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THE MICHAELS

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

Progress Arts & Crafts Our Our Current Our Future


Since IPO A Fragmented Customer Position
Industry
2016 Net Revenues $5.2B / Adjusted EBIT $727M

#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)

Specialty format focused on frames,


custom frames, art supplies and dcor
#1 wholesale distributor in the arts & crafts,
104 stores(2)
gift and decor industry
Sell through 36,000 doors

#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

Leading arts and crafts wholesaler


Wholesale Cross-industry distribution
Consumer $5.2bn
Crafts.com Sales
Michaels.com
Darice.com Strongest web presence and web
High Growth traffic
E-commerce
~$50M in revenue from
e-commerce in 2016

Supports differentiated product


Vertical Sourcing Vertical development across all channels
Sourcing
4 vertical frame manufacturing
facilities
(1)As of April 29, 2017
Dedicated and Experienced Team
Years of Retail
Name Title Experience Prior Experience

Chuck Rubin Chairman & CEO 35

Denise Paulonis EVP - CFO 8

EVP Marketing &


Steve Carlotti Business Development
10

Bryan Venberg EVP - HR & Stores 27

Idalia Farrajota SVP Merchandising 29

Holly SVP Merchandising


Operations
34
Shaskey-Platek

Carrie Walsh SVP - Marketing 13


Dedicated and Experienced Team
Years of Retail
Name Position Experience Prior Experience

Chuck Sonsteby Vice Chairman 12

Philo Pappas President MSPCI 36

Mike EVP General


30
Veitenheimer Counsel & Secretary

EVP Supply Chain


Dennis Mullahy & IT
29

SVP Real Estate &


Lance Weibye
Development
30

VP Investor Relations
Kiley Rawlins 20
& Communications

Director Treasury &


Elaine Locke 3
Financial Risk Management
Dedicated and Experienced Team
Years of Retail
Name Position Experience Prior Experience

Laura Denk VP - Merchandising 23

Tracie VP Store
Operations
25
Wickenhauser

VP Space Planning
April Willers 12
& Analysis

Zone Vice President


Rafael Herrerias Store Operations
27

Mary Beth
Hawthorne District Manager 16

Jennifer Dropski District Manager 24


#1 Player in a Fragmented Industry

Why #1 Customer Destination for


Making

Michaels #1 Omnichannel Platform

IS ATTRACTIVE Powerful Private Brands, Product


Development and Sourcing

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

Stores Opened At Current Stores(1)


Beginning of
2014
(1)As of April 29, 2017
Improved In-Store Experience

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

Note: As of April 29, 2017


Find It

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%

$2.2B in sales $2.9B in sales


Acquired B2B Capabilities
Exclusive
Licenses

Domestic & 80,000


International Available SKUs

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

New e-commerce site $5,197

Acquired Lamrite West

Total Sales
$4,913

($millions)
$4,738
$4,570

2013 2014 2015 2016 (2)


(2)Includes acquisition of Lamrite
Generated $664
$721 $727
$624
Retail-Leading

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

Technology Reduced share


Debt count by ~8%
Store Refresh
Paydown(1,2)
New Stores
$401M
Sourcing
Reduced Total Share
Debt/ Adjusted Buybacks(1)
EBITDA to $157M
3.2x
M&A(1)
Cumulative Cash Flows Lamrite West
from Operations Acquired in 2016
2014-2016 for $151M

(1)Asof January 28, 2017


(2)Excludes 2014 refinancing activity
Produced Significant EPS Growth &
High ROIC
Adjusted Diluted EPS ROIC(1)

$1.88 28% 27%


27% 27%
$1.75
$1.46
$1.30

2013 2014 2015 2016


2013 2014 2015 2016
(1)ROICdefined as adjusted after tax income, before interest and rent
expense, divided by average capital employed (net debt, equity and
rent capitalized at 5.0x).
ARTS & CRAFTS
A Fragmented Industry
Arts & Crafts Includes Multiple
Product Categories
~$35B Arts & Crafts Industry

Creative Celebrations/ Art Supplies Seasonal/ Paper Crafts Creative Gifting Needle Crafts Jewelry & Beads Floral Items Food Crafts
Decorating Entertaining Holiday

Source: Michaels research


Retail Distribution Is Fragmented

Crafts & fabric chain stores


remains the largest channel
24% in US Arts and Crafts
34%
$35B Other hardline retail
~[VAL Total US industries have
Arts and consolidated more
UE] Crafts
significantly
11%
26%

Source: Michaels research. Data as of 2016.


