between $5,217 million and $5,293 million and the comparable store sales is expected to increase between 0% and 1.5%. During FY 18, the company has planned to open 19 new Michaels stores and relocate 17 Michaels stores. The company expects adjusted operating income to be in the range of $677 million to $710 million, net interest expense will be approximately $144 million and the effective tax rate will be approximately 24%. For FY 18, the adjusted diluted earnings per common share is expected to be between $2.19 and $2.32, based on diluted weighted average common shares of approximately 185 million and capital expenditures is expected to be between $160 million and $170 million.
For the second quarter of FY18, the company expects the comparable store sales to be approximately flat and has planned to open six new Michaels stores and relocate eight Michaels stores. In Q2 2018, the adjusted operating income is expected to be between $65 million and $70 million, net interest expense will be approximately $37 million, the effective tax rate will be approximately 24% and adjusted diluted earnings per common share is expected to be between $0.12 and $0.14.