The Michaels Companies announced this week that it will close all of its Pat Catan’s stores in the fourth quarter of fiscal 2018 (March). Pat Catan’s is a retailer of arts and crafts in Ohio and surrounding states, including Pennsylvania, Michigan and West Virginia. Michaels intends to rebrand 12 of the 36 Pat Catan’s stores and reopen them under the parent company's banner. It will also continue to operate a support center as well as a distribution center in Strongsville, OH to support the wholesale business. Michaels also updated its fourth-quarter guidance to the low end of its forecast, citing “more volatility in consumer shopping behavior” so far in January than it initially expected. “We believe these changes will provide more value for customers and shareholders by enabling us to leverage a more consistent merchandise assortment and eliminate duplicative retail operating expenses,” said Chuck Rubin, chairman and CEO of Michaels, in a statement.
Total Retail's Take: In 2016, Michaels acquired Lamrite West, a privately held company based in Ohio with a wholesale division, a sourcing office in China, and a small retail chain called Pat Catan’s Arts & Crafts Stores, which was operated as outlets for the wholesale business. So what went wrong? Why did Michaels decide to close the Pat Catan's stores? Simply put, the retail unit repeatedly failed to overcome the persistent challenges facing retailers today. While over the last three years Michaels said it has delivered value through the expansion of its China-based sourcing team and growth of its wholesale business, "the Pat Catan’s retail business has struggled in the face of industry headwinds," noted Rubin. Pat Catan's is not alone in that regard. Many other retailers have announced plans to shutter brick-and-mortar stores this year, including Signet Jewelers, Chico's FAS, Nordstrom, Kohl's, Macy's and J.C. Penney. What's more, four retailers have announced bankruptcy filings so far in 2019: Gymboree, Shopko, Innovative Mattress Solutions, and Beauty Brands. And, unfortunately, Things Remembered may not be far behind.