Arts and Crafts is Similar to Industries with Low E-
commerce Penetration
2016 US Retail Category Sales
Store based share of total sales Online share of total sales

5% 1% 4% 5% 11% 14% 14% 17% 22% 23% 27% 45% 48% 93%

Food/ Auto Hard- House- Sport.


Arts and Jewelry Health/ Toys/ Flowers/ Apparel/ Comp./ Office Books/
Drug Parts/ ware/ ware/ Goods
Crafts Home Beauty Hobbies Gifts Access. Electronic Supp. Music/
Accessory Home
Improv. Furnishing Video

Source: ATKearney Internet Retailer 2017 Report and Michaels research


Pureplay E-commerce Limitations

National Brands Private Brand, Seller Equals


Quality

80/20 Bestsellers Long Tail of SKUs

Fast Inventory Turn Credible Players Turn ~2x

Component parts that


Known Commodity Item
Create Item

Attractive AUR Average AUR ~$4

Attractive Supply Chain Multiple Items @ $4 each; Each


Economics Require Pick, Pack, Ship
Michaels is Best Positioned to Win in Omnichannel

Integrated Most Trusted Efficient,


Online & Brand in Established
Physical Arts & Crafts Infrastructure
Platform

Michaels large physical The absence of national Our scale, inventory


footprint enables attractive brands and the prevalence and infrastructure
e-commerce solutions that of low average ticket items give us a significant
pure-play e-commerce makes the Michaels name competitive advantage
and what it stands for very over pure-play e-
retailers cannot provide important to the online commerce
shopper
Michaels is
Differentiated and Advantaged
Big Box Independent Mass E-commerce
Craft Stores /Local Market /Direct
CATEGORY LEADING
SCALE
CATEGORY BRAND
AWARENESS
OMNICHANNEL

DIGITAL CONTENT
VERTICALLY INTEGRATED \
CUSTOM FRAMING
IN-HOUSE PRODUCT
DEVELOPMENT TEAM
DIRECT SOURCING
CAPABILITIES
IN-STORE & ONLINE
CLASSES
PROJECT IDEAS

Source: Michaels research


OUR CUSTOMER
Michaels Customer
Customer Demographics Diverse Customer Ethnicities
[CATEG[CATEG
ORY ORY
NAME] NAME]
[CATEG
[VALUE][VALUE]
ORY
NAME]
[VALUE]
[CATEG
85% 15% 50% ORY
NAME]
[CATEG
ORY
of Customer [VALUE] NAME]
Female Male Households Have [VALUE]
Children

Range of Household Incomes Range of Customer Ages


19% 22%
17% 16% 20% 20%
18%
12% 15%
11%
10%
8%
6%
6%

Unknown <$25K $25- $50- $75- $100- $125- >$150K 18-24 25-34 35-44 45-54 55-64 65+
50K 75K 100K 125K 150K

Source: Michaels research


Customer Purchasing Habits

Customer Frequency Customer Spending


Transactions per Year Revenue per Year

55% 65%

26%

21%
9%
4% 4% 9%
2% 4% 2%
1 2-3 4-5 6-7 8-9 10+
Key Shopping Missions

32% Percent of Total Shopping Missions

26%

11% 11% 10% 9%

To Complete a To Decorate a For Family To Stock Up To Entertain For a Gift


Project Home Activities on Supplies

Personalization Is the Common Driver


Source: Michaels research
Personalization Is Increasingly Important

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%

Desires to be creative but lacks the


expertise or time
Novice Inspired by Pinterest and other social
channels
60% 40%
Not sure where to start and fears failure
or wasting time and money

All Customers Want the Experience to be


Easy, Relevant and Inclusive
Source: Michaels research
OUR CURRENT POSITION
Largest Player in Arts &
Crafts Across US and Canada
1,364 stores(1)
3 e-commerce
sites
50,000
Team Members
8 distribution
centers
2 sourcing
offices in China
4 custom frame
production
facilities

(1)As of April 29, 2017


#1 Brand in the Marketplace
Michaels Outranks Competitors Across Key Brand Awareness Metrics(1)

