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IPO Report: The Michaels Companies (MIK)

By  +Follow June 26, 2014 3:34AM
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The Michaels Companies IPO, IPO, IPO report, The Michaels Companies IPO Report, IPOs today, stocks to buy nowThe Michaels Companies ($MIK) is a large arts and crafts specialty retailer, the largest in North America based on store count. It is headquartered in Irving, TX,

Fourteen other companies are scheduled for the week of June 23, 2014.  The complete IPO calendar is available at IPOpremium.

The manager and co-managers are J.P. Morgan, Goldman Sachs, Barclays, Deutsche Bank Securities, BofA Merrill Lynch, Credit Suisse, Morgan Stanley, and Wells Fargo Securities.  The joint managers are Guggenheim Securities, Macquarie Capital, Nomura, Piper Jaffray, Raymond James, Stephens, SunTrust Robinson Humphrey, Ramirez, Telsey Advisory Group, and The Williams Capital Group.

MIK scheduled a $500 million IPO with a market capitalization of $4.6 billion at a price range midpoint of $18 for Friday, June 27, 2014 on the Nasdaq. SEC filings

The Michaels Companies IPO Report

Overview

MIK is a large arts and crafts specialty retailer, the largest in North America based on store count.

48% of total Net sales in fiscal 2013, are only available at Michaels, under MIK's private brands.

Valuation

Glossary

Valuation Ratios

Mrkt Cap (mm)

Price /Sls

Price /Erngs

Price /BkVlue

Price /TanBV

% offered in IPO

annualizing May 3 qtr

       

Michaels Companies (The) (MIK)

$3,654

0.9

19.9

-1.6

-1.3

14%

Jan 31 2014 yr

.

0.8

15.0

     

Conclusion

Consider these MIK stats:

Market cap:  $3.6 billion
Total debt:  $3.2 billion

Accumulated deficit: -$2.9 billion
Per share dilution to new IPO investors:  -$32.11

Price-to-tangible book value:  -1.3

It looks like a private-equity sponsored train wreck, but it's not because top line revenue is growing, up 5.9% for Q1 '14 vs Q1 '13, the P/E for the year ended January '14 is 15 and the corresponding price-to- sales ratio is .8.

Those are enough positives for institutions to add MIK to a segment of their portfolios.

The rating on MIK is neutral plus.

Business

MIK is a large arts and crafts specialty retailer

Largest in North American based on store count

With 1,263 stores (consisting of 1,145 Michaels stores and 118 Aaron Brothers stores) as of May 31, 2014 and $4.6 billion in sales in fiscal 2013, Michaels is the largest arts and crafts specialty retailer in North America based on store count.

MIK also operates a market-leading vertically-integrated custom framing business.

Arts & craft experience

With helpful store associates and a broad selection of merchandise combined with compelling in-store events and online content, MIK believes it offers the most complete arts and crafts experience and are the preferred destination in the industry.

MIK carries a broad and deep assortment of approximately 36,000 stock-keeping units ("SKUs") in arts, crafts, scrapbooking, floral, framing, home décor, seasonal offerings and children's hobbies that enable it to satisfy the diverse needs of its customers.

MIK has also developed a robust online platform which promotes social networking, and includes expert tips, project ideas, marketing content and information on upcoming store events.

In recent years, MIK has capitalized on its 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 its portfolio of private brands.

Private branded products

MIK’s private branded products, which represented approximately 48% of total Net sales in fiscal 2013, are only available at Michaels and allows MIK to further differentiate its merchandise while enhancing product margins.

MIK is also able to use its scale and market leadership to identify and secure exclusive third party products. MIK believes its compelling store experience and broad product offering distinguishes it from its competitors and position Michaels as the leading brand that defines arts and crafts.

Dividend Policy

No dividends are planned.

Competition

MIK competes with many different types of retailers and classifies its competition within the following categories:

Mass merchandisers: This category includes companies such as Wal-Mart Stores, Inc. (WMT) , Target Corporation (TGT) , 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 100 stores, and comprises: Hobby Lobby Stores, Inc., which operates approximately 620 stores in 47 states; Jo-Ann Stores, Inc., which operates approximately 790 stores in 49 states; and A.C. Moore Arts & Crafts, Inc., which operates approximately 140 stores primarily in the Eastern United States. MIK believes 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.

