...Category Leader: The Michaels Companies, Inc. (Michaels) has a solid business profile as the market share leader in arts and crafts retail. Positive trends in annual comparable store sales (comps), EBITDA and EBITDA margins over the last three years confirm this leadership. The company is differentiated based on the breadth/depth of its merchandise and its in-store classes. While the products are discretionary, the average ticket is low and customer loyalty is high, positioning the company well in both strong and weak economic climates. Modest Annual Comps Growth: Comps growth has ranged from 1.5% to 3.2% on an annual basis over the past four years. Comps turned slightly negative in third-quarter 2014 (ending Nov. 1), and are expected to be flat in the fourth quarter, reflecting difficult comparisons with the second half of 2013, when sales were boosted by the hot-selling Rainbow Loom. However, demand for core category products remains strong and Fitch Ratings expects Michaels will continue...
