A far cry from the pop that you might expect from a high-profile IPO, Michaels Stores Inc (NASDAQ:MIK) has barely budged in trading today, ranging between $16.65 and $17.2 after starting trading at $17. The company raised $472 million, falling short of the $500 million it had set as a goal, valuing the company at $3.45 billion, reports William Alden for The New York Times. JPMorgan Chase & Co. (NYSE:JPM), Goldman Sachs Group Inc (NYSE:GS), Barclays PLC (NYSE:BCS) (LON:BARC), and Deutsche Bank AG (NYSE:DB) (ETR:DBK) (FRA:DB) are the IPO’s lead underwriters.

Michaels Stores

Michaels Stores Inc (NASDAQ:MIK) was taken private in 2006 by a group of investors led by The Blackstone Group L.P. (NYSE:BX) and Bain Capital LLC for $6 billion, so falling short of the modest goals they had set for the arts and crafts retailer must have been a disappointment. Blackstone and Bain each have about a 40% stake in Michaels following the IPO, following a trend of private equity firms staying involved in companies for a longer period of time instead of just unloading them during the IPO.

Michaels thinking about expanding, but facing down significant debt

Michaels Stores Inc (NASDAQ:MIK) is a specialty arts and crafts retailer with 1145 Michaels stores and 118 Aaron Brothers stores in the US and Canada, making it the largest such chain by store count. The company says that it can expand to 1,500 stores across the two nations (including both brands), but it has only grown from 1,175 to 1,262 combined since 2009. At that rate it would take more than a decade to hit 1,500, when almost every other brick-and-mortar retailer is focusing on its most profitable locations. It’s $3.7 billion in outstanding debt, $1.6 billion at a variable rate, could force the company to rethink its plans to expand.

Michaels Stores Inc (NASDAQ:MIK) has had an online presence for years, but it only launched its e-commerce platform this year (before that it was just arts and crafts content and social marketing). Michaels.com had 188 million visits over the last twelve months, but it’s too early to know how effectively the retailer will be able to monetize that online traffic.

Private brands could help Michaels set itself apart

The Michaels Stores Inc (NASDAQ:MIK) filing statement stresses that private branded products accounted for 48% of total net sales in fiscal 2013, giving the retailer a way to differentiate itself and defend its margins. We’ve seen that the switch back to private labels has been a key part of J.C. Penney Company, Inc. (NYSE:JCP)’s efforts to turn its business around, so this could be a big advantage. Michaels had $4.5 billion in sales during the fiscal year 2013 with scrapbooking contributing 10% of sales, the custom framing business contributing 17%, home décor contributing 20%, and ‘general crafts’ making up the balance.