Michaels has undergone a remarkable transformation and financial rebound under the ownership of investment giant Apollo. When current CEO David Boone took over in early 2025, the company's bonds traded as low as $0.34 on the dollar, signaling potential restructuring. However, the company's bonds have since roared back close to $1.00, allowing Michaels to bolster its finances through the credit markets. This turnaround has been attributed to strategic maneuvers enabled by being privately held, allowing for faster decision-making than publicly traded rivals.
Key to this resurgence are the newly re-imagined stores, with the first opening in Columbus, Ohio, and more planned for later this year. These stores emphasize hands-on experiences and customization, offering events like junk journal making and watercolor cards, aiming to make the brand "culturally relevant." Michaels has also actively capitalized on challenges faced by competitors; it acquired the intellectual property and brands of fabrics retailer Joann for less than $10 million after Joann's second bankruptcy, adding yarn and sewing machines to its inventory. Furthermore, balloons once exclusive to bankrupt Party City now prominently feature in Michaels' entrances.
The strategic focus has revitalized Michaels' bottom line, with first-quarter sales and adjusted EBITDA growing by double digits. Inventory also swelled by 20% in preparation for the busier second half of the year. While Michaels' leverage remains high, Moody's Corp. identified it as a potential credit challenge but expects leverage to improve to 5.5x this year, with positive free cash flow anticipated for 2026. The company's chairman, Andrew Jhawar, a 25-year Apollo veteran, characterized this period as an "exciting period of opportunity." Neil Saunders, a retail analyst at GlobalData, highlights that private ownership has allowed Michaels to be a more decisive business.
