Professional Documents
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COMPANIES
Investor Conference | June 15, 2017
Todays Agenda
Strategic Overview
Vision 2020
Break
Vision 2020 (continued)
Financial Overview
Lunch Break
Q&A
Closing
Disclosures
Forward-Looking Statements
Certain statements made in this presentation and other written or oral statements made by or on behalf of The Michaels
Companies, Inc. (Michaels) constitute forward-looking statements within the meaning of the federal securities laws,
including statements regarding Michaels future performance, as well as management's expectations, beliefs, intentions, plans,
estimates or projections relating to the future. Forward-looking statements can be identified by the fact that they do not relate
strictly to historical or current facts and generally contain words such as anticipate, assume, believe, continue,
estimate, expect, forecast, future, guidance, imply, intend, may, outlook, plan, potential, predict, project,
or similar expressions. These forward-looking statements are subject to risks and uncertainties that may change at any time,
and, therefore Michaels actual results may differ materially from those expected. Michaels cautions you that it is very difficult to
predict the impact of known factors, and it is impossible for Michaels to anticipate all factors that could affect its actual results.
Important factors that could cause actual results to differ materially from Michaels expectations are disclosed under Risk
Factors in the Companys Annual Report on Form 10-K for the fiscal year ended January 28, 2017. All subsequent written and
oral forward-looking statements attributable to Michaels, or persons acting on its behalf, are expressly qualified in their entirety
by such cautionary statements. These statements are based on current expectations and speak only as of the date they are
made. Michaels does not undertake any obligation to publicly update or revise any forward-looking statement, whether as a
result of future events, new information or otherwise.
Non-GAAP Measures
To provide additional information to evaluate our operating performance, this presentation also contains various non-GAAP
measures. These measures of performance and/or liquidity are not calculated in accordance with US GAAP and should not be
considered in isolation of, or as a substitute for, the most directly comparable GAAP financial measure. Our computations of
these non-GAAP measures may differ from those of other companies. A reconciliation of these non-GAAP measures to the
most comparable GAAP measures can be found on our website.
STRATEGIC
OVERVIEW
CHUCK RUBIN
Chairman & CEO
Todays Focus
#1 arts & crafts specialty retailer in North Broad assortment of arts & crafts
America(1) supplies, and DIY home dcor
# 1 custom framer 35 stores across Ohio Valley(2)
1,225 stores across U.S. and Canada(2)
#1 manufacturer of high-quality,
Offices in Ningbo and Hong Kong custom and specialty frames
~100 Team Members
(1)Based on store count
(2)As of April 29, 2017
Only Integrated Distribution Platform
Largest retail store network(1)
Retail Strongest customer footprint
Significant cash flow allows future
investments as needed
VP Investor Relations
Kiley Rawlins 20
& Communications
Tracie VP Store
Operations
25
Wickenhauser
VP Space Planning
April Willers 12
& Analysis
Mary Beth
Hawthorne District Manager 16
High ROIC,
Strong Free Cash Flow and
Financially Disciplined
PROGRESS SINCE IPO
Opened More than 100 stores
138 1,364
1,257 (31)
New Stores
Stores Closed
32 Pat Catans
Stores Acquired
106 new stores
opened over
period
Likelihood to
Recommend
65%
+1200 bps
53%
2013 2016
(Note: Reflects absolute growth over period)
Launched Michaels E-commerce Site in 2014
VISITORS
2016 250M
vs
2013 130M
= 10M visitors
Launched Michaels Rewards Program in 2016
16.5M
Michaels Rewards Members
44% of Total Sales from
Rewards Customers
= 2M members
Created #1
Trend Share It
Source It
Merchandising BEST
Capability SPEED
0 TO
MARKET
Market It Deliver It
Expanded Private Brand Capabilities
Trend
Research
Product
Development,
Ideation and
Alignment
Invested in Private Brands
900bps Increase In Private Brand Penetration
2013 Total Sales 2016 Total Sales
48%
57%
Diversified Established
Distribution Sales Force
Increased Revenue
3.4% 3.2%
Comparable Sales
2.4%
In-store enhancements Avg.2.2%
Growth(1)
Customer focused
merchandising
and marketing (0.4%)
2013 2014 2015 2016
Disciplined store openings (1)Constant Currency
Total Sales
$4,913
($millions)
$4,738
$4,570
Adjusted Operating
Operating Margins
Income
Sales growth continues to provide
operating leverage 2013 2014 2015 2016
Expansion of private brand business
Fuel for Growth
Enhanced sourcing capability through
Adjusted Operating
14.7%
Lamrite acquisition 13.7% 14.0% 14.0% MIK Avg.
