Michaels wants to own parties and fabric, but tariffs loom
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Michaels' new Knit & Sew Shops are labeled with "Michaels X Joann" to signal the expanded selection. Photo: Courtesy of Michaels
Michaels is trying to remake itself into North America's largest specialty retailer for party supplies and fabric — just as tariffs threaten to raise the cost of both.
Why it matters: The Texas-based retailer wants fuel for its turnaround, even as it contends with trade risks and the same retail headwinds that sank Party City and Joann.
- Much of its expanded assortment — décor, fabric and yarn — comes from tariff-exposed markets like China. (Michaels says 80% of its balloons are U.S.-made, though.)
Driving the news: Michaels said Wednesday that two new shop-in-shop concepts — The Party Shop and The Knit & Sew Shop — have rolled out to its 1,300-plus stores.
- The Party Shop features a Balloon Bar, 700 new products in stores, and 79,000 online options.
- The Knit & Sew Shop expands fabric to 840-plus stores and adds Joann's Big Twist yarn at the end of October. (Michaels acquired Joann's intellectual property and private label brands earlier this year.)
- The retailer also cut in-store party prices from $299 to $149.
Zoom in: CEO David Boone told Axios that Michaels has leaned on supply chain efficiency to blunt the impact of tariffs and inflation.
- The company has started to show signs of recovery, with same-store sales rising 2.3% in the quarter ending May 1, in part thanks to gaining customers from shuttered rivals.
- "The last place we want to go is to impact price… we are constantly working to find ways to show value to our customers," Boone said, noting the chain has "reduced prices on key products."
State of play: Competitors are making moves, too: Walgreens announced earlier this month that it expanded its party assortment across 8,500 stores.
- That includes foil balloons, backdrops and candles, with one-hour delivery and 30-minute pickup.
What we're watching: Boone said Michaels is "seeing a resurgence in the interest in arts, crafts, creativity."
- Like other retailers, it's also benefiting from strong Halloween demand.
Editor's note: This story was updated with details on where Michaels sources its balloons.
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