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                                                 EXHIBIT 10.2

                MICHAELS STORES, INC.

                1997 STOCK OPTION PLAN


     Michaels Stores, Inc., a Delaware corporation (the
"Company"), hereby establishes the Michaels Stores, Inc. 1997
Stock Option Plan (the "Plan"), effective as of June 6, 1997.

     1.   Purpose.  The purpose of the Plan is to attract and
retain the best available talent and encourage the highest level of
performance by executive officers, key employees, directors, 
advisors and consultants, and to provide them with incentives to
put forth maximum efforts for the success of the Company's
business, in order to serve the best interests of the Company and
its stockholders.  All options granted under the Plan are intended
to be nonstatutory stock options.

      2.  Definitions.  The following terms, when used in the
Plan with initial capital letters, will have the following meanings:

          (a)  "Act" means the Securities Exchange Act of
     1934 as in effect from time to time. 

          (b)  "Board" means the Board of Directors of the
     Company.

          (c)  "Code" means the Internal Revenue Code of
     1986, as in effect from time to time.

          (d)  "Common Stock" means the common stock,
     par value $.10 per share, of the Company or any security
     into which such common stock may be changed by reason
     of any transaction or event of the type described in
     Paragraph 7.

          (e)  "Date of Grant" means the date specified by
     the Stock Option Committee or the Board, as applicable, on
     which a grant of Stock Options will become effective
     (which date will not be earlier than the date on which such
     committee or the Board takes action with respect thereto).

          (f)  "Market Value per Share" means the fair
     market value per share of the Common Stock on the Date
     of Grant as determined by the Stock Option Committee or
     the Board, as applicable.

          (g)  "Option Price" means the purchase price per
     share payable on exercise of a Stock Option.

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          (h)  "Participant" means a person who is selected
     by the Stock Option Committee or the Board, as applicable,
     to receive Stock Options under Paragraph 5 of the Plan and
     who is at that time (i) an executive officer or other key
     employee of the Company or any Subsidiary, (ii) an advisor
     or consultant to the Company or any Subsidiary, or (iii) a
     member of the Board. 

          (i)  "Rule 16b-3" means Rule 16b-3 under
     Section 16 of the Act as such Rule is in effect from time to
     time.

          (j)  "Stock Option Committee" means the 1997
     Stock Option Plan Committee, which is a committee of the
     Board whose members are appointed by the Board from
     time to time.  All of the members of the Special Stock
     Option Committee, which may not be less than two, are
     intended at all times to qualify as "outside directors" within
     the meaning of Section 162(m) of the Code, and as "Non-Employee 
     Directors" within the meaning of Rule 16b-3;
     provided, however, that the failure of a member of such
     committee to so qualify shall not be deemed to invalