The agreement with Apollo gives Michaels a day period when it can look at other options in case a better offer comes forward. The retailer has stores in almost every market — 1, stores in 49 states and Canada — but has had trouble growing. It made strides during the pandemic by building up its online business and using its stores for same-day, curbside service.
Michaels also focused on maker-minded customers, both hobbyists and people with cottage businesses at home, who need to buy in bulk. Another investment, The Fresh Market, expanded too fast and had to retrench, leaving the Dallas market after a year.
It was founded in Dallas in The decision to sell to Apollo comes just a couple weeks after competitor Joann fabrics and crafts filed for an initial public offering. Michaels is scheduled to report fourth-quarter results Thursday morning. Twitter: MariaHalkias. Looking for more retail coverage? Amid the display booths and product departments that filled the selling space in a Michaels store, employees taught in-store art classes, providing instruction for various arts and crafts projects, including how to create T-shirt designs and how to make festive centerpieces.
With service, product mix, and rapid expansion propelling the company forward, it was only a matter of time and money before Michaels stores dotted the nation's landscape. The stores opened in extended Michaels' presence from its base in the Southeast and Southwest to Ohio, Virginia, Oklahoma, Washington, and Iowa, and carried the company beyond U.
The strategy was to cover as much territory as possible with Michaels stores before competitors had the time to catch up. In , any hope of catching the Irving-based retailer was lost as Michaels completed an unprecedented year of physical growth by increasing its store count more than 70 percent.
These three acquisitions added 25 stores to the expanding Michaels chain, but the company's next acquisition quickly overshadowed the gains made during the spring months of At the beginning of , there were stores composing the Michaels chain, with stores scattered throughout 41 states and in Canada. For , 55 stores were expected to be added to the chain, including units in Alaska and Puerto Rico, as efforts were underway to round out the company's presence throughout North America, particularly in the Northeast.
The company's stores by this point averaged 16, square feet and were located in highly visible strip shopping centers near shopping malls. Of the merchandise gracing the company's store shelves--general crafts, home decor items, picture frames, art and hobby supplies, party supplies, wearable art, and seasonal and holiday goods--silk and dried flowers and plants still accounted for the bulk of Michaels' sales, generating a fifth of its annual revenue volume.
As store expansion continued in , Michaels added another retail concept to its widely popular Michaels format. Located primarily in California, where the greatest number of Michaels stores were located, the Aaron Brothers stores offered professional custom framing services, sold photograph frames, and stocked a full line of ready-made frames, as well as a broad selection of art supplies. The company anticipated opening between 50 and 55 new Michaels stores in , but was beginning to scale back its expansion plans to achieve greater operational efficiencies.
Between and , the company's expansion of store units had increased at a compounded annual rate of 33 percent; for the future the store growth rate was targeted at 15 percent. As the company charted its course for the late s and the beginning of the 21st century, Michaels officials saw the potential for stores in the United States and in Canada, an estimate that set the stage for another decade of robust growth for the year-old company.
Michaels' impressive rate of expansion continued as the s progressed, but only after the company dealt with some serious problems related to its rampant growth. Worse still, the company was running out of cash. In late , R. Michael Rouleau arrived as the company's new chief executive officer, inheriting a mess that called on his four decades of retail experience to clean up. Rouleau revamped the chain's units, met with hundreds of vendors, and devoted more resources to the company's custom framing business, Artistree, which began as two small manufacturing shops started by Michaels in Rouleau's most significant changes were directed at Michael's single greatest problem: inventory management.
The equipment and systems used by the company to track inventory were antiquated, dating back to the earliest days of the personal computer.
The changes worked wonders, resulting in an average increase in profits of 35 percent compounded annually during the first five years of his tenure.
With the revamped, sophisticated infrastructure to support expansion, Michaels grew aggressively around the end of the century. The company added significantly to its two chains, Michaels and Aaron Brothers, and diversified into new business areas.
In , the company purchased a one-store florist and decorating supplies operation in Dallas that became the foundation of its Star Decorators' Wholesale Warehouse business. The company envisioned its wholesale business eventually occupying 50 locations.
In , the company added another dimension to its business by creating an arts-and-crafts store for smaller markets. The first store, roughly half the size of a typical Michaels store, debuted as Village Crafts by Michaels, a concept designed for communities with populations ranging between 70, and 90, Rouleau and his team identified markets in the United States as ideal locations for the company's Village Crafts concept.
Phillip, File AP. Arts and crafts retailing chain Michaels will be sold to a private equity firm. As soon as this transaction is complete, Michaels will officially be a privately held company with no common stock listed on the market. As a private company, we will have financial flexibility to invest in, expand, and improve our retail and digital platforms.
The Associated Press contributed to this report. Note to readers: if you purchase something through one of our affiliate links we may earn a commission.
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