14.1%
Margin initiatives partially offset by
Margin
10.8% 10.4% 10.3%
9.6% Peer Avg.
promotional environment, acquisition of 10.3%
Darice and other operating cost
inflation 2013 2014 2015 2016
Retail Peers
Note: Dollars in millions. Peer metrics reflect median of retail peers last four fiscal years. Retail peers include
Advance Auto Parts, AutoZone, Bed Bath & Beyond, Big Lots, Burlington Stores, Chicos, Costco,
Dicks Sporting Goods, Dollar General, DSW, GNC Holdings, Home Depot, Lowes Companies, OReilly
Automotive, Party City, Ross Stores, Sally Beauty Holdings, Signet Jewelers, Tractor Supply, and
Williams-Sonoma.
Delivered Strong Cash Flow
$1,510M $376M
Capex(1)
$574M
Creative Celebrations/ Art Supplies Seasonal/ Paper Crafts Creative Gifting Needle Crafts Jewelry & Beads Floral Items Food Crafts
Decorating Entertaining Holiday
5% 1% 4% 5% 11% 14% 14% 17% 22% 23% 27% 45% 48% 93%
DIGITAL CONTENT
VERTICALLY INTEGRATED \
CUSTOM FRAMING
IN-HOUSE PRODUCT
DEVELOPMENT TEAM
DIRECT SOURCING
CAPABILITIES
IN-STORE & ONLINE
CLASSES
PROJECT IDEAS
Unknown <$25K $25- $50- $75- $100- $125- >$150K 18-24 25-34 35-44 45-54 55-64 65+
50K 75K 100K 125K 150K
55% 65%
26%
21%
9%
4% 4% 9%
2% 4% 2%
1 2-3 4-5 6-7 8-9 10+
Key Shopping Missions
26%
MICHAELS
HELPS MAKE
IT YOUR
OWN
The Customer is Defined by Her Experience and
Comfort with Crafting
Customer Mix
Crafts frequently
Experienced and comfortable on how
Enthusiast to tackle projects
40%
Identifies as creative
60%
Competitors
66%
43%
40% 39%
35%
26%
20%
15%
10% 12%
8%
4%
>$500M(1) in
Sales each
>$100M(1) in
Sales each
(1)2016 Sales
OUR FUTURE
Michaels Future: Vision 2020
Technology
Improve ease of
shopping
Invest in primarily self
directed, technology
enablement
Reinforce inclusive,
friendly team culture
Expand experiential
Enhance community
Curate the Best Offering
Technology
KEY LEARNINGS
Key Learnings
Hit Products
are Difficult to
Anniversary
Key Learnings
1 2
1 2 3
Value is
Hit Products Promotional
Winning in
are Difficult to Nature of
Arts and
Anniversary Competition
Crafts Retail
Key Learnings
1 2 3 4
Progress
Takes Time
Value is
Hit Products Promotional and
Winning in
are Difficult to Nature of Customer
Arts and
Anniversary Competition Behavior
Crafts Retail
Changes
Slowly
THE FINANCIAL IMPACT
OF OUR INITIATIVES
Drive Sales Growth
2-3%
Invest in our store base
Comparable Sales
to reinforce #1 position
2.2%
Growth(1)
Generate trend-right
merchandise to expand
product advantage
Avg 2017-2021
Enhance omnichannel 2013-2016 (1)Constant Currency
capability to gain wallet share
Contemporize the experience to
4-5%
inspire and enable Makers 4.4%
Total Sales
Growth
Expand B2B capability
2013-2016 2017-2021
CAGR
Drive Operating Profit Growth
Adjusted Operating Income Growth
Increase private brand
penetration and increase
direct sourcing 5-7%
1
Returns
Focused
Capital M&A 4 Shareholder
2
Target
Activity
Allocation Returns Leverage
Priorities
3
Share Repurchases
Grow Sales and Market Share
VISION
2020:
Create a Customer-
Centric Shopping
Experience
BRYAN VENBERG
EVP HR & Stores
STEVE CARLOTTI
EVP Marketing & Business
Development
Vision 2020
Technology
Role of
digital in
channel
Size and
scale
advantage
The Power of Omnichannel
IN-STORE ONLY ONLINE ONLY OMNICHANNEL
+
Note: 2016 spend of identified customers
Largest Chain of Arts & Crafts
Stores in North America
~220M transactions
1.1B items sold
$22 average ticket
We are a Customer Destination
