Michaels Upgraded by S&P on Enhanced Performance

Michaels Upgraded by S&P on Enhanced Performance

April 30, 2024 :S&P Global Ratings, a leading credit rating agency, recently upgraded The Michaels Companies, Inc. (Michaels) ‘s corporate credit rating from CCC+ to B-. This positive adjustment reflects the company’s significant financial performance and credit metrics strides, exceeding initial expectations.

The upgrade was primarily driven by Michaels’ notable improvement in operating margin and cash generation during fiscal year 2023. These positive developments strengthened the company’s creditworthiness beyond what was previously anticipated. Despite ongoing sales pressures within the broader arts and crafts retail sector, S&P Global Ratings projects that Michaels will maintain relatively stable adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) in fiscal year 2024. This stability is expected to be achieved through ongoing cost-saving measures related to products and labor.

Furthermore, S&P Global Ratings anticipates that Michaels will continue to generate positive free operating cash flow, contributing to a stable outlook for the company. This optimism is supported by the company’s successful implementation of various initiatives, including expanding self-checkout kiosks across its store network and improving inventory management strategies.

Therefore, the credit rating upgrade signifies S&P Global Ratings’ recognition of Michaels’ successful efforts to enhance its financial performance and creditworthiness. While external challenges within the retail sector persist, the company’s positive trajectory suggests a promising outlook for its financial health.


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