Competitors
66%

43%
40% 39%
35%
26%
20%
15%
10% 12%
8%
4%

Top of Mind Unaided Awareness Extremely Likely to Recommend

Source: Michaels research


(1)As of April 29, 2017
Ability to Track to Customer Behavior

76% of Total Sales 65% of Total Transactions


Linked to Identified linked to Identified
Customers Customers
80M identified active customers
16.5M Michaels Rewards members
25M active email addresses Note: TTM through April 28, 2017
#1 Digital Engagement
We have Amassed a Vault of Actionable Customer Data

250M Visitors 4M Followers Across 50M Views of


Social Media Platforms Michaels Content
= 10M visitors
= 10M views

Note: TTM through April 28, 2017


Top Private Brands

>$500M(1) in
Sales each

>$100M(1) in
Sales each

(1)2016 Sales
OUR FUTURE
Michaels Future: Vision 2020

THE MICHAELS COMPANIES

Create Curate Speak to Our


Expand Fuel for
Customer- Offering Customers
Other Growth
Centric Based on Where,
Businesses
Shopping Trend, Value, When, How
Experience Customer they Want
Demand

Integrated, Efficient Supply Chain

Enhanced Processes, Performance Measurement and Analytics

Technology

High Performing Culture


Deliver a Customer Centric Omnichannel Experience

Improve ease of
shopping
Invest in primarily self
directed, technology
enablement
Reinforce inclusive,
friendly team culture
Expand experiential
Enhance community
Curate the Best Offering

Expand trend and exclusives


Broader and deeper private
brands
Improve value perception
Grow endless aisle offering
Increase story telling
merchandising
Speak to Our Customers Where,
When and How They Want

Strategically shift media mix


Aggressively expand
analytics and CRM
Contemporize brand image
Expand loyalty program
customer benefits
Expand New Businesses
Online
Custom Darice Grow B2B segment
Framing leveraging Private Brands

Market- Michaels Consumer Pat


Grow B2C e-commerce
place .com Craft.com Catans channel
Launch Michaels
Marketplace
Expand Shared Service
platform
Sourcing Supply Chain Data Analytics
Opportunistically explore
investments and
Product Development Shared Services acquisitions
Pursuing Strategic Alternatives for
Aaron Brothers
Potential Paths
Small format, specialty Continue enhancements
stores to find greater profitability

~$100M in sales Sell business


Breakeven profitability Close business
Create Fuel for Growth
Deliver $150M+ on top of the
more than $150M saved since
IPO
Product sourcing
Pricing and promotional
effectiveness
Process simplification
Leverage size and scale
Continue to foster frugal, not
cheap simplified working
culture
Supported by Strong Enablers

THE MICHAELS COMPANIES

Create Curate Speak to Our


Expand Fuel for
Customer- Offering Customers
Other Growth
Centric Based on Where,
Businesses
Shopping Trend, Value, When, How
Experience Customer they Want
Demand

Integrated, Efficient Supply Chain

Enhanced Processes, Performance Measurement and Analytics

Technology

High Performing Culture


Unique Culture That Cant Be Copied
Large Closeup High Res Product Image

KEY LEARNINGS
Key Learnings

Hit Products
are Difficult to
Anniversary
Key Learnings

1 2

Hit Products Promotional


are Difficult to Nature of
Anniversary Competition
Key Learnings

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%

Promotional and price 5.2%


optimization
Continue fuel for growth
initiatives
2013-2016 2017-2021
Drive operating leverage CAGR
Maintain a Strong Return Profile
Adjusted Diluted EPS Growth
Return capital to
shareholders 10-15%
13.1%
Prudently manage the
balance sheet
Make investments and
strategic acquisitions
2013-2016 2017-2021
CAGR
Core Business
Investments

1
Returns
Focused
Capital M&A 4 Shareholder
2
Target
Activity
Allocation Returns Leverage

Priorities
3

Share Repurchases
Grow Sales and Market Share

Expand Industry-Leading Omnichannel


OUR Customer Experience

COMMITMENTS Provide Customers with


the Most Compelling Value Proposition

Drive Operating Income, Free Cash


Flow and EPS(1) Growth

Deliver Strong Shareholder Returns

(1)Adjusted Diluted EPS


Large Closeup High Res Product Image

VISION
2020:
Create a Customer-
Centric Shopping
Experience

BRYAN VENBERG
EVP HR & Stores

STEVE CARLOTTI
EVP Marketing & Business
Development
Vision 2020

THE MICHAELS COMPANIES

Create Curate Speak to Our


Expand Fuel for
Customer- Offering Customers
Other Growth
Centric Based on Where,
Businesses
Shopping Trend, Value, When, How
Experience Customer they Want
Demand

