Published on June 30, 2020

Michaels Stores is the largest arts and crafts specialty retailer in North America, and its mission is to inspire and encourage everyone to unleash their inner maker.

Product offerings, crafting classes, in-store events, mobile apps, and digital content are all designed to inspire creativity and build confidence in its customers’ artistic abilities. The company’s operations adhere to a set of core values that begin with its focus on people, makers, integrity, accountability, and diversity. Through these core values the company works to create a fun and rewarding place to work, foster meaningful connections with its customers and communities, and lead the industry in growth and innovation.

As a leader in the arts and crafts industry Michaels uses its sourcing as a competitive advantage to create privately-branded products and establish strategic partnerships or exclusive relationships with other leading brands. Private-brand merchandise makes up about 60% of the company’s revenue and is beneficial to margins. Michaels uses third-party specialists to audit potential vendors and factories to ensure adherence to the company’s policies around safety, fair compensation, and human rights. All manufacturing facilities must earn satisfactory audit results before manufacturing Michaels-branded or private-branded products.

Michaels views its engagement with employees, customers, and communities as an essential component of success. Michaels’ commitment to its core values has led to its certification as a Great Place to Work, a designation awarded only to high-trust and high-performing workplace cultures. Fuel for Growth and Next Big Item are programs implemented to encourage employees to submit ideas that can improve operational efficiencies or develop new and innovative products; employees are rewarded with cash payments for ideas that are implemented. Michaels recently named the Boys and Girls Clubs of America and Canada as the company’s exclusive charity partners. The goal of this partnership is to encourage youth to confidently explore and discover their creative voices. The company also works with troop leaders to provide training and development to further cultivate optimism, originality, and confidence.

The company’s environmentally sound business practices around energy conservation, recycling, and waste reduction are not only good for the environment, but also boost profitability. Michaels operates an Energy Management System from its head- quarters in Irving, TX that controls and measures the electricity used by their retail stores. The company has a corporate recycling program and encourages its customers to recycle through participation in local recycling initiatives. Michaels also partners with Stericycle to ensure the company’s hazardous waste is recycled or used to produce energy. Michaels sustainability efforts are directly tied to a core set of values that focus on doing the right thing, holding themselves accountable, and acknowledging that we are better together. This is not a recent priority either: The company has long pursed initiatives that are both good for the environment and corporate profits. Such long-standing priorities set Michaels apart as a model for other companies looking to do good while doing well.

Marcus Moore

Assistant Portfolio Manager

Written by

Marcus Moore

Assistant Portfolio Manager

Marcus Moore

Assistant Portfolio Manager

Marcus Moore joined Osterweis Capital Management in 2022 as part of the Zeo Capital Advisors team transition, where he was an Assistant Portfolio Manager focused on credit research, including sustainability analysis. Before joining Zeo in 2019, Mr. Moore worked at Wells Fargo Bank for 14 years as an Analyst within Principal Investing, responsible for the retail, consumer, and gaming sectors across various asset classes including high yield bonds, leveraged loans, and structured products. Prior to working at Wells Fargo, Mr. Moore worked at Edison Mission Energy as an analyst and at Hamilton Resources, Procter & Gamble, and Goldman Sachs.

Mr. Moore is an Assistant Portfolio Manager for the sustainable credit strategies.

Mr. Moore graduated from Morgan State University in Baltimore, MD (B.S. in Accounting) and from the University of California, Los Angeles Anderson School with an M.B.A. He also holds the CPA designation.

Invest With Us

For more information about this strategy, please send us an email or call us at (800) 700-3316.

Past performance does not guarantee future results. This company was not selected for performance-based reasons, and was instead selected to emphasize the types of issuers that the Osterweis Sustainable Credit Team seeks to invest in based on its sustainability mandate.

The methodology for initially preparing a Sustainability Profile for an issuer requires the issue to be among the Sustainable Credit strategies’ largest as of quarter-end. As of June 30, 2020, Osterweis Capital Management’s clients owned securities issued by this company. Complete holdings of Osterweis mutual funds (“Funds”) are generally available ten business days following quarter end. The Funds’ holdings and sector allocations may change at any time due to ongoing portfolio management. References to specific investments should not be construed as a recommendation to buy or sell the securities. Sustainability Profiles are shared to provide information about the sustainability selection process and may be used after an issue is no longer one of the largest holdings in a strategy.

Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken), or any non-investment related content, made reference to directly or indirectly in this commentary will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. You should not assume that any discussion or information contained in this commentary serves as the receipt of, or as a substitute for, personalized investment advice from Osterweis Capital Management.

The material provided herein has been provided by Osterweis Capital Management and is for informational purposes only.

The Osterweis Funds are available by prospectus only. The Funds’ investment objectives, risks, charges, and expenses must be considered carefully before investing. The summary and statutory prospectuses contain this and other important information about the Funds. You may obtain a summary or statutory prospectus by calling toll free at (866) 236-0050, or by clicking here. Please read the prospectus carefully before investing to ensure the Fund is appropriate for your goals and risk tolerance.

Fund holdings as of the most recent quarter end are available at Osterweis Short Duration Fund and Osterweis Sustainable Credit Fund.

Osterweis Capital Management is the adviser to the Osterweis Funds, which are distributed by Quasar Distributors, LLC. [OSTE-20221110-0675]