reported a 2.4% rise in fourth-quarter same-store sales, but said heavy markdowns cut into margins.
The company's fourth-quarter revenue rose 7.2% to $1.27 billion, in line with analysts' forecast of $1.269 billion.
The arts-and-crafts specialty retailer expects fourth-quarter earnings of 82 cents a share, up from 75 cents a share the previous year. After considering accounting-related charges, the company expects to report earnings of 85 cents a share, in line with its prior forecast of 83 cents to 87 cents. Analysts polled by Thomson First Call were expecting earnings of 86 cents a share.
"Consumers shopped late during this competitive holiday season, with several events negatively impacting our gross margin performance during the fourth quarter," Michael's said. "In addition, we took earlier markdowns on our planned 2006 merchandise resets and accelerated the clearance of certain fashion yarns. However, with solid cost control efforts during the quarter, we were able to partially offset some of these fourth quarter gross margin issues."
The company expects to earn $2 to $2.05 a share for fiscal 2006. Analysts expect earnings of $1.81 a share.
Fiscal 2006 revenue is expected to increase 8.5% over fiscal 2005, with a same-store sales increase of approximately 3%, new store sales growth of 4%, and an additional week of business in fiscal 2006.
Michael's shares recently were down 68 cents, or 2%, to $33.13.
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