Integrated, Efficient Supply Chain

Enhanced Processes, Performance Measurement and Analytics

Technology

High Performing Culture


True Omnichannel Experience

Role of
digital in
channel

Omnichannel In Store Brick &


Online mortar
Experience advantage

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

Store Ease of Locating Friendliness of Speed of Liklihood to


Cleanliness Team Member Checkout Recommend

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

Low store manager 1


0

turnover 2014 2015 2016 2017

High store Team Store Management Turnover


Member engagement 100%

80%

60%

40%

20%

0%

2014 2015 2016 2017


Hire Happy, Friendly, Creative People
The ART of Service

Self-service model with


friendly Team Members
The ART:
Acknowledge
Recognize
Thank
Personalized Framing Experience

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

Robust tracking of all


store tasks
Two-way communication
Analytics-driven insights
Automated task
scheduling
Making It Easier for Customers and Teams

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

COMMERCE ENABLEMENT MARKETING


Michaels.com Connected Retail Partnerships
Consumercrafts.com CRM
Darice.com 360-degree marketing
Framerspointe.com Digital media
Michaels Marketplace
Endless Aisle
Michaels.com - Initial Launch
Launched in 2014
17,000 SKUs
100% 3rd party fulfillment
Limited assortment
Added ship from DC in
2015
Expanded the
available assortment
Introduced minimum order
quantities on some items
Michaels.com - Today
60,000 SKUs
1M transactions in 2016
$50M in sales
Conversion improved
Promotional strategy
Mirror brick & mortar
Unique online offers
Ship from store
Michaels.com - Today
Top Sources of Traffic

[VALUE]

[VALUE]
[VALUE]

Paid: paid search, PLA, paid social, display, affiliate


Earned: natural search, referring sites, direct load
Paid Owned Earned Owned: email, organic social, video, SMS
Michaels.com - Today
Top Destinations
19% 18%

15%

13%
12%

Coupon Pages Category Pages Product Pages Weekly Ad Pages Search Result
Pages
% of Total Page Views
Michaels.com - Future State

Enhanced Improved Easier Digital Fully


Assortment Discoverability Shopping Partnerships Integrated with
Experience Brick & Mortar
Enhance Assortment
Integrated store
assortment
Leveraging existing
inventory ownership
Endless aisle
Darice partnership
Drop ship
Improve Discoverability

Search improvements
Natural language
Visual
Projects
Easy to buy
materials and tools
Differentiated vs.
pure play or mass
Recommendations
Deliver an Easier Shopping Experience

Simpler cart, persistent


across devices
Improved checkout
Fewer clicks
Less data entry
Mobile first
Leverage Digital Partnerships

Provide inspiration
Create demand
Build stickiness
Improve transactions

We are the largest partner in our space


Fully Integrate with Brick & Mortar

Buy online pick up in store


Convenience
In-stock visibility
No shipping costs
Buy online, return to store
Endless aisle: use your
device to buy while in store,
ship to home
Connected Retail
WHY Inspire the
customer
Connect? Make it easier
Make it Easier to Shop
Search using
barcode
Store
automatically
sets for her and Future versions
is omnipresent
Visual search
Search by voice
Deliver Inspiration - Project Finding

She opens the


Projects tab to
Make-It with
Michaels

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

She can add all


to online cart or
create list to find
in store
Make it Easier to Shop
Conversion
Make it Easier - Purchase

Home Screen Coupons Drawer Coupon

Rewards & Coupons


Connect Team Members
Make it easier for
team members to
help customers
Product information
Recommendations
Projects
Training tool for
new team members
1. Build a engaging omnichannel
experience
Buy online, ship from store
SUMMARY: Connected Retail
DRIVE 2. Make it easier to shop
Leverage technology in stores
LOYALTY Show new product better

AND 3. Create unique customer experiences


In-store classes and events
SALES Online classes and inspiration
4. Empower an experienced, productive team
VISION
2020:
Curate the
Offering

IDALIA FARRAJOTA
SVP Merchandising

HOLLY SHASKEY-
PLATEK
SVP Merchandise
Operations
Vision 2020

THE MICHAELS COMPANIES

Create Curate Speak to Our


Expand Fuel for
Customer- Offering Customers
Other Growth
Centric Based on Where,
Businesses
Shopping Trend, Value, When, How
Experience Customer they Want
Demand

