Law Firm Scott + Scott Announces Class Action Lawsuit Against Michaels Stores, Inc

Business Wire, Feb 6, 2003

Business Editors & Legal Writers

COLCHESTER, Conn.--(BUSINESS WIRE)--Feb. 6, 2003

Scott Scott, LLC Files Shareholder Lawsuit Against Michaels Stores,

Inc.

Shareholder Lawsuit Brought Against Corporation Michaels Stores

Scott Scott, LLC, a Connecticut-based law firm, announced that it commenced a class action yesterday in the United States District Court for the Northern District of Texas on behalf of purchasers of Michaels Stores, Inc. ("Michaels Stores") (NYSE: MIK) stock during the period between August 8, 2002 through November 7, 2002 (the "Class Period"). A copy of the complaint filed in this action on behalf of an investor is available from the Court or can be obtained by calling Scott Scott, LLC at 800/404-7770, e-mailing the firm at (scottlaw@scott-scott.com) or by going to its website at (http://www.scott-scott.com/news/news.htm). For more information, you can also contact attorney Neil Rothstein at nrothstein@scott-scott.com.

If you wish to serve as lead plaintiff and if you bought Michaels Stores publicly traded securities between August 8, 2002 and November 7, 2002 inclusive, and you wish to serve as lead plaintiff, you must move the Court no later than 60 days from January 4, 2003. A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. Any member of the purported class may move the Court to serve as lead plaintiff through Scott Scott, LLC or through counsel of their choice, or may choose to do nothing and remain an absent class member. In order to be appointed lead plaintiff, you must meet certain legal requirements. Please be aware that Scott Scott, LLC has filed this lawsuit at the request of Shareholders.

The complaint charges Michaels Stores and certain of its officers and directors with violations of the Securities Exchange Act of 1934. The complaint alleges that during the Class Period, defendants repeatedly represented that Michaels Stores' financial condition was strong and that the Company was increasing its market share and would continue to do so in the foreseeable future. The Company was persistent in its claims despite a known downturn in the consumer-goods markets and a very, very difficult earnings environment. In fact, throughout the Class Period, defendants consistently appeared at analyst conferences and in other public forums and made very positive statements about Michaels Stores.

Thus it was only on November 7, 2002, when the Company released results for its third quarter 2002, that investors learned the following: (i) Defendants' claims that Michaels Stores' purported "record setting" growth was the result of systems and/or infrastructure upgrades, or any other improvements made by defendants, were false; (ii) Many of Michaels Stores' customers were already curtailing their spending for hobby and entertainment -- or discretionary purchases -- by the inception of the Class Period and, as a result, Michaels Stores was experiencing the same adverse market conditions which were negatively impacting the Company's competitors; (iii) The Company was not "in great shape," it did not have "considerable momentum" and was not proceeding according to guidance sponsored or provided by defendants; and (iv) Notwithstanding defendants' efforts to create the materially false impression that the Company had achieved record results in the fiscal second quarter, the truth was that Michaels Stores was already suffering from the same adverse market conditions other retailers were experiencing.

In all, during the Class Period, at the time that Michaels Stores was being adversely affected by the aforementioned factors, but prior to any disclosure to the market, certain of the defendants sold more than $15.3 million worth of their personally held Michaels Stores common stock while in possession of material adverse information. In fact, the CEO and President of the Company, defendant Rouleau, sold over 125,000 shares of his privately held Company shares during the Class Period for over $5.8 million in proceeds.

Plaintiff seeks to recover damages on behalf of all purchasers of Michaels Stores stock during the Class Period (the "Class").

Scott Scott, LLC is a Connecticut-based law firm engaged in the representation of funds, foundations, endowments, institutions, pension funds, individuals and other entities throughout the world in securities, antitrust and other complex class and non-class action litigation. The firm is committed to client satisfaction and communication. The firm's attorneys litigate in both state and federal courts throughout the nation. The firm has been appointed "lead counsel" on cases nationwide, including the Imclone Securities Litigation. Scott Scott, LLC issues this release in accordance with the applicable federal securities laws. If you wish to discuss this action or have any questions concerning this notice or your rights with respect to this matter, please contact David R. Scott, Esq., (drscott@scott-scott.com) or Neil Rothstein, Esq., (nrothstein@scott-scott.com), Scott Scott, LLC, 108 Norwich Avenue, Colchester, Connecticut 06415 at 800/404-7770. Fax: 860/537-4432.