Internet: This category includes all internet-based retailers that sell arts and crafts merchandise, completed projects and custom framing online. MIK’s Internet competition is inclusive of those companies discussed in the categories above, as well as others that may only sell products online. These retailers provide consumers with the ability to more easily search and compare products and prices compared to visiting a physical store. These sellers generally offer a wide variety of products but do not offer product expertise or project advice.

5% stockholders

Michaels Holdings LLC 92.9%  

Highfields Capital Management LP and related funds 6.2%

Use of proceeds

MIK expects to net $466 million from its IPO. Proceeds are allocated as follows:

to redeem $466 million of the Holdco Notes.

MIK also intends to use cash on hand to pay the applicable make-whole premium of $5 million (1% of the principal amount of the Holdco Notes being redeemed).

The Holdco Notes were issued in July 2013 and mature in August 2018. The interest rate on the Holdco Notes is 7.50% per annum with respect to cash interest and 8.25% per annum with respect to PIK Interest, which is the cash interest rate plus 75 basis points.

Net proceeds of the Holdco Note issuance were used to pay a cash dividend, distribution and other payments to its equity and equity award holders and pay related fees and expenses.

 

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions.


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Results for MIK
tim andreacci
26 Nov 14 07:21:17
.@MichaelsStores CEO: Rainbow Loom Was A `Grand Slam' ... Now They Need to Replace Those Sales http://t.co/Ok8ffTuJz7 @BloombergTV $MIK
The Legacy News
25 Nov 14 06:44:53
Michaels Companies Price Target Increased to $27.00 by Analysts at JPMorgan Chase & Co. $MIK http://t.co/jVI3U9Q6De
Tracey Ryniec
25 Nov 14 06:38:35
RT @ZacksResearch: Does Black Friday still matter for retailers? Check out our video and give us your thoughts! $TIF $MIK $DSW $CTRP http:/…
Zacks.com
25 Nov 14 06:21:51
Does Black Friday still matter for retailers? Check out our video and give us your thoughts! $TIF $MIK $DSW $CTRP http://t.co/bAW9aJzfUc
don
24 Nov 14 16:40:14
$MIK - http://t.co/0O564yCj7s http://t.co/Vct2GtgKz0 #stockcharts
WKRB News
24 Nov 14 15:20:44
Recent Analysts’ Ratings Updates for Michaels Companies $MIK http://t.co/h30NV8nc59
US Banking News
24 Nov 14 15:13:11
Recent Analysts’ Ratings Updates for Michaels Companies $MIK http://t.co/4ksIvP3GxO
Heard on the Street
24 Nov 14 14:50:35
RT @miriamgottfried: Wildly popular Rainbow Loom kits mean tough holiday comparisons for Michaels Cos. $MIK http://t.co/pYbsXIa6H5 http://t…
Laura Stevens
24 Nov 14 14:33:19
RT @miriamgottfried: Wildly popular Rainbow Loom kits mean tough holiday comparisons for Michaels Cos. $MIK http://t.co/pYbsXIa6H5 http://t…
Miriam Gottfried
24 Nov 14 14:30:35
Wildly popular Rainbow Loom kits mean tough holiday comparisons for Michaels Cos. $MIK http://t.co/pYbsXIa6H5 http://t.co/z9CZVs9xPw
Mark Minervini