Integrated, Efficient Supply Chain

Enhanced Processes, Performance Measurement and Analytics

Technology

High Performing Culture


Manage a Diversified
Portfolio 2016 Sales by Major Category
Custom Frame Art Supplies
Yarn & Stitchery
Celebrations
Holiday

Floral Design

Papercrafting

Food Crafting

Other*
Frames

Kids Crafts Home Dcor


Jewelry & Beads

*Includes apparel crafts, books & magazines and


unfinished surfaces
Fulfill a Variety of Shopping Missions

32%
26%

11% 11% 10% 9%

To Complete a To Decorate a For Family To Stock Up To Entertain For a Gift


Project Home Activities on Supplies

Personalization Is the Common Driver


Source: 2016 TCG - Customer Strategy Refresh.
Manage Three Primary Businesses

Seasonal
[CATEGORY
Custom
NAME]
Framing

Note: based on 2016 sales


Standard Basic Assortment
KIDS PAPER CRAFTING JEWELRY MAKING CELEBRATIONS

ART SUPPLIES YARN & STITCHERY FRAMES FOOD CRAFTING


Seasonal
SPRING HALLOWEEN CHRISTMAS
Custom Framing
High ticket
$150-160 average unit
retail
Planned but infrequent
purchase
High margin
Vertically integrated
Business is SKU Intensive
Total Number of SKUs (all channels) +100,000 unique SKUs
Small items
Low price points
Infinite
combinations
and uses
Slow turning

*Includes apparel crafts, books & magazines and unfinished surfaces


Low Reliance on National Brands
2016 Sales
Fragmented vendor base
Industry Limited supplier pricing
labels power

National
Private Higher margin
Brand opportunities
Brands

Limited 3rd party data


Large Closeup High Res Product Image

ASSORTMENT
Meaningful Progress Since IPO

Private Brand Strengthened Introduced Increased Expanded


Growth Product Trend and Newness Seasonal
Development Exclusives
Capabilities
Private Brand Growth
Private Brand Sales Penetration
Key differentiator
Margin enhancing
57%
48% Product development
Sourcing

19%
Defense against pure e-
commerce players
Difficult to replicate
(1)
2009 2013 2016

1Includes Rainbow Loom Sales


Strong Private Brand Portfolio

>$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

Now Trending TRIPLE


at Michaels
SINGLE
What Trends Mean at Michaels

Trend-Right Fads/ Key Items

Fast follower Happen periodically


Supported by standard basic Rapid peak
assortment
Requires disciplined
Influenced by other channels inventory management
and industries
Longer life cycle
Cultural happenings
Trend Capabilities
A Competitive Advantage
Identify &
Dedicated team of trend experts Validate
Robust research across a wide
variety of industries and social
media
Create and
Rigorous validation processes Source
External/internal sources

Cross functional alignment


Deliver to
Focus on speed the customer
Capitalizing on Trend: Adult Coloring

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

Grow private brand and exclusives


Enhance product development capabilities
Expand sourcing capabilities
Leverage scale
Leverage portfolio management to respond to
changing customer preferences
Expand Private Brand

Private Brand Sales % of Total Sales


70%
57%
51% 53%
49% 48%
44%
32%
19%

2009 2010 2011 2012 2013 (1) 2014 2015 2016 Goal

(1)Includes Rainbow Loom Sales


Increase Exclusives

Leverage our brand and scale


Leverage Darice design and
sourcing capabilities
Partnerships
Enhance Product Development Capabilities

Ongoing process improvement


Continue to leverage trend team
Product life cycle management
Packaging enhancements
More experiential
More visible pricing
Expand Global Sourcing

Increase direct sourcing


Create a robust quality and compliance process
Factory consolidation
Further expansion of capabilities and resources
Leverage Portfolio Management
Party Kids

Wedding Lighting
Large Closeup High Res Product Image

VALUE
Most Common Promotion Vehicles

Coupons
Category discounts
Clearance
Appealing Value

Percent of Units Sold


100%

90%

80%

70%
75% < $5
60%

50%

40%

30%

20%

10%

0%
< $1 < $2 < $3 < $4 < $5 < $10 < $20 < $30 >$30
What Weve Accomplished

More customer-centric offers


Diversified our offers
Increased flexibility
Introduced Every Day Value
Introduced even price points
Build on Our Success