Arts & Crafts Can Be Intimidating
Uncertainty
of outcome
Lots of small SKUs
Overwhelming
product selection
Lack of knowledge
Improve Customer Satisfaction
72
66 65
60
56 54 53
48
41 43
2013 2016
Large Closeup High Res Product Image
EASIER TO SHOP
Progress Made
Lower fixtures
Cleaned up stores
Reduced clutter
New dress code
Opportunity to Get Better
Calm the visual
experience
Accelerate facility
improvements
Create more cohesive
stories
Enhance store
consistency
Leverage technology to
facilitate self-service
Roll Out New POS
Faster checkout
Shorter lines
Increased conversion
Higher employee
productivity
Easier returns
Enhanced rewards
Intuitive for Team Members
Large Closeup High Res Product Image
UNIQUE EXPERIENCES
Leverage A Classroom in Every Store
# Participants in In-store
Classes and Events
1.1M
39%
780K
2013 2016
Drive Engagement - MAKEbreaks
HAPPY PEOPLE
Experience Matters
Store Management Average
Tenure (Years)
7
6
5
Strong tenure
4
3
2
80%
60%
40%
20%
0%
Differentiated service
Emotional connection
High ticket purchase
Highly trained and
certified specialists
Drive Simplification Efforts
Improve execution
Improving efficiency of
tasks
Simplified visits
Focus on operational
improvement
Empower for Success
Easier to shop
Creating unique personal experiences
Empowering our teams
The Power of Omnichannel
IN-STORE ONLY ONLINE ONLY OMNICHANNEL
+
Note: 2016 spend of identified customers
Digital Strategy
[VALUE]
[VALUE]
[VALUE]
15%
13%
12%
Coupon Pages Category Pages Product Pages Weekly Ad Pages Search Result
Pages
% of Total Page Views
Michaels.com - Future State
Search improvements
Natural language
Visual
Projects
Easy to buy
materials and tools
Differentiated vs.
pure play or mass
Recommendations
Deliver an Easier Shopping Experience
Provide inspiration
Create demand
Build stickiness
Improve transactions
She browses
Projects, based
on interest, time
and skill level
Deliver Inspiration
Project Finding
She browses
Projects, based
on interest, time
and skill level
Deliver Inspiration
Project Detail
IDALIA FARRAJOTA
SVP Merchandising
HOLLY SHASKEY-
PLATEK
SVP Merchandise
Operations
Vision 2020
Technology
Floral Design
Papercrafting
Food Crafting
Other*
Frames
32%
26%
Seasonal
[CATEGORY
Custom
NAME]
Framing
National
Private Higher margin
Brand opportunities
Brands
ASSORTMENT
Meaningful Progress Since IPO
19%
Defense against pure e-
commerce players
Difficult to replicate
(1)
2009 2013 2016
>$500M(1) in
Sales each
>$100M(1) in
Sales each
(1)2016 Sales
Impressive Product Development Capability
The Michaels
Companies Customer-driven product
ideation
Exclusive and
differentiated product
Vendor selection
Product packaging & in-
store merchandising
GRAND
SLAM
1 2 3
Early Identification Expanded Customer
to Ancillary Recognized
First to Market Categories Michaels as the
Authority
Increase Newness
Drives traffic
Differentiates brand
Key items
Disciplined approach to
category resets
Expand Seasonal
The Michaels
Product with an end date
Companies Appeals to broader
customer base
Personalization
opportunities
Ready-made dcor
Seasonally-inspired
projects
Build on Our Success
2009 2010 2011 2012 2013 (1) 2014 2015 2016 Goal
Wedding Lighting
Large Closeup High Res Product Image
VALUE
Most Common Promotion Vehicles
Coupons
Category discounts
Clearance
Appealing Value
90%
80%
70%
75% < $5
60%
50%
40%
30%
20%
10%
0%
< $1 < $2 < $3 < $4 < $5 < $10 < $20 < $30 >$30
What Weve Accomplished
