Private Brand Drives Michaels 2Q Profitability

Irving-based arts and crafts retailer Michaels Stores swung to a second-quarter profit and posted higher sales as it continued to grow its Private Brands, added in-store classes and managed inventories better.

Stores are already stocked with Halloween and fall merchandise, and more of that merchandise is Private Brands developed by Michaels. In the first half of this year, Private Brands, which are more profitable, represented 39 percent of merchandise, up from 27.5 percent a year ago.

Michaels chief executive John Menzer said he believes there’s “still room to expand private-label merchandise,” which is directly imported from manufacturers. “Private label gives us competitive edge, but we’re not reducing quality.”

The largest U.S. arts and crafts chain reported a profit Thursday of $10 million in the period ended July 30, compared with a net loss of $1 million a year ago. Total sales were up 3.1 percent to $857 million. Same-store sales increased 1.8 percent as shoppers spent 2.6 percent more on each visit, but transactions fell 0.8 percent.

To learn more about the growth of Private Brands at Michaels join me at the Private Brand Movement Conference,  September 19 – 21 at the Sheraton Chicago Hotel & Towers where Betsy Schowachert, Director of Private Brand and Licensing at Michaels Stores will be presenting “Building a Private Brand Organization: How to Leverage CPG. Best Practices and Strategies Down a Path to world-class performance”

In this session you will learn how Michaels modeled their organizational structure and approach to brand development after successful CPG companies. By having a clearly defined vision and by implementing industry recognized strategies and best practices, Michaels has been able to successfully reinvent/re-launch their Private Brand program in just three short years. moving from over 200 different labels to 10 strategically positioned and high performing brands.

With only 4 weeks to the event, space is limited. Register today here.

My Private Brand readers can register with the code MYPBRAND and receive 20% off the standard rates.

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Christopher Durham is the president of My Private Brand and the co-founder of The Vertex Awards. He is a strategist, author, consultant and retailer who built brands at Delhaize-owned Food Lion, and lead strategy and brand development for Lowe’s Home Improvement. He has consulted with retailers around the world on their private brand portfolios including: Family Dollar, Petco, Staples, Office Depot, Best Buy, Metro (Canada), TLW (Taiwan) and Hola (Taiwan). Durham has published five definitive books on private brands, including his first book, Fifty2: The My Private Brand Project. In 2017, he will debut his newest book, Vanguard: Vintage Originals, a visual tour of innovation and disruption in private brand going back to the mid-1800’s. Dynamic in his presentation while down to earth and frank in his opinions, he has presented at numerous conferences, including FUSE, The Dieline Conference, Packaging that Sells, Omnishopper and PLMA’a annual trade show in Chicago. Durham lives in Charlotte, NC with his wife, Laraine, and two daughters, Olivia and Sarah.