Lean Into CRM Expand Every Create


and Pricing Price Point Price
Day Value Endless
Analytics Clarity Guarantee
Program Aisles
Leverage CRM & Analytics to Optimize Discounts

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

100 items (1,000 SKUs)


Core crafting basics
Refreshed every quarter
Clear, visible signage
Enhance Price Point Clarity

Clear, visible signage


Even dollar price points
Simplification for store
teams
Offer Price Guarantee

Direct price comparison


Brick & mortar and
online
Reinforce commitment
to value
Large Closeup High Res Product Image

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

Increase Expand Leverage Create Create Space


Storytelling Experiential Signage to Endless to Support
Touch Points Educate and Aisles Portfolio
Inspire Management
Increase Storytelling
Increase Experiential Displays
Leverage Signage to Inspire and Educate
Create Endless Aisles

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

Expand and contract space


with customer demand Before After

More consistent adjacencies


Easier to execute
1. Deliver a differentiated, relevant offering
through portfolio management
2. Maximize industry-leading trend capabilities

SUMMARY: 3. Increase exclusives, leveraging our product


development competitive advantage
DRIVE 4. Strengthen our value perception
SALES 5. Enhance in-store and online presentation
6. Create endless aisles with new categories and
expanded assortments
1. Grow penetration of private
brands and direct sourcing
SUMMARY: 2. Leverage our size, scale and
extensive data analytics to
ENHANCE optimize pricing and
PROFITABILITY promotion
VISION
2020:
Speak To Her

CARRIE WALSH
SVP - Marketing
Vision 2020

THE MICHAELS COMPANIES

Create Curate Speak to Our


Expand Fuel for
Customer- Offering Customers
Other Growth
Centric Based on Where,
Businesses
Shopping Trend, Value, When, How
Experience Customer they Want
Demand

Integrated, Efficient Supply Chain

Enhanced Processes, Performance Measurement and Analytics

Technology

High Performing Culture


A Powerful Brand
(1) (1)

Top of mind awareness 40% 20% 10%

Store for someone like me


51% 39% 28%

Makes making crafts look 57% 37% 26%


easy

Carry products that are on- 57% 40% 29%


trend

(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

Heavier category user


Share of wallet upside
11 stated category trips/year
Key categories
Paper crafts
Fine art
Yarn
Engage Novice

Lighter category user


Kids in household is a
driver of many trips
Key categories
Dcor
Kids
Party
Growing Enthusiasts
# of Top Customers
(>6 transactions/year)

+16% +16% YOY growth in


number of top customers
Low-single-digit YOY
average sales/ customer
in this group

Apr 2016 Apr 2017


Trends Have Driven in Novice
New Customers

2013

2014

2015

2016
Address Barriers and Needs
Need easy ideas
Its hard & inspiration
Strategies to WIN

Unleash data and


CRM
Reward loyalty
Innovate digitally
Employ 360-degree
marketing approach
Create Targeted Communication
Deliver Smarter Promotions
Expand CRM
Tomorrow: Triggered Dynamic 1 to 1 Content

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

*As of April 2017


Rewards Three Year Outlook

Tiered Incentives (i.e. Membership Levels)

> 70% of Sales

~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

2.5M Facebook fans


711K Pinterest followers
634K Instagram followers
171K Twitter followers
123K YouTube subscribers
Product Rating & Reviews
Increase Experiential Events

2016: >1M Attendees


Leverage New Partnerships

Product

Education Celebs &


(Exclusive) Influencers
Reinforce Trend & Value
Continue 360-Degree Evolution

% Marketing Spend

Print

Other
Marketing

2015 2017 2019


1. Unleash data and CRM
SUMMARY:
DRIVE 2. Reward loyalty
TRAFFIC 3. Innovate digitally
AND 4. Employ 360-degree marketing
SALES approach that contemporizes the
brand
VISION
2020:
Expand Other
Businesses

STEVE CARLOTTI
EVP Marketing &
Business Development
Vision 2020
THE MICHAELS COMPANIES

Create Curate Speak to Our


Expand Fuel for
Customer- Offering Customers
Other Growth
Centric Based on Where,
Businesses
Shopping Trend, Value, When, How
Experience Customer they Want
Demand