24 Nov 14 12:53:50
Still holding $BURL, $MFRM, $FRGI, $TNET -- sm. pos. in $PANW (earnings today). Sold $MIK @ nice profit - $GMCR cut last week bef. earnings
Zacks.com
24 Nov 14 11:08:54
Does Black Friday still matter for retailers? Check out our video and give us your thoughts. $TIF $MIK $LOW $DSW http://t.co/OYvb8PuqpU
Tracey Ryniec
24 Nov 14 11:07:18
Does Black Friday Still Matter for Retailers? We cover the earnings reports. $MIK $TIF $LOW $DSW $CTRP http://t.co/0G1Io33PHD
AR Money & Politics
24 Nov 14 09:19:54
RT @Stephens_Inc: Morning Brief: Stephens releases research reports on $RAX $SIG $SIRO $MIK $TIF $WPT http://t.co/BTpMuc9sQc #SIResearch
BOTD
24 Nov 14 08:03:34
... the Dalí of Wall Street. $MiK 🎨 http://t.co/CztMlarJd7
Daily Contracts
24 Nov 14 08:00:02
Real-Time feed of company contracts, original agreements and executive updates from Michaels Stores Inc $MIK http://t.co/7Jn5WesBkQ
Stephens Inc
24 Nov 14 06:25:18
Morning Brief: Stephens releases research reports on $RAX $SIG $SIRO $MIK $TIF $WPT http://t.co/BTpMuc9sQc #SIResearch
iuubob
24 Nov 14 06:03:14
RT @chartsmarter: ChartSmarter Monday Game Plan: http://t.co/SCd6gjjLie "new traded retail names looked at" $MIK $BURL http://t.co/NI91YBB0…
Douglas Busch
24 Nov 14 05:59:18
ChartSmarter Monday Game Plan: http://t.co/SCd6gjjLie "new traded retail names looked at" $MIK $BURL http://t.co/NI91YBB0QE
The Legacy News
24 Nov 14 05:34:45
Michaels Companies Price Target Increased to $24.00 by Analysts at Deutsche Bank $MIK http://t.co/3oEsLItEw9
WKRB News
24 Nov 14 05:23:12
Michaels Companies Price Target Increased to $24.00 by Analysts at Telsey Advisory Group $MIK http://t.co/F1pcFWBaB4
InterCooler
24 Nov 14 05:23:06
Michaels Companies Price Target Raised to $25.00 $MIK http://t.co/65q3l6mKJs
Eddie's Kiddin'
24 Nov 14 00:46:19
U.S. Economy Heats Up Even As China, Eurozone Cool http://t.co/8NNVCaecKE #IBDNews @IBDinvestors $BBY $MIK $DLTR $WSMさんから
chartguy89
23 Nov 14 22:10:09
MIK 22.95 Michaels Companies Inc. Stock Charts $MIK Last Updated: 11/21/14 Last price: 22.95 Total volume: 709 http://t.co/nsjdHI0oLg
Jake13
23 Nov 14 20:58:13
MIK Year to date has changed +34.84% percent. +25.27% in the last 30 days. $MIK Michaels Companies Inc. Full b http://t.co/swqCuRZXp1
danrocks
23 Nov 14 17:08:09
Right now MIK is number 133 for the largest percentage gain out of 250 stocks. $MIK MIK is up +9.65% in the la http://t.co/CNvY790nOL
Langan Stocks
23 Nov 14 16:30:17
clayton: MIK 22.95 Michaels Companies Inc. $MIK added to http://t.co/SHk8l3HyNM
clayton
23 Nov 14 16:26:44
MIK 22.95 Michaels Companies Inc. $MIK added to my watch list. Right now with MIK I am watching the last price http://t.co/SfzQKutWTC
DennyT
23 Nov 14 16:11:10
MIK Stock 22.95 Michaels Companies Inc. $MIK Hit a 52 week high of 23.00 Closing the day 11/21/14 at 22.95 +0. http://t.co/ZZT7NoCGR2
Douglas Busch
23 Nov 14 15:27:48
ChartSmarter Monday Game Plan: http://t.co/vZuxWWFhS9 "new traded retail names looked at" $MIK $BURL http://t.co/3V0G0wTllm
Daniel Navarro
23 Nov 14 12:25:21
