S&P: Michaels outlook positive

Standard & Poor's said it revised its outlook on Michaels Stores Inc. to positive from developing.

At the same time, the agency said it affirmed all of our ratings, including the B-corporate credit rating, on Michaels.

According to S&P, the outlook revision reflects Michaels' improvement in gross margins since its leveraged purchase last year and S&P's expectation that the company should be able to improve credit ratios within the next 18 months in line with a higher rating.

The agency noted that the ratings on Michaels reflect its participation in the highly fragmented crafts industry that has modest growth prospects and is vulnerable to changes in consumer spending and its highly leveraged capital structure that results in weak cash flow protection measures.

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