Michaels Leverages Rivals' Bankruptcies for Growth

Michaels Stores has strategically capitalized on the bankruptcies of competitors Party City and Joann Fabrics to drive growth and expand its market presence. In the past year, following the liquidations of these retailers, Michaels has actively moved to fill the market voids they left behind. The arts and crafts retailer quickly established dedicated party supply sections in approximately 1,400 of its stores. This involved setting up a new supply chain for helium, installing balloon-filling equipment, and training staff on these new operations. Concurrently, Michaels significantly increased its fabric offerings in 1,000 locations after acquiring the intellectual property and store brands of Joann Fabrics through a bankruptcy auction.

CEO David Boone, who assumed leadership in February 2025, highlighted Michaels' ability to execute these expansions with "rapid speed." As a portfolio company of private equity firm Apollo Global Management, Michaels benefits from a less bureaucratic decision-making process compared to publicly traded companies. Boone noted that decisions can be made and implemented much faster, allowing for more significant strategic moves that might be harder to justify to public markets. This agility is attributed to the direct access to its board, which is "just a phone call away."

This strategic push into party supplies and expanded fabric offerings is central to Michaels' plan to find new avenues for growth beyond the saturated arts-and-crafts market, where it has competed with Hobby Lobby for market share over the last decade. While Michaels, as a private entity, is not required to disclose its financial results, media reports indicate the strategy is yielding positive outcomes. Bloomberg reported last week, citing sources familiar with the matter, that Michaels experienced double-digit percentage growth in both first-quarter sales and adjusted earnings. Prior to these initiatives, Michaels had faced a decade of stagnant annual revenue, hovering around $5 billion according to the National Retail Federation, and struggled to close the market share gap with its main competitor, Hobby Lobby, which generated approximately $1 billion more in revenue.