The Michaels Companies announced record financial results for the quarter and fiscal year ended January 31, 2015. For the quarter ended January 31, 2015.
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Q4 net sales increased by 3.4% to a record $1.61 billion from $1.56 billion in the fourth quarter of fiscal 2013. Comparable store sales increased by 1.4% or 2.2% on a constant currency basis.
This anniversaries the comparable store sales increase of 4.6% in the fourth quarter of fiscal 2013, which significantly benefited from the success of the Rainbow Loom® product. The fourth quarter of fiscal 2014 also saw more favorable weather year over year.
Q4 gross profit increased 110 basis points to 41.2% of net sales compared to 40.1% of net sales in the fourth quarter of fiscal 2013. The increase reflects lower promotional activity, primarily on seasonal product compared to the weather-impacted fourth quarter last year, as well as favorable shrink experience.
Q4 selling, general and administrative expense, including share-based compensation, related party and store pre-opening costs ("SG&A") as a percent of net sales increased 60 basis points to 22.9% versus 22.3% during the fourth quarter last year. SG&A was $369 million compared to $347 million in the fourth quarter of fiscal 2013 with the increase driven by higher performance based compensation, new store payroll and $0.7 million in costs associated with the secondary offering in January 2015.
Q4 operating income grew 6.5% to a record $294 million from $276 million in the fourth quarter of fiscal 2013. As a percent of net sales, operating income increased 50 basis points to a record 18.3%.
For the year ended January 31, 2015:
For the full year, net sales increased 3.7% to $4.74 billion. Comparable store sales for fiscal year 2014 were 1.7% or 2.4% on a constant currency basis, lapping a Rainbow Loom comparable sales impact of 2.9% in fiscal 2013, all of which was realized in the second half of fiscal 2013.
Operating income grew to $627 million from $610 million in fiscal 2013. Operating income excluding $37 million of IPO related costs and related party/sponsor fees ("Adjusted operating income"), increased 6.4% to $664 million from $624 million in fiscal 2013. As a percent of net sales, adjusted operating income increased 36 basis points to 14.0%.
Interest expense decreased $16 million to $199 million in fiscal 2014 due to proceeds from the Company's IPO being used to repay PIK Notes and the debt refinancing that took place in the second quarter of fiscal 2014.
Net income was $217 million for fiscal 2014. Adjusted net income which excludes IPO costs, related party/sponsor fees, second quarter debt refinancing costs and reflects the go forward interest expense based on the Company's debt refinancing ("Adjusted net income") grew 12.2% to $303 million compared to $270 million for fiscal 2013. ■