The Michaels Companies (MIK 18.72), which is North America's largest arts and crafts retailer, is holding an Analyst Day presentation today. That presentation begins at 8:30 a.m. ET, yet the company got out in front of the event with an announcement that its Board of Directors authorized a new $500 million share repurchase program.
There is good reason to expect, too, that The Michaels Companies will start acting on that buyback program. Its stock has dropped 30.8% over the last 52 weeks and is trading at levels last seen in November 2014.
The retailer has been challenged of late by some tough comparisons, as well as by consumers pulling back on discretionary spending. On Wednesday the Retail Sales report for May indicated sales were down for many retail categories, including sporting goods, hobby, book and music stores (-0.6%), general merchandise stores (-0.3%), and miscellaneous store retailers (-1.3%).
The first quarter earnings report from The Michaels Companies earlier this month pointed to the company's sales challenges, as revenue was unchanged from the year-ago period while comparable sales decreased 1.2% due largely to a decrease in the average ticket size.
Analysts, then, will be eager to hear how The Michaels Companies plans to jumpstart sales. The latest guidance from the company calls for total net sales growth of 2.2% to 3.7% for fiscal 2017 and comparable store sales to be down 0.2% to up 1.3%.
The share buyback announcement is a welcome piece of news, yet it comes without any guarantees as to when it will be executed. There is no expiration date on the program and the timing and number of repurchase transactions, it was said, will depend on market conditions and various other factors.
At Wednesday's closing price for MIK, the company could effectively repurchase 26.7 million common shares, or roughly 14.1%, of its outstanding stock under the new buyback program. That won't happen in one, fell swoop of course, yet it goes to show The Michaels Companies has some levers it can pull to help support EPS growth if it's not getting the leverage it so desires from stronger sales growth.