logo
Sign in or Register

Already a member?

Sign in

Or sign in with your account on:

Not a member yet?

Register
    

 


IPO Report: The Michaels Companies (MIK)

By  +Follow June 26, 2014 3:34AM
Share:
Tickers Mentioned:

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. To read our full disclosure, please go to: http://www.equities.com/disclaimer


Signup for our daily newsletter and get our best articles emailed right to you!

Results for MIK
Douglas Busch CMT
4 Aug 15 06:41:15
Stocks That Underperform Tend To Stay Yhat Way: http://t.co/zk1P9xkUHt "laggards exhibit negative habits" $MIK $FOSL http://t.co/cne1u40li1
BreakingStocksNews
4 Aug 15 00:08:03
$MIK: The Michaels Companies, Inc. (MIK:NASDAQ) Analyst Price Target ...: http://t.co/DnsRO1qeqc
TimeForGrowth
3 Aug 15 21:36:02
$MIK: Wall Street analysts bullish on MIK's earnings growth: http://t.co/8wXEhHjktW http://t.co/C8syVZC4H5
Stock_Huntress
3 Aug 15 19:31:37
http://t.co/aV04SGRUmy <-- In a few months this guy will likely be Super_trades 1st Millionaire student! $MGNX $MIK $XNCR $CALA
Stock_Huntress
3 Aug 15 04:20:32
http://t.co/aV04SGAiXY <-- In a few months this guy will likely be Super_trades 1st Millionaire student! $MGNX $MIK $XNCR $CALA
Stock_Huntress
1 Aug 15 17:30:39
http://t.co/aV04SGAiXY <-- In a few months this guy will likely be Super_trades 1st Millionaire student! $MGNX $MIK $XNCR $CALA
Stock_Huntress
31 Jul 15 20:31:03
http://t.co/aV04SGAiXY <-- In a few months this guy will likely be Super_trades 1st Millionaire student! $MGNX $MIK $XNCR $CALA
Capital Market Labs
31 Jul 15 15:56:35
$MIK High Fundamental Rating http://t.co/4fNmMgZ1GD http://t.co/uPzVa5ZKSN
MarketBeatCom
31 Jul 15 04:37:49
Want automatic email alerts for $BBRY $SYNL $MIK $TILE $CRNCY? Subscribe to MarketBeat Daily http://t.co/nSJuDsYidj
Greg David
30 Jul 15 06:03:26
Check out http://t.co/Y1RoKIXsmm. Top OTC trading group right now. Never paid promo. Related: $RICE $MCRL $MIK $KIM $KKR $ALLY
Greg David
30 Jul 15 04:27:54
Check out http://t.co/Y1RoKIXsmm. Top OTC trading group right now. Never paid promo. Related: $RICE $MCRL $MIK $KIM $KKR $ALLY
InvestWithConf
30 Jul 15 02:18:02
$MIK is rated BUY, 28.6% upside by Wall Street analysts based on average ratings/targets http://t.co/m0SqGhc8wL http://t.co/78XioXdEWM
Daily Contracts
29 Jul 15 14:12:04
Real-Time feed of company contracts, original agreements and executive updates from $MIK http://t.co/sVkawA8bSH
Stock_Huntress
29 Jul 15 12:30:00
http://t.co/aV04SGAiXY <-- In a few months this guy will likely be Super_trades 1st Millionaire student! $MGNX $MIK $XNCR $CALA
Greg David
29 Jul 15 09:26:23
Check out http://t.co/Y1RoKIXsmm. Top OTC trading group right now. Never paid promo. Related: $RICE $MCRL $MIK $KIM $KKR $ALLY
StockNewsWires
29 Jul 15 05:32:04
$MIK: Oversold Stocks To Watch: Michaels Cos Inc (NASDAQ:MIK), Regal ...: http://t.co/Fd12Jxtihx
TimeForGrowth
29 Jul 15 03:03:02
$MIK: Wall Street analysts bullish on MIK's earnings growth: http://t.co/8wXEhHjktW http://t.co/SVA1W2rGbi
BDGM CAPITAL
28 Jul 15 21:17:04
SHORT: $PEB, $ABAX, $BBBY, $LHO, $RHI, $PB, $MIK, $TRIP, $CVA, $EXC, $MHFI, $ANF, $OFC, $ACC, $SBH, $WYN, $TRIP
dailystockplays.com
28 Jul 15 15:02:26
Below Keltner http://t.co/dG3FKAccPh $ZNGA $RAX $PEGI $MIK $EXTR $ELY $UNVR $LPSN $ALR $RELY $EZA $AVID $SGI $TRIB $IMNP $FMI $BANC $ORBC
SMPman
28 Jul 15 12:52:39
$MIK im short..
Stock_Huntress
27 Jul 15 16:21:04
http://t.co/aV04SGAiXY <-- In a few months this guy will likely be Super_trades 1st Millionaire student! $MGNX $MIK $XNCR $CALA
InvestWithConf
27 Jul 15 11:41:01
$MIK is rated BUY, 27.4% upside by Wall Street analysts based on average ratings/targets http://t.co/m0SqGhc8wL http://t.co/d7K384tt0f
wsnewspublishers
27 Jul 15 07:43:51
Current Trade News Alert on: http://t.co/3NX4xCQj9R $AGN $FCS $SNH $MIK
Vic Scherer
27 Jul 15 05:31:12
$MIK ready to disappoint longs.
Greg David
26 Jul 15 22:47:27
Check out http://t.co/Y1RoKIXsmm. Top OTC trading group right now. Never paid promo. Related: $RICE $MCRL $MIK $KIM $KKR $ALLY
BreakingStocksNews
26 Jul 15 21:33:06
$MIK: Shares of The Michaels Companies, Inc. (NASDAQ:MIK) Sees Large ...: http://t.co/GXcR0qcjZr
				
				
By  +Follow June 26, 2014 3:34AM
Share:

Comments

 

blog comments powered by Disqus

 Today's Must Reads

Beyond Twitter: 5 Small-Cap Tech Plays Nobody’s Talking About


Will the Fed Continue Its Track Record of Unprecedented Moves?

Facebook versus Google: Who Rules the Internet?

Are These the Worst Business Documentaries on Netflix?


Saving the

Small-Cap Market

 

Small-cap stocks offer investors many benefits, ranging from higher growth potential to overlooked value opportuni... in Equities.com's Hangs on LockerDome

About us

Equities.com is an advanced financial data portal and social network designed to connect self-directed investors with the world’s most innovative startup and small cap companies. Through our in-depth coverage of small cap markets, comprehensive research and stock valuation reports, state of the art issuer products, and world class events, Equities.com provides the social tools and insight that drive tomorrow’s investment relationships and opportunities.

Market Data powered by QuoteMedia.
Copyright © QuoteMedia. Data delayed 15 minutes unless otherwise indicated. Terms of Use.

Login or Register

LOG IN