tag:blogger.com,1999:blog-5500180952023277493.post4407940011366843130..comments2023-12-07T00:32:57.377-08:00Comments on Debbie's Clay Babies: Little girl with a bookUnknownnoreply@blogger.comBlogger1125tag:blogger.com,1999:blog-5500180952023277493.post-83785196587191573612009-01-07T14:01:00.000-08:002009-01-07T14:01:00.000-08:00I publish Creative Leisure News, an online trade n...I publish Creative Leisure News, an online trade newsletter for retailers, vendors, designers, etc. in the craft business. It's at www.clnonline.com.I've been reporting on the industry -- including Michaels -- for 30 years.<BR/><BR/>Michaels is not going out of business. Many retailers have gone bankrupt, and many more probably will. Still more may close certain stores that aren't so profitable.<BR/><BR/>The rumor about Michaels is probably due to its financial structure. Two private equity firms, Bain Capital and The Blackstone Group, bought Michaels a couple of years ago for about $6 billion -- $4 billion of that they borrowed.<BR/><BR/>Now Michaels has to service that $4 billion debt, plus pay hefty "management fees" to Bain and Blackstone.<BR/><BR/>Consquently, after you pay the interest on the debt, on top of paying for the inventory, employee salaries, rent, etc., it makes the bottom line look pretty grim. But Michaels execs will tell you the company is generating enough cash flow that they're fine.<BR/><BR/>If sales go down because of the recession, they may not be so fine. But traditionally the craft industry does comparatively well during recessions.<BR/><BR/>Mike HartnettAnonymousnoreply@blogger.com