Is Michaels going out of business?” this is one question that has sent shockwaves through the arts and crafts community. Given the prominent position Michaels has held in the market for over four decades, it’s no surprise that such rumors would raise eyebrows and generate concern.
If you are a fan of this iconic brand, then you would likely have the question on your mind, too. Michaels has recently been seen closing many of its stores across the country. These multiple store closures have come as a concern to its customers.
So, is Michaels going out of business really, or is this just another pivotal move by the company to remain in the market? Let’s find out!
Is Michaels Going Out of Business?
To address the burning question: No, Michaels is not going out of business. While the company has faced hurdles, closing some stores, especially the one in Fresh Meadows, Queens, at the beginning of the year, it’s essential to understand these actions as potential strategic shifts rather than the end of the road.
Michaels was at the point where they needed a pivotal move to save the company from going bankrupt. It has recently suffered from financial challenges and so had to do everything possible to cut down operational costs. And store closure came as one important way to do that.
A Quick Look at Michaels Art and Crafts
For those unfamiliar, Michaels is not just a store; it’s a haven for creativity and artistic expression. Founded in 1973 in Dallas, Texas, Michaels has been the place where ideas come alive.
With offerings spanning from art supplies and home decor to seasonal products, the company has catered to both seasoned artists and budding hobbyists for over 45 years.
But all hasn’t been rosy for Michaels. Recent times have seen the company grappling with multiple store closures and financial challenges. The 2020 pandemic, for instance, painted a dim picture, with the brand suffering a loss of $97 million in just the second quarter.
These developments have understandably led to whispers and speculations about the company’s longevity, including, ‘Is Michaels going out of business?’ But we are sure you now know that Michaels isn’t going anywhere yet.
So, Why Is Michaels Closing Stores?
As we already said, the question, “Is Michaels going out of business?” often stems from the noticeable wave of store closures by the company.
While many might hastily jump to dire conclusions, these closures don’t mean Michaels is going out of business. Because of that, it is important to understand the reasons behind these closures.
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A shift in consumer behavior
A significant factor influencing Michaels’ decision to close some stores is the undeniable shift in consumer behavior. Over the past few years, especially accelerated by the pandemic, there’s been a surge in online shopping.
With the convenience of a click, consumers can now access a plethora of options, sometimes at more competitive prices than brick-and-mortar stores can offer. The digital era has not only expanded choices for consumers but has also posed challenges for traditional retailers like Michaels. And that’s part of what led the company to close some of its stores to adapt to this significant change in business.
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Fierce competition
Apart from the digital shift, Michaels faces stiff competition in the market. Retail giants and emerging e-commerce platforms in the arts and crafts space have been continuously vying for consumer attention.
Brands like Hobby Lobby and Joann Fabrics, both online and offline, have created a competitive landscape where only the fittest can thrive. The presence of these formidable rivals has inevitably nudged Michaels to rethink its retail strategy.
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Financial challenges
Financial constraints have also played their part. With declining sales in certain locations and escalating operational costs, sustaining every store becomes a financial challenge.
Moreover, the emphasis on building a strong online platform has further driven the company to divert resources from physical stores to their digital counterpart. After all, with consumer preferences tilting towards online shopping, a robust digital presence is no longer optional but a necessity for survival.
What Did the Company Have to Say About the Closures?
Michaels has been clear in its stance. Through public statements, the company has asserted its commitment to the craft community, emphasizing its plans to navigate current challenges.
In 2022, specific underperforming stores were closed to cut down operational costs and streamline the business, showing a resilient stance toward sustaining its place in retail.
Did Michaels Get Bought Out?
Yes, in a strategic corporate move, Michaels was acquired by Apollo Global Management in 2021. Over the years, businesses have adapted and changed to better fit the evolving economic and competitive landscape. For Michaels, one of the most significant shifts in its corporate journey came when the company underwent an acquisition.
The brand caught the attention of Apollo Global Management, a leading private equity firm. This wasn’t just a casual interest; Apollo saw immense potential in Michaels and sought to capitalize on its strong brand presence in the arts and crafts retail sector.
In a deal worth a staggering $5 billion, Apollo Global Management acquired Michaels, marking a pivotal transition for the company. This acquisition was not just about a change in ownership but also an opportunity for Michaels to leverage the financial strength and strategic expertise of Apollo.
The agreement’s specifics highlighted Apollo’s robust commitment, with a tender offer to acquire all outstanding shares of Michaels at $22.00 per share in cash.
What About Michaels’ Recent Controversies – What Really Went Down?
Legal battles have further complicated matters for Michaels. A class-action lawsuit in February 2023 accused the company of overcharging certain customers, specifically related to sales tax, which the plaintiffs termed “unfair and deceptive practices.”
This legal challenge, coupled with previous financial woes, has inevitably sowed seeds of doubt about the company’s future in the minds of even its most loyal patrons.
Is Michaels Going Out of Business – Final Note
While Michaels may be in the midst of some transformative changes, we all need to understand that these shifts do not spell the end for the brand. The arts and crafts giant is not going out of business.
The company remains committed to its mission and backed by robust strategies and a clear vision. This looks like a company weathering current challenges and striving to continue to serve its customers rather than a company that will be throwing in the towel soon.
FAQs
Is Michaels going out of business?
While the closures of certain Michaels stores have raised eyebrows, it’s not a sign of an impending end. Instead, it is a strategic move by the company to realign its resources, adapt to evolving market dynamics, and ensure its longevity in a digitized world.
What is Michaels Art and Crafts worth?
The recent acquisition by Apollo Global Management valued Michaels at a substantial $5 billion. This valuation speaks to the inherent value and potential that investors see in the brand.
What company owns Michaels?
Currently, Michaels is owned by Apollo Global Management. With the 2021 acquisition, Michaels transitioned from a publicly traded entity on NASDAQ to a privately held company.
Who are its top competitors?
In the arts and crafts realm, Michaels faces competition from major players like Hobby Lobby, known for its vast arts supplies and home décor items, and Joann Fabrics, which specializes in fabrics but also offers a range of craft materials.
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