UPDATE 1-Crafts retailer Michaels to close all Aaron Brothers stores

By Jessica DiNapoli

March 22 (Reuters) - Michaels Companies Inc willshut down its 94 Aaron Brothers framing and art supplies stores,the largest U.S. crafts retailer said on Thursday, as itgrapples with the popularity of online shopping.

The move is the latest example of how brick-and-mortarretailers are struggling to compete with e-commerce sites suchas Amazon.com Inc. More than 15 U.S. retailers filedfor bankruptcy last year.

The arts and crafts retailer plans to make Aaron Brothers astore-within-a-store and to provide custom framing in allMichaels stores. Michaels owns and operates about 1,300 storesin the United States and Canada.

Aaron Brothers reported $110 million in sales in Michaels'last fiscal year. Michaels said it would cost between $37million to $42 million to shut the Aaron Brothers stores andthat the process would be completed by July 31.

Reuters first reported Michaels' decision to shutter AaronBrothers stores on Wednesday.

Michaels' shares fell 8 percent in morning trading onThursday after its earnings disappointed investors.

Aaron Brothers shops are located largely on the U.S. WestCoast, and offer custom framing and an assortment of paintingand drawing tools. As part of its plan to shutter the AaronBrothers stores, Michaels will rebrand its online custom framingwebsite as AaronBrothers.com.

Michaels acquired Aaron Brothers in 1995, when the frameretailer was a 71-store chain, expanding the number of storesover the years.(Reporting by Jessica DiNapoli in New York; Editing byBernadette Baumc)