Arts & Crafts retailer Michaels Store's net sales up 13.1% to $821mn
26 May '05
7 min read
for the quarter, the company's operating income increased 48.9% to $77.5 million and to 9.4% of sales from $52.0 million and 7.2% of sales for the same period last year. gross margin expanded approximately 130 basis points from 35.8% of sales in the first quarter of last year to 37.1% in the first quarter of fiscal 2005, due to improved merchandising margins, partially offset by higher occupancy costs. these merchandise margin improvements were partly driven by the shift in timing of the majority of merchandise plan-o- gram resets and related markdowns into the second quarter of fiscal 2005 versus the first quarter of 2004 as well as a favorable comparison against last year's accelerated clearance program.
selling, general, and administrative expenses increased 9.1% and supported a 13.1% increase in sales, with expenses as a percent of sales declining to 27.4% from 28.3% in the first quarter of last year. strong cost management efforts in payroll and related personnel costs generated the majority of the expense leverage.
balance sheet
the company's cash balance at the end of the quarter was $558.5 million, an increase of $177.1 million over last year's first quarter ending balance of $381.4 million. average inventory per michaels store at the end of the first quarter, inclusive of distribution centers, increased 0.9% year over year to $1.035 million. during the first quarter, the perpetual inventory and automated replenishment merchandisinn centers, increased 0.9% year over year to $1.035 million. during the first quarter, the perpetual inventory and automated replenishment merchandising systems enabled investments in inventory to be redeployed from slow growth to higher growth categories. incremental inventory investments, primarily in the yarn category, were largely offset by inventory reductions in other categories. during the quarter, the company opened 14, relocated eight and closed one michaels store, opened one aaron brothers store, opened one star wholesale store, and opened one recollections store.
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