Heading into a holiday season like no other, Michaels Stores has bounced back — somewhat — from pandemic closures earlier in the year.
Although e-commerce sales shrunk, overall sales for the third quarter of the fiscal year increased to $1.4 billion. Because of this growth, CEO Ashley Buchanan announced Michaels was setting aside about $10 million for one-time holiday bonuses for all workers.
“We’re in a much stronger position operationally, financially and strategically than we at the start of this year due to our team members’ hard work and dedication in serving our maker customers,” he said on the earnings call.
Employees on Reddit reported that the bonus came out to $200 for full-time employees and $100 for part-time employees. It’s worth noting that this year the performance-based compensation for select Michaels’ executives will be about $70 million. Last year those bonuses to seven executives totaled about $15 million.
Customer satisfaction scores are up. Buchanan reported that Michaels expanded floor space devoted to technology and massively grew its assortment of private-label products. Replenishment is being streamlined to minimize the number of touches it takes a product to get to customers. Pricing and promotions are being simplified.
“We’re also enhancing the level of in-store creative expertise available to our makers by training our team members and, when possible, hiring team members who were also makers themselves,” Buchanan said.
Michaels reported the breakout craft trend of 2020 was resin, which anyone who spends a lot of time on Instagram can confirm. Watching people mix pigments and glitter is super soothing; Michaels said canvases for pour painting were also in high demand. Tie-dye kits were a top seller for homeschool projects, and big yarn was a big draw for cozy crafting. Michaels also reported technology for personalizing products was hot this year.
Canvases for pour painting were in high demand this quarter at Michaels, signifying a craft trend.
But things could be better
Michaels Pro launched officially in the third quarter, and Buchanan reported that average basket sales for Pro customers were twice that of the average customer. But if the target market is professional crafters, it was too late to get a bump from this year’s holiday season — many crafters have to ship out Christmas orders for wholesale buyers in mid-summer.
I keep wondering: Why hasn’t Michaels experienced the same exponential growth that Etsy had this year? It seems like the company’s timing is always a little off. Michaels’ e-commerce is just a few years old, so customers might not have thought to shop online during lockdowns this spring.
It was just 2018 when Michaels expanded its e-commerce offerings, introduced BOPIS (buy online, pick up in store) and brought fulfillment in-house; total online sales for that year were $210 million. In 2019, e-commerce sales totaled $271 million, with much of the growth from BOPIS. From the first three quarters of 2020, e-commerce has already reached $457 million, with pickup and curbside options driving the growth.
E-commerce revenue was $115 million in the third quarter of 2020, accounting for about 10% of all sales. That’s an increase from the same quarter last year, but a drop of 37% from Q2, which had a record $183.2 million in e-commerce sales.
The final quarter of the year, of course, is the most important for any retailer. Michaels’ executives aren’t making any predictions about Q4. “I would say we are very pleased with how we have started with Q4 for both the arts and crafts and the seasonal,” CFO Michael Diamond said on the earnings call. “But there’s also a lot of uncertainty as we look forward through the rest of Q4” with the pandemic and how individual cities may restrict shopping.