Is Michaels (MIK) a Buyout Target?

March 2, 2021

Is Michaels (MIK) a Buyout Target?

Consumer mentions of shopping with the arts and crafts supply retailer Michael’s (MIK) boomed during the pandemic.

At the height of the lockdown, consumer mentions of buying supplies from Michaels rose buy as much as +130% YoY.

Purchase Intent has since returned to a normal level, but digital-specific mentions show that MIK has done an excellent job of expanding its omnichannel capabilities. Michael’s digital mentions are currently trending +22% YoY.

Although quarantined consumers drove demand to an all-time high, the resulting decline in Happiness suggests that Michael’s has had some difficulty scaling its expanded digital operations: Positive Sentiment is currently trending -16% YoY.

However, the company's success in 2020 has made it a potential buyout candidate, with multiple private equity firms courting the retailer.

MIK is set to report 20Q4 earnings before the bell on Thursday.

LikeFolio is leaning bearish, largely due to YoY weakness seen in Demand and Consumer Happiness.

However, the prospect of an acquisition gives this name notable upside potential.

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