Dive Brief:

• The Michaels Companies on Tuesday reported that fourth quarter net sales fell to $1.8 billion from $1.9 billion, mostly because of an extra week in the previous year's quarter, the previous closure of all 94 full-size Aaron Brothers stores and a comp store decline.

• Store comps dropped 0.4% (flat on a constant currency basis), according to a company press release. Accounting for the loss of a trading week, however, store comps rose 1.4%, the arts and crafts retailer also said.

• Net income in the quarter fell to $181.4 million from $203 million a year ago. Twenty net new Michaels stores in operation during the quarter helped offset declines, the company also said. During the quarter, the company opened three new Michaels stores, closed two Michaels stores and closed all 36 Pat Catan's stores.

Dive Insight:

Michaels is grappling with factors — like the loss of a holiday sales week and costs associated with shuttering and rebranding its Aaron Brothers and Pat Catan's stores — that make its quarterly results seem worse than they are. But the arts and crafts retailer can do better, according to Neil Saunders, managing director of GlobalData Retail, who noted in comments emailed to Retail Dive that the economy and the demise of Toys R Us should have provided bigger boosts.

The retailer continues to overstate challenges in its segment, Saunders warned, noting that GlobalData research reveals that spending on crafting rose 2.7% over the quarter. "Given that Michaels adjusted comparable sales increased by 1.4%, this indicates the chain is still losing market share," he said. "In our opinion, this signals there is a lot more work to be done in combating some of the competitive forces which are reducing the relevance of Michaels to consumers."

That share is being taken up by the likes of Amazon and Walmart, where crafting goods are cheaper and good enough, particularly for casual hobbyists, according to GlobalData's research. That made Michaels especially vulnerable at the holidays, when in the past it was able to bring in not just crafter types, but also those who don't usually look for such supplies.

"Increased customer sharing has been an ongoing problem for Michaels for some time, but the dynamics this quarter underscore the necessity to boost the brand's relevance to occasional customers," Saunders said, adding that Michaels could do better online in terms of marketing, merchandising and the shopping experience. Holidays, in particular, could be better taken advantage of by including gifting ideas and inspiration, he said.

More dire for Michaels is that serious crafters are finding better experiences at online specialty retailers, Saunders also said, which "are often cheaper, have offers for bulk buying, and carry more extensive ranges. Individually, these players are small and somewhat invisible; collectively, their impact puts strong downward pressure on traditional craft stores – and Michaels needs to up its game to maintain its market share among this group."

With major changes to its store footprint behind it, the coming year will continue to be one of refinement as it works to hold onto its share amid an increasingly more competitive market, Saunders said.