Michaels Stores, Inc. reported their earnings results for the first quarter of Fiscal 2010 (which ended May 1st) on May 27th. The company reported $13 million in net income, a great increase over the first quarter Fiscal 2009 result of $4 million. The company reported a 5.7% increase in sales for the first quarter of 2010 over 2009, to $901 million from $852 million.
Same-store sales increased 4.9% over the same period the previous year. About a third of the increase was due to beneficial foreign exchange rates, but average tickets increased 3.7% and there was also a 1.2% increase in transactions over first quarter fiscal 2009.
The company also improved its gross margin to 39.3%, up from 37%. The increase was achieved by increasing imported merchandise and improved markdown management, along with decreased occupancy costs.
At the end of the quarter, the average Michaels store inventory was 3.6% lower than the first quarter of 2009. The company says it expects the trend of lower inventory levels to continue through fiscal 2010.
The company’s debt totaled $3.695 billion at the end of the first quarter of fiscal 2010, $262 million lower than the previous year. The company also had $79 million in cash, and $651 million available to it via its revolving credit facility.
John Menzer, Chief Executive Officer, said, “We were pleased with the strengthening sales trends and the improvement of our operations during the first quarter. A number of key categories performed well during the first quarter, including Custom Framing, Bakeware and Jewelry. Michaels continues to make significant improvements in the customer shopping experience, particularly with expanded classroom programs and in-store events. These programs create excitement and drive increased store traffic. Strong product offerings, increased classroom participation and a strengthening retail environment all contributed to the increase in our comparable store sales performance.
“Operating income improved 64% to a record first quarter level of $105 million due to stronger sales, gross margin improvements with increased direct sourcing, effectiveness of our promotions and closely controlled expenses,” concluded Mr. Menzer.