What happened

Shares of arts and crafts retailer Michaels Companies (MIK) fell as much as 16.7% on Thursday, based on a respectable first-quarter earnings report with a side of disappointing guidance.

So what

In the first quarter of the 2019 fiscal year, Michaels saw top-line sales fall 6% year over year to $1.09 billion. Analysts had been looking for roughly $1.11 billion. Adjusted earnings dropped 21% lower, landing at $0.31 per diluted share. This was exactly in line with Wall Street's consensus estimate.

Management's second-quarter earnings guidance also fell right in line with current analyst projections at $0.15 per share. However, Michaels cut its full-year earnings view from approximately $2.40 per share to $2.35 per share. Net sales for the full fiscal year are still seen in the neighborhood of $5.21 billion, unchanged from the previous quarter's guidance rundown and in line with the current analyst view.

A young woman stands next to a shopping cart with her wallet open and a sad look on her face.

Image source: Getty Images.

Now what

"We are not satisfied and are taking steps to improve our performance," said Michaels' interim CEO, Mark Cosby.

In particular, the company had to absorb restructuring charges related to the closing of Pat Catan's stores, one-time costs tied to the departure of longtime CEO Chuck Rubin, and noncash writedowns of an investment in a liquidated business. Whoever takes the permanent reins at Michaels will inherit a bit of a mess, as the previous management team made some questionable acquisitions in recent years.

At this point, Michaels' shares have plunged 51% lower in 52 weeks, including a 31% drop in 2019 alone. The stock is trading at a mere 3.5 times trailing earnings.