Michaels is aggressively expanding beyond its traditional arts and crafts business after the collapse of Party City and Joann Fabrics created a rare opening in the retail sector.
The company has rapidly introduced new product categories and revamped its stores as it aims to attract millions of customers left without their former go-to retailers.
The transformation reflects a broader strategy to diversify the business and reduce its reliance on the increasingly competitive arts and crafts market.
Rapid Expansion Into Party Supplies and Fabrics
Following the liquidation of Party City and Joann Fabrics last year, Michaels wasted little time filling the gap.
The retailer introduced dedicated party supply departments across all of its approximately 1,400 stores, complete with helium services, balloon-filling stations, and specially trained staff.
At the same time, Michaels significantly expanded its fabric business in about 1,000 stores after acquiring Joann’s intellectual property and several of its private-label brands through a bankruptcy auction.
The swift rollout highlighted the company’s ability to move quickly when new opportunities emerge.
CEO Credits Private Ownership for Faster Decision-Making
Chief Executive David Boone, who assumed leadership in February 2025, says Michaels’ private ownership has been instrumental in allowing the retailer to act decisively.
Owned by Apollo Global Management, the company is free from the lengthy approval processes and investor scrutiny that publicly traded corporations often face.
Boone, whose previous leadership roles include Staples Canada as well as senior positions at Loblaws and TD Bank, believes this structure allows Michaels to implement major strategic changes with far greater speed.
A Strategy Built for Long-Term Growth
The expansion into party supplies and fabrics is not simply a response to competitors disappearing from the market.
Boone describes it as a central pillar of Michaels’ long-term growth plan.
For years, the retailer has battled Hobby Lobby for dominance in the arts and crafts industry, but the mature nature of the market has limited growth opportunities.
By entering adjacent retail categories, Michaels hopes to unlock entirely new revenue streams.
Financial Performance Shows Signs of Improvement
Although Michaels does not publicly release its financial results as a privately owned company, recent reports suggest its new strategy is beginning to deliver positive results.
According to Bloomberg, citing sources familiar with the company’s performance, Michaels recorded double-digit growth in both first-quarter sales and adjusted earnings.
The reported gains come after years of sluggish performance, during which annual revenue remained around $5 billion while rival Hobby Lobby maintained a larger business.
Store Experience Becomes the New Priority
After Apollo acquired Michaels in a $5 billion deal in 2021, former CEO Ashley Buchanan concentrated on strengthening the company’s digital capabilities, improving e-commerce, and simplifying product assortments.
Boone says those investments laid an important foundation, but the retailer has since redirected much of its spending toward improving physical stores and enhancing the overall shopping experience.
He believes customers increasingly value engaging, well-designed stores that encourage them to browse and discover new products.
Reinventing Michaels as a Celebrations Destination
One of the most visible changes has been the introduction of “party shop” sections featuring balloons, greeting cards, flowers, and other event essentials.
The company has also installed interactive kiosks where shoppers can test art supplies and jewelry-making products before making a purchase.
Boone believes Michaels can attract former Party City customers by offering a cleaner, more enjoyable shopping environment than many of the chain’s aging stores provided before their closure.
Regional Stores Reflect Local Preferences
Michaels is also giving local management greater flexibility to customize merchandise based on community demand.
That strategy has resulted in Nashville stores carrying larger selections of bachelorette party decorations, while Calgary locations stock more horse-themed products tied to the city’s famous Stampede festival.
The retailer expects localized assortments to strengthen customer loyalty and improve sales performance across different markets.
Capturing a Share of Two Billion-Dollar Markets
With both Party City and Joann Fabrics previously generating roughly $2 billion in annual revenue before closing, Michaels sees a substantial opportunity to win over displaced shoppers.
Boone believes capturing even a portion of those former customer bases could significantly accelerate the retailer’s future growth and expand its presence well beyond arts and crafts.
IPO Talk Remains Secondary to Customer Experience
As Michaels approaches five years under Apollo Global Management’s ownership, speculation has grown over whether the retailer could eventually return to the stock market.
Boone acknowledges that possibility may arise in the future but says the company’s immediate priority remains serving customers and continuing its transformation.
According to the CEO, shoppers are far more concerned with product selection, service, and store quality than with who owns the business, making customer satisfaction the company’s guiding principle regardless of its ownership structure.