Are your wives going to $MIK to buy ornaments this holiday season? #holidaycheer
Sandman
22 Nov 14 08:30:18
RT @chartsmarter: ChartSmarter Monday Game Plan: http://t.co/Qq4UA99xwc "new traded retail names looked at" $MIK $BURL http://t.co/kBTxURW5…
Derald Muniz
22 Nov 14 08:00:17
$MIK is getting a little extended now. If Long, protect the recent gains (a Stop or add Options)
Dr. Duru
22 Nov 14 07:59:37
"@TraderMike: "Recent IPOs @ or near new highs $NAVI $MIK $DPLO $LQ $CTLT $ZAYO $SYF $VWR $ICL $CIVI $TNET http://t.co/Q86VpfXVzF " $STUDY"
Michael Seneadza
22 Nov 14 07:54:35
"@SwingTradeBot: Recent IPOs @ or near new highs $NAVI $MIK $DPLO $LQ $CTLT $ZAYO $SYF $VWR $ICL $CIVI $TNET http://t.co/AOqsMZugCd " $STUDY
Douglas Busch
22 Nov 14 05:10:19
ChartSmarter Monday Game Plan: http://t.co/Qq4UA99xwc "new traded retail names looked at" $MIK $BURL http://t.co/kBTxURW52H
Unknown
22 Nov 14 04:38:57
RT @StockSignaling: Earnings Surprises: $WBAI $DCI $LRAD $GLOG $GEOS $PLCE $ARUN $EDAP $GPS $GME $GWB $MIK $JKS $BRC $BKE http://t.co/S9oPU…
Stock Signaling
22 Nov 14 03:01:26
Earnings Surprises: $WBAI $DCI $LRAD $GLOG $GEOS $PLCE $ARUN $EDAP $GPS $GME $GWB $MIK $JKS $BRC $BKE http://t.co/S9oPUZ8PN3 #swingtrading
spyia
22 Nov 14 02:00:49
RT @stockgoat: $RTH Retail sector powering ahead with 26 new highs yesterday inc $M $LOW $MIK $DPZ - http://t.co/5dHzxk7COk http://t.co/v9s…
Stockgoat
22 Nov 14 02:00:27
$RTH Retail sector powering ahead with 26 new highs yesterday inc $M $LOW $MIK $DPZ - http://t.co/5dHzxk7COk http://t.co/v9sPInSLHF
SwingTradeBot
21 Nov 14 18:47:34
Recent IPOs at or near new highs: $NAVI $MIK $DPLO $LQ $CTLT $ZAYO $SYF $VWR $ICL $CIVI $TNET http://t.co/wINZl8R7GI
Analyst Ratings
21 Nov 14 14:08:54
The Michaels Companies Receives a Buy from Nomura $MIK http://t.co/nLwN2kfxcr
FlashRatingsHOT
21 Nov 14 10:52:36
$MIK has 6 analyst ratings in the last 7 days and 66% are positive. Median target: $24. View here: https://t.co/ivfAcyyLxQ #MIK
Chayton Falke
21 Nov 14 10:15:07
Top Twenty Recent Exits #14: Sold $MIK long for a 19.77% gain in 14 days. #trading #MIK #forex #stocks
Wyatt Research
21 Nov 14 08:50:53
#Target Offers Invaluable #Investing Lesson; Few Will Listen http://t.co/hl9zMTlBre $TGT $PEP $MIK #Stocks http://t.co/LlRA2t0fRM
US Banking News
21 Nov 14 08:36:58
Deutsche Bank Raises Michaels Companies Price Target to $24.00 $MIK http://t.co/UGNN1JHvZI
US Banking News
21 Nov 14 08:36:57
Michaels Companies Given New $27.00 Price Target at JPMorgan Chase & Co. $MIK http://t.co/vFVufd0S0Y
HotKeyTrading
21 Nov 14 08:30:11
Price Declines: $KND $CST $WAIR $RENN $NYMT $IRF $FISV $PDCO $CYBX $EPB $DCI $SYKE $MIK $LQDT $GALT http://t.co/TRx9EnjwT5 #daytrader #dow
Sleek Money
21 Nov 14 08:24:45
Deutsche Bank Boosts Michaels Companies Price Target to $24.00 $MIK http://t.co/H3aeZBfQF8
InterCooler
21 Nov 14 07:49:57
Michaels Companies PT Raised to $24.00 at Deutsche Bank $MIK http://t.co/uz1ZCWBkY2
				
				
By  +Follow June 26, 2014 3:34AM
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