Integrated, Efficient Supply Chain

Enhanced Processes, Performance Measurement and Analytics

Technology

High Performing Culture


Expansion of Other Businesses
Year Business
2014 Launched Michaels.com
Acquired Lamrite West
Darice
2016
Pat Catans stores
ConsumerCrafts.com
Darice expansion
Relaunch ConsumerCrafts.com
2017
Launch online custom framing
Launch new Michaels Marketplace
Acquisition of Lamrite West
Lamrite West

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

Everyday low club prices


Test new programs
Fabric
Party supplies
Lighting
Expand Other Businesses - Digital
FUTURE: Common Infrastructure
Michaels.com
B2C

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

Increase SKU assortment


Improve site look and feel
Drive incremental traffic
2016
Sessions: 3.7M eBay storefront
AOV: $41 Search and PLA
Conversion Rate: 3.5% advertising
SKU Count: 13,500
Launch Online Framing
Leverage our leadership position

EDLP pricing (consistent


with the market)
Satisfaction guarantee
Art prints and functional
dcor available
Marketplaces
Indexed Online Marketplace Sales

Strong growth in gross sales


150
value across online platforms
125 (Amazon, Etsy, eBay)

100 Expressed interest from


customers in homemade look
and feel
Platform for future capabilities

2014 2015 2016


1. Drive B2B growth through Darice
2. Leverage Pat Catans retail lab
SUMMARY: 3. Launch and grow new online platforms
DRIVE Michaels.com

SALES EDLP e-commerce site


(consumercrafts.com)
AND Online custom frame

MARGIN Michaels marketplace


4. Selectively evaluate external
opportunities
VISION
2020:
Fuel For Growth
DENISE PAULONIS
Chief Financial Officer
Vision 2020

THE MICHAELS COMPANIES

Create Curate Speak to Our


Expand Fuel for
Customer- Offering Customers
Other Growth
Centric Based on Where,
Businesses
Shopping Trend, Value, When, How
Experience Customer they Want
Demand

Integrated, Efficient Supply Chain

Enhanced Processes, Performance Measurement and Analytics

Technology

High Performing Culture


Fuel for Growth
Company effort to reduce
costs
Spans gross margin and
SG&A expense
Grounded in a culture of
Frugal, not Cheap
Team Members financially
rewarded for ideas
Delivered expense savings of
more than $150M over the
last three years
Building Blocks

Pricing & Promotion


Product Margin Product Sourcing
Effectiveness

Leveraging Size &


Expense Process Simplification
Scale
Product Sourcing
Breakdown of Product Sourced Direct Sourced Private Brand
Earns Retail Margin + Wholesale Margin

Increasing Margin Benefit


Agent Supported Private Brand
Earns Retail Margin + Wholesale Margin
less Agent Fee

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

Aisle ready boxes, pre-made displays

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+

Pricing & Promotion


Product Margin Product Sourcing
Effectiveness

Leveraging Size &


Expense Process Simplification
Scale
Vision 2020

THE MICHAELS COMPANIES

Create Curate Speak to Our


Expand Fuel for
Customer- Offering Customers
Other Growth
Centric Based on Where,
Businesses
Shopping Trend, Value, When, How
Experience Customer they Want
Demand

Integrated, Efficient Supply Chain

Enhanced Processes, Performance Measurement and Analytics

Technology

High Performing Culture


FINANCIAL
OVERVIEW
Financial Overview

Strong Track Record of


Financial Performance

Investment for Growth

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

Acquisition of Lamrite West


$5,197

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

Operating income growth Adjusted Diluted EPS


Interest expense savings
through voluntary debt
paydown $1.75
$1.88

Favorable debt refinancing $1.30


$1.46

Share repurchases

2013 2014 2015 2016


Significant Cash Flow Generation

Cumulative Cash Flow


Consistent through different From Operations Free Cash Flow Yield(1)
economic cycles
$1,510
Strong operating performance 8.7%

7.6%
Effective working capital 7.2%

management $946

Cash conversion cycle


improvements $442

Inventory management

2014 2015 2016 2014 2015 2016

(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

2013 2014 2015 2016


Consistent, High-Quality ROIC
Return on Invested Capital
Retail Peers

27% 27% 28% 27%

20% 19%
16% 17%

2013 2014 2015 2016

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

Progress Takes Time


and Customer Behavior
Changes Slowly
Coloring no longer a headwind
TREND Lapping election distraction
Change in Anniversarying our flexible
2H 2017
merchandise area rollout
Continued realization of sourcing
benefits
Financial Overview