Direct Mail Version for More Value Sensitive Customers: Direct Mail Version for Customers not as Sensitive to Discount
Coupon utilization
Trip drivers
Optimize offers
Adjust Promotional Messaging
Optimize offers
More storytelling
More focus on value, newness, trend
Expand Everyday Value Program
PRESENTATION
What Weve Accomplished
More customer-centric presentations
Improved sight lines and navigation
Relevant groupings
Product presentation
Simplified layouts and flow
Flexible merchandising area
Improved Sight Lines and Navigation
From
To
Relevant Groupings
From
To
Stronger Product Presentation
Set by color
Organized
by logical themes
Separated
by relevant signage
Easier to replenish
Build on Our Success
Integrated signage
Extension of existing
categories
New categories
Improve Flexible Merchandising Area
Develop Ex: Kids Department
Space to
GROW 113 Blocks
113
113blocks
Blocks 99Blocks
blocks
CARRIE WALSH
SVP - Marketing
Vision 2020
Technology
(1)Select competitors
Note: As of April 28, 2017
A Clear Promise
Unleash
the
MAKER
in all of us
Brand Points of Difference
EASIER
RELEVANT
INCLUSIVE
Large Customer Base
80M identified
customers
51M shopped in last
year
Shop Michaels 2-3x / year
Two Distinct Targets
Enthusiast Novice
Nurture Enthusiast
2013
2014
2015
2016
Address Barriers and Needs
Need easy ideas
Its hard & inspiration
Strategies to WIN
Products
Recommended Special deals
for you Carrie just for you
Carrie
In-Store
Email / Push
Site
Notifications
Reward Loyalty
16.5M Members*
Unique rewards & benefits
(not points-based)
44% of total sales
Spend 30% more
Driven by more
transactions
~35MM Members
Innovate Digitally
TODAY TOMORROW
Artificial intelligence
Project chatbots
Visual search
Michael
s
Michael
s
Employ 360-Degree Marketing Approach
Media
Integrations
Launched New Campaign
Expand Digital Engagement
Product
% Marketing Spend
Other
Marketing
STEVE CARLOTTI
EVP Marketing &
Business Development
Vision 2020
THE MICHAELS COMPANIES
Technology
B2B B2C
#1 wholesale distributor 35 stores in upper Midwest B2C
in the arts & crafts, gift EDLP e-commerce site
and decor industry
Darice (B2B)
Established sales infrastructure
Product development capabilities
Exclusive licensee
for key brands
Martha Stewart
Disney
David Tutera
Darice Growth Opportunities
Exclusives
Category expansion
Darice product
development
Michaels private brands
Customer growth
International sales
Leverage CRM
Pat Catans
35 stores in
upper Midwest
Smaller, rural markets
Larger selling space
Folksy store environment
Less promotional
Pat Catans A Learning Lab
ConsumerCrafts.com
Supply Chain B2C (EDLP)
Data Analytics
FramersPointe.com
Technology B2C
Customer Service
Darice.com
Product Development B2B
Michaels Marketplace
B2C
Pure Play E-commerce is Mostly EDLP
Pure Play Competitor Business Models
Amazon EDLP
Opportunity exists
eBay EDLP to capture share in
EDLP space within
Dick Blick EDLP categories in which
Michaels already
Big Box Players Mostly Hi-low competes
Grow ConsumerCrafts.com to Capture EDLP
Technology
Domestic Supplier
Earns Retail Margin Only
2013 TODAY FUTURE
Pricing & Promotion Effectiveness
Leverage Analytics Leverage CRM
Item price elasticity Understand customer
Understand responsiveness of behavior
offers on: Trip drivers
Basket Coupon utilization
Store
Understand cross-promotional Target offers based on drivers
effects vs one size fits all
Redirect promotion dollars to More value sensitive
