The arts and crafts store operator's shares slipped 8 cents, to $16.92 in morning trading on the Nasdaq.
Michaels Cos. Inc., which also runs the Aaron Brothers chain, priced an initial public offering of 27.8 million shares at $17 each, at the low end of its predicted range.
The Irving, Texas, company raised $472 million from the offering.
The IPO comes amid a market rush. It's the third-busiest week for IPOs since 2000, according to IPO investment adviser Renaissance Capital.
Michaels' IPO was delayed two years after its then-CEO John Menzer resigned after a stroke. It comes at a time when the IPO market is heating up, as this is the third-busiest week for IPOs since 2000, according to Renaissance Capital.
Private equity firms Bain Capital LLC and The Blackstone Group LP bought Michaels in a $6 billion leveraged buyout in 2006. Its original debut as a public company came in 2001 on the New York Stock Exchange. It's using the same ticker "MIK," but is now trading on the Nasdaq.
Michaels' return to the market shows tepid investor enthusiasm for retailing and the highly fragmented $30 billion arts and crafts industry. The last IPO from a major retailer was The Container Store Group Inc., which made its debut late last year. Its shares have fallen 19 percent to close at $29.41 Thursday.
Michaels, which was in a sweet spot during the Great Recession when homemade goods gained new currency as people tried to save money, has faced increasingly tough competition. That's coming from discounters - Wal-Mart Stores Inc., for example, recently brought back its fabric offerings - and online king Amazon.com.
"There's just no wow," said Brian S. Sozzi, CEO of Belus Capital Advisors. "With an IPO in retail, you want a growth concept. Michaels is still a destination for fabric and household crafts. But online competition has grown substantially."
Michaels has been late to the online party, launching its e-commerce business only this year.
The company, founded in 1973 with one small store in Dallas, has said it sees growth opportunities. In regulatory filings, it said that North America could potentially grow to 1,500 Michaels stores. It currently operates 1,263 Michaels stores and 118 Aaron Brothers stores.
It plans to open 40 to 45 new Michaels stores in North America this fiscal year, including 10 to 15 relocations, and sell some products only online. It's also aiming to add more exclusive products, largely through private brands.
For its latest fiscal year, which ended on Feb. 1, sales rose nearly 4 percent to $4.6 billion. Net income rose to $243 million from $200 million.
The arts and crafts chain plans to use the IPO's proceeds to pay down its debt. It had $3.7 billion of debt on its books as of May 3.
AP Business Reporter Michelle Chapman contributed to this report in New York.