Strong Track Record of


Financial Performance

Investment for Growth

Shareholder Return
Principles

Financial Algorithm
Investments for Growth
Near-term Capital Investment: 2-3% of sales
Technology Investment

Omnichannel Data Analytics


Connected retail Customer 360-degree
Artificial intelligence Advanced analytics
Buy online, pick up in store
Buy online, ship from store
Efficiency / Productivity
E-commerce
New POS
Online custom frame Task management
Canada Inventory flow/supply chain
Marketplace enhancements
EDLP
Michaels.com
High Quality Current Store Base
Average over $4 million in sales per store
Over 99% of stores are profitable
Strong 4-wall EBITDA margin, averaging 20%
Over 90% of stores have 4-wall EBITDA more than $0.3M
New Store Model
Considerations

Real estate process grounded in geospatial assessment


Financials include impact of competition and cannibalization
Gating factors for annual openings:
Real estate capacity
Disciplined view of return
New Store Openings
Michaels White Space Potential
(Number of Stores)
We anticipate adding 15-20 new
Michaels stores per year 1,400-
100+ 1,500
Additional potential for modest ~1,223 ~80
~1,303

expansion of our Pat Catans store


format is not included in the white
space potential

2016 Expected 2021 Total Estimated Total


Total Stores Remaining Estimated
Being Added Potential Michaels
Opportunity
Refresh the Fleet
Facility Merchandise
Relocations improvements refreshes
Financial Overview

Strong Track Record of


Financial Performance

Investment for Growth

Shareholder Return
Principles

Financial Algorithm
Shareholder Return Principles
Invest in the Invest 2-3% of sales in capital expenditures
Business

Robust, consistent share repurchase


Share
New $500M share repurchase
Repurchases
authorization

Manage to 2.5x to 3.0x total debt to


Capital Structure adjusted EBITDA
Assess fixed/ floating debt mix

External Disciplined use of M&A and partnerships to


Investments further competitive advantage
Financial Overview

Strong Track Record of


Financial Performance

Investment for Growth

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

Maximize industry-leading trend capabilities


Curate Offering Based on Increase exclusives, leveraging our product development competitive
Trend, Value, Customer advantage
Demand Strengthen our value perception
Enhance in-store presentation

Speak to Our Customers Unleash data and CRM


Where, When, How they Reward loyalty
Innovate digitally
Want Employ 360 marketing approach
Launch and grow new online platforms
Expand Other EDLP e-commerce site, online custom frame and Marketplace
Businesses Drive B2B growth through Darice
Drive Sales Growth
Sources of Growth

HSD/ LDD growth


Comp Sales Growth
Wholesale
2-3%
Comp
Sales
New
Total Sales Growth Add 15-20
Stores

stores
4-5% annually

E-commerce: Strong DD
growth
Brick & Mortar: Slightly
positive growth
233
Operating Income Growth

Deliver Attractive 5-7%


Grow penetration of private brands
OPERATING Expand direct sourcing

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

Same Store Sales Growth 2-3%

Total Sales Growth 4-5%

Operating Income Growth 5-7%

EPS Growth 10-15%

Target Leverage 2.5x 3.0x


QUESTION & ANSWER
SESSION
CLOSING
REMARKS
CHUCK RUBIN
Chairman & CEO
Michaels Future: Vision 2020

THE MICHAELS COMPANIES

Create Curate Speak to Our


Fuel for
Customer- Offering Customers Expand Other
Growth
Centric Based on Where, When, Businesses
Shopping Trend, Value, How they
Experience Customer Want
Demand

Integrated, Efficient Supply Chain

Aligned Processes & Measurement

Technology

High Performing Culture


Long-Term Financial Algorithm

Same Store Sales Growth 2-3%

Total Sales Growth 4-5%

Operating Income Growth 5-7%

EPS Growth 10-15%

Target Leverage 2.5x 3.0x


Grow Sales and Market Share

Expand Industry-Leading Omnichannel


OUR Customer Experience

COMMITMENTS Provide Customers with


the Most Compelling Value Proposition

Drive Operating Income, Free Cash


Flow and EPS(1) Growth

Deliver Strong Shareholder Returns

(1)Adjusted Diluted EPS


THE MICHAELS
COMPANIES
Investor Conference | June 15, 2017

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