The Michaels Companies, Inc. (MIK) has reported a marginal fall of 0.44 percent in profit for the quarter ended Oct. 29, 2016. The company has earned $76.46 million, or $0.37 a share, compared with $76.80 million or $0.37 a share, a year ago. On the other hand, adjusted net income for the quarter stood at $82.09 million, or $0.40 a share compared with $76.80 million or $0.37 a share, a year ago. Revenue during the quarter grew 5.03 percent to $1,227.21 million from $1,168.42 million in the previous year period. Gross margin for the quarter contracted 183 basis points over the previous year period to 38.02 percent. Total expenses were 88.08 percent of quarterly revenues, up from 86.66 percent for the same period last year. That has resulted in a contraction of 142 basis points in operating margin to 11.92 percent.
Operating income for the quarter was $146.32 million, compared with $155.85 million in the previous year period.
However, the adjusted operating income for the quarter stood at $148.60 million compared to $155.85 million in the prior year period. At the same time, adjusted operating margin contracted 123 basis points in the quarter to 12.11 percent from 13.34 percent in the last year period.
"In a tough environment, I am encouraged we continued to increase adjusted net income, gain market share, and invest to support our long-term strategy. We are disappointed our plans did not result in expected comp and earnings growth, and we have taken steps to position the fourth quarter for better performance," said Chuck Rubin, chairman and chief executive officer. "We are the leader in the channel, and we have a strong financial model with consistent cash flows. Although the industry may be facing some temporary headwinds, we intend to leverage our leadership position to continue to expand our market share while continuing to return cash to shareholders."
For fiscal year 2016, The Michaels Companies, Inc. projects adjusted operating income to be in the range of $724 million to $737 million. The company forecasts diluted earnings per share to be in the range of $1.86 to $1.90 on adjusted basis.
For the fourth-quarter2016, The Michaels Companies, Inc. projects adjusted operating income to be in the range of $335 million to $348 million. On an adjusted basis, the company forecasts diluted earnings per share to be in the range of $0.94 to $0.98.
Operating cash flow improves significantly
The Michaels Companies, Inc. has generated cash of $136.52 million from operating activities during the nine month period, up 663.94 percent or $118.65 million, when compared with the last year period. The company has spent $234.59 million cash to meet investing activities during the nine month period as against cash outgo of $94.73 million in the last year period.
The company has spent $161.35 million cash to carry out financing activities during the nine month period as against cash outgo of $186.69 million in the last year period.
Cash and cash equivalents stood at $149.97 million as on Oct. 29, 2016, up 30.70 percent or $35.22 million from $114.75 million on Oct. 31, 2015.
Debt comes down
The Michaels Companies, Inc. has recorded a decline in total debt over the last one year. It stood at $2,759.66 million as on Oct. 29, 2016, down 5.56 percent or $162.61 million from $2,922.27 million on Oct. 31, 2015. Total debt was 120.43 percent of total assets as on Oct. 29, 2016, compared with 140.28 percent on Oct. 31, 2015. Interest coverage ratio improved to 4.64 for the quarter from 4.61 for the same period last year.
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