maximize gross margin dollars for Less value sensitive
the store, not the item
Process Simplification
DC to shelf process improvements
Downstocking
Leverage
ROI based view technology to focus
of Plan-o-gram restocking on what
updates has sold vs fixed
schedule
Leverage Size and Scale
Non Merchandise
Purchases
Product Development
Supply Chain
Shared Services
Data Analytics/ CRM
Media Placement
Artistree
Michaels Marketplace
Target: $150M+
Technology
Shareholder Return
Principles
Financial Algorithm
Consistent Revenue Growth
3.4% 3.2%
Comparable Sales
In-store enhancements 2.4%
Avg.2.2%
Growth(1)
Customer focused
merchandising and marketing
New e-commerce site (0.4%)
2013 2014 2015 2016
Disciplined store openings (1)Constant Currency
Total Sales
($millions)
$4,913
$4,738
$4,570
(2)
2013 2014 2015 2016
(2)Includes acquisition of Lamrite
Generated $721 $727
$664
Retail-Leading $624
Adjusted Operating
Operating Margins
Income
Sales growth continues to
provide operating leverage
2013 2014 2015 2016
Expansion of private brand
business
Enhanced sourcing capabilities
Adjusted Operating
14.7%
13.7% 14.0% 14.0%
Avg.
Fuel For Growth 14.1%
Margin
2013 2014 2015 2016
Strong EPS Growth
Share repurchases
7.6%
Effective working capital 7.2%
management $946
Inventory management
(1) Free Cash Flow Yield calculated as annual free cash flow per diluted share
divided by average share price
Strong Balance Sheet
4.7x
Adjusted EBITDA
Over $500M in net debt 3.8x
3.2x 3.2x
Leverage
payments since IPO
BB-/Ba2 credit ratings
Ratings upgrades in 2013 2014 2015 2016
last 12 months
5.8x
Adjusted Interest
5.2x
Coverage
3.9x
3.2x
20% 19%
16% 17%
Note: ROIC defined as after tax adjusted income, before interest and rent expense, divided by average capital employed (debt,
equity and rent capitalized at 5.0x). Peer metrics reflect median of retail peers last four fiscal years. Retail peers include
Advance Auto Parts, AutoZone, Bed Bath & Beyond, Big Lots, Burlington Stores, Chicos, Costco, Dicks Sporting Goods,
Dollar General, DSW, GNC Holdings, Home Depot, Lowes Companies, OReilly Automotive, Party City, Ross Stores, Sally
Beauty Holdings, Signet Jewelers, Tractor Supply, and Williams-Sonoma.
Recent Business Pressures
Hit Products are
Difficult to Anniversary
Comp growth slow down
Promotional Nature of
SG&A deleverage
Competition
Marketing investments
Value is Winning in Arts Promotional investments
and Crafts Retail
to grow share
Shareholder Return
Principles
Financial Algorithm
Investments for Growth
Near-term Capital Investment: 2-3% of sales
Technology Investment
Shareholder Return
Principles
Financial Algorithm
Shareholder Return Principles
Invest in the Invest 2-3% of sales in capital expenditures
Business
Shareholder Return
Principles
Financial Algorithm
Initiatives to Drive Sales
Build a engaging omnichannel experience
Customer-Centric Make it easier to shop
Shopping Experience Create unique customer experiences
Empower an experienced, productive team
stores
4-5% annually
E-commerce: Strong DD
growth
Brick & Mortar: Slightly
positive growth
233
Operating Income Growth
INCOME
Optimize pricing and promotion
Drive process simplification
Growth Utilize size and scale to reduce operating
costs
Continue to foster culture of Frugal, not
Cheap
Diluted EPS Growth
Deliver
Attractive 10-15%
EPS Prudently manage balance
sheet
Growth Return capital to
shareholders through share
repurchases
Long-Term Financial Algorithm
Technology