Not too crafty Michaels IPO is disappointing
INVESTORS weren’t exactly whipping out the glue guns as arts and crafts retailer Michaels made its way back to the public market.
The company’s shares finished on Friday with a gain of just 0.1% at $17.02 after its initial public offering priced at the bottom of its marketed range.
Michaels is the biggest specialty retailer of its kind in the U.S., selling supplies for scrapbooking, beading, baking, knitting and paper crafts. It also offers custom framing and invitation cards.
While the company has been profitable, it is facing increasingly stiff competition from discounters like Walmart and from e-commerce retailers including Amazon.com.
Its net sales rose 4% to $4.57 billion last year.
Concerns that the IPO proceeds will mainly go toward the company’s $3.7 billion debt burden may also have dampened investors’ appetite for the shares. After being offered for between $17 and $19 per share, Michaels’ stock priced at $17 in the IPO, valuing the company at about $3.5 billion.
Michaels made its initial public debut in 1984, when it had 16 stores. It has since grown to 1,263 locations under its namesake and Aaron Brothers brands, and racked up $4.6 billion in sales during the year that ended Feb. 1, according to its prospectus.
It was snapped up by Bain Capital in 2006 and taken private.
With News Wire Services