Company Overview
| Company Name |
MICHAELS STORES INC |
| Company Address |
8000 BENT BRANCH DR
IRVING, TX 75063 |
| Company Phone |
9724091300 |
| Company Website |
www.michaels.com |
| CEO |
John B. Menzer |
| Employees (as of 3/19/2012) |
45300 |
| State of Inc |
DE |
| Fiscal Year End |
1/28 |
| Status |
Filed (3/30/2012) |
| Proposed Symbol |
MIK |
| Exchange |
New York Stock Exchange |
| Share Price |
-- |
| Shares Offered |
-- |
| Offer Amount |
$500,000,000.00 |
| Total Expenses |
-- |
| Shares Over Alloted |
-- |
| Shareholder Shares Offered |
-- |
| Shares Outstanding |
-- |
| Lockup Period (days) |
180 |
| Lockup Expiration |
-- |
| Quiet Period Expiration |
-- |
| CIK |
0000740670 |
We estimate that the net proceeds we will receive from the sale of the shares
of our Common Stock in this offering, after deducting underwriter discounts
and commissions and estimated expenses payable by us, will be approximately
$ million. This estimate assumes an initial public offering
price of $ per share, the midpoint of the range set forth on
the cover page of this prospectus. We will not receive any of the net
proceeds from the sale of shares of Common Stock by the selling stockholders
if the underwriters exercise their option to purchase additional shares, which
are estimated to be approximately $ million if such option is
exercised in full.
We intend to use the net proceeds of this offering to repurchase or redeem all
of our outstanding indebtedness under our Subordinated Discount Notes (an
aggregate amount of $306 million of which was outstanding as of January 28,
2012), and to repurchase or redeem all, or a portion, of the Senior
Subordinated Notes (an aggregate amount of $393 million of which was
outstanding as of January 28, 2012). We will repay any remainder of the
Senior Subordinated Notes with our cash on hand. To the extent there are
any excess proceeds, we will apply them toward working capital and other
general corporate purposes. The interest rate applicable to the Subordinated
Discount Notes and the Senior Subordinated Notes is 13% and 11 3/8 % per
year, respectively, and they mature on November 1, 2016.
A $1.00 increase (decrease) in the assumed initial public offering price of
$ per share would increase (decrease) the net proceeds to us
from this offering by $ million, assuming the number of shares
offered by us, as set forth on the cover page of this prospectus, remains
the same and after deducting the estimated underwriting discounts and
commissions and estimated expenses payable by us.
Until the proceeds from this offering are used as described above, we
intend to invest them in short-term, investment-grade securities.
We are the largest arts and crafts speciality retailer within the estimated
$30.3 billion arts and crafts industry and $3.0 billion framing industry.
The market we compete in is highly fragmented, including stores across the
nation operated primarily by small, independent retailers along with a few
regional and national chains. We face competition from Internet-based
retailers, in addition to traditional store-based retailers. We believe
customers choose where to shop based upon store location, breadth of
selection, price, quality of merchandise, availability of product, and
customer service. We compete with many different types of retailers and
classify our competition within the following categories:
• Mass merchandisers. This category includes companies such as Wal-Mart
Stores, Inc., Target Corporation, and other mass merchandisers. These
retailers typically dedicate only a small portion of their selling space
to a limited selection of home décor, arts and crafts supplies, and seasonal
merchandise, but they do seek to capitalize on the latest trends by stocking
products that are complimentary to those trends and their current merchandise
offerings. These mass merchandisers generally have limited customer service
staffs with minimal amounts of experience in crafting projects.
• Multi-store chains. This category includes several multi-store chains, each
operating more than 30 stores, and comprises: Hobby Lobby, which operates
approximately 500 stores in 41 states, primarily in the Midwestern and
Southern U.S.; Jo-Ann Stores, Inc., which operates approximately 770 stores
in 49 states; A.C. Moore Arts & Crafts, Inc., which operates approximately
135 stores primarily in the mid-Atlantic and Northeast regions; and Garden
Ridge Corporation, which operates approximately 50 stores in 18 states,
primarily in the Midwestern and Southern U.S. We believe all of these chains
are significantly smaller than Michaels with respect to Net sales.
• Small, local specialty retailers. This category includes local independent
arts and crafts retailers and custom framing shops. Typically, these are
single-store operations managed by the owner. These stores generally have
limited resources for advertising, purchasing, and distribution. Many of
these stores have established a loyal customer base within a given community
and compete based on relationships and customer service.
Company Description
We believe Michaels is where creativity happens. With 1,196 stores (consisting
of 1,066 Michaels stores and 130 Aaron Brothers stores) and $4.2 billion in
sales in fiscal 2011, Michaels is the largest arts and crafts specialty
retailer in North America. We have approximately as many stores as
our two
largest direct competitors combined. Our mission is to inspire and enable
customer creativity, create a fun and rewarding place to work, foster
meaningful connections with our communities and lead the industry in growth
and innovation. With crafting classes, store events, project sheets, store
displays, mobile applications and proprietary online content, we believe we
offer the most complete arts and crafts experience and are the preferred
destination in the industry.
We focus on building strong customer relationships through our innovative
merchandise offering, engaging store experience and multi-channel marketing.
Our stores are at the heart of our customer engagement strategy, showcasing
our artistic and creative products and providing an opportunity for our
knowledgeable store associates to interact with customers and help them
develop creative ideas. We carry a broad and deep assortment of approximately
35,000 stock-keeping units ("SKUs") in arts, crafts, scrapbooking, floral,
framing, home décor, seasonal offerings and children's hobbies that enable
us to satisfy the diverse needs of our customers. In recent years, we have
capitalized on our market-leading scale to create a team and infrastructure
dedicated to designing, sourcing and delivering high quality, on-trend
merchandise, including a growing number of products under our portfolio of
private brands. These private branded products, which represented
approximately 44% of total Net sales in fiscal 2011, are only available
at Michaels and allow us to further differentiate our merchandise while
enhancing product margins. We believe our compelling store experience
and broad product offering distinguish us from our competitors, drive
customer loyalty, increase the frequency of customer visits and position
Michaels as the brand that defines arts and crafts.
In recent years, our experienced management team has undertaken a series of
transformative initiatives designed to enhance the strength of our business
and our potential for future growth. Our primary initiatives include:
• Enhancing our store experience
• Initiating a comprehensive digital marketing campaign
• Reinventing our approach to merchandising and sourcing to introduce on-trend
products and improve margins
• Launching several high-quality private branded product lines
• Developing new store formats to facilitate expansion
• Building an online platform to strengthen customer engagement
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Our principal executive offices are located at 8000 Bent Branch Drive, Irving,
Texas 75063, our telephone number at that address is (972) 409-1300 and our
Internet address is www.michaels.com.