Michaels concept store
Michaels is opening a second concept store in Texas in September which will include dedicated “trend hubs” and a maker space.

Photo courtesy of Michaels.

The first quarter of the year was tough for Michaels Stores Inc., as many of its stores were temporarily closed during the Covid-19 pandemic.

But all 1,270 Michaels stores are now back open, and the company’s flexible delivery offerings drove e-commerce to grow 353% in the second quarter. Sales were also up overall in the second quarter, but Michaels isn’t out of the woods just yet.

Full speed ahead

CEO Ashley Buchanan noted that Covid-19 is providing some tailwinds for Michaels as consumers are spending more time at home and are embracing creative outlets.

“Our customers spent increased amounts of time at home and look to Michaels for positive and inspiring outlets for self-expression or simply just to fill up the day,” he said on the earnings call. The company’s Camp Creativity kids’ classes drew 200,000 signups over four months.

Michaels engaged creative agency R/GA for its new ad campaign “Made By You,” which has a very Etsy feel to it. “We were less promotional during the quarter by design,” Buchanan said.

“We wanted to go from a branding perspective to provide more inspiration, more creativity with discounts, versus just a discounting brand.”


A new Michaels ad features real makers talking about their time at home, creating, during the pandemic.

In-person shopping restrictions sped up customer adoption of ship-from-store, Buy Online Pick Up in Store (BOPIS) and curbside pickup options. Michaels retail stores are now essentially also functioning as distribution centers.

The revamped rewards program Michaels had been testing in select markets was rolled out to all customers in August, with personalized emails now at 70%, compared to 20% at the end of last year.

Michaels briefly had a chat room on its homepage to connect shoppers with other shoppers in August, and it quickly turned into a party that got out of hand. There’s still a chat box on the homepage, but it seems to be more moderated.

As wholesale service Darice is being wound down by the end of the year, the company launched MichaelsPro, a wholesale service. Michaels Pro “allows Makers to purchase competitively priced bulk supplies,” Buchanan said. “It’s clear to us that there’s a subset of customers that want to buy bulk products from us.”

Looking ahead

The fourth quarter is always the most important part of the year for creative retailers. Michaels placed its wholesale holiday orders back in March and doesn’t expect any disruptions in inventory.

Michaels recently announced that it’s hiring more than 16,000 people in its North American stores and distribution centers to get through the Christmas season. The company said more than half of those of seasonal workers were hired into regular roles after the holidays last year.

Michaels is opening a second maker-focused test store in Plano, Texas, on Sept. 12 with “inspiration and trend hubs” and a dedicated maker space for classes. The first prototype maker store opened in McKinney, Texas, back in March.

Financial details

Michaels’ new CFO, Mike Diamond, came to the company after six years at Pizza Hut.

Overall, sales in the second quarter of 2020 were up 11.1% compared to 2019, but gross profit and net profit were still down. Michaels has recorded a loss of $71 million so far this year.

The company used the pandemic to “aggressively negotiate” with its landlords and secure $12 million in rent abatements that will be spread over multiple years.

Michaels attributes higher sales to government stimulus checks and consumers spending more time at home. In addition to adding new customers — 15% more than the same period last year — the average transaction size was also up.

E-commerce grew by 353% from the same period in 2019 even as physical stores reopened. The dollar value of inventory per store was down by 15.6% compared to last year, which Buchanan said was due to clearing out clearance items.

Though it isn’t offering full-year guidance because of ongoing volatility, the company will reveal more details about their long-term outlook during its Virtual Investor Day on Sept. 24.



Grace Dobush

Grace Dobush


Grace Dobush is a Berlin-based freelance journalist and the author of the Crafty Superstar business guides. Grace has written about business and creative entrepreneurship for publications including Fortune, Wired, Quartz, Handelsblatt and The Washington Post. 

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