Summary
Michaels Stores, owned by private equity firm Apollo Global Management, is using the bankruptcies of Party City and Joann Fabrics to grow its business. The arts and crafts retailer quickly added party supplies to all its stores and expanded fabric sales after buying Joann’s intellectual property. CEO David Boone says being private allows the company to make fast decisions without needing to explain them to Wall Street. Early results show sales and earnings growing by double digits in the first quarter of 2026.
Main Impact
Michaels is turning the collapse of two major rivals into a clear growth opportunity. By moving quickly to fill the gaps left by Party City and Joann Fabrics, the retailer is expanding beyond its traditional arts and crafts market. This strategy is already showing promise, with reports of strong sales growth. The move also helps Michaels compete better against its main rival, Hobby Lobby, which has long been a bigger player in the market.
Key Details
What Happened
After Party City and Joann Fabrics went out of business in 2025, Michaels acted fast. Within months, it added party supply sections to all 1,400 of its stores. This included setting up a supply chain for helium, installing balloon-filling equipment, and training staff. At the same time, Michaels started selling more fabric at 1,000 of its locations after buying Joann’s brand names and store brands at a bankruptcy auction.
Important Numbers and Facts
Michaels had seen its annual revenue stuck at around $5 billion for a decade before this push. Its main competitor, Hobby Lobby, was about $1 billion bigger. Both Party City and Joann Fabrics were each $2 billion-a-year businesses. Michaels hopes to capture a large share of those markets. Bloomberg reported that Michaels saw first quarter sales and adjusted earnings grow by double-digit percentages in 2026.
Background and Context
Michaels has been owned by Apollo Global Management since 2021, when the private equity firm bought it for $5 billion. Being private means the company does not have to report its financial results publicly or convince stock market investors before making big changes. This has allowed CEO David Boone, who took over in February 2025, to move quickly. Before this, Michaels had spent years trying to improve its online shopping and store experience but had not focused enough on its physical stores. The new strategy shifts attention back to making stores more appealing and useful for customers.
Public or Industry Reaction
The move has drawn attention from business media, with Bloomberg reporting on the company’s early success. Industry observers see Michaels’ quick action as a smart way to take advantage of market changes. Customers may benefit from more choices in party supplies and fabrics at Michaels stores. The company is also letting local managers decide what to stock, such as bachelorette decorations in Nashville or horse-themed items in Calgary, to better match local demand.
What This Means Going Forward
Michaels is betting that its new party and fabric sections will drive growth for years to come. The company is also adding in-store kiosks where shoppers can try art and jewelry-making supplies. However, there are questions about whether Apollo will eventually take Michaels public again. The private equity firm has owned the company for five years, close to the typical seven-year cycle for such investments. CEO Boone says the focus remains on customers, not ownership structure. If the strategy continues to work, Michaels could become a much bigger retailer, but it will need to keep competing with Hobby Lobby and other rivals.
Final Take
Michaels is showing how a private company can move fast to seize opportunities when competitors fail. By quickly adding party supplies and fabric, it is trying to grow beyond a slow arts and crafts market. Early results are positive, but the real test will be whether it can keep customers coming back and eventually deliver a return for its private equity owner.
Frequently Asked Questions
Why did Michaels add party supplies and fabric?
Michaels added these products after Party City and Joann Fabrics went out of business. The company saw a chance to fill the gap in the market and attract customers who used to shop at those stores. This also helps Michaels grow beyond its traditional arts and crafts business.
How is Michaels able to make changes so quickly?
Michaels is owned by private equity firm Apollo Global Management, so it does not have to explain its decisions to stock market investors. CEO David Boone says the company can make big moves with just a phone call to its board. This allows faster decision-making than public companies.
Will Michaels go public again?
There is no clear plan yet. Apollo has owned Michaels for five years, and private equity firms typically sell their investments after about seven years. CEO Boone says the company is focused on customers, not on whether it is public or private. Michaels has been on and off the stock market before, going public in 2014 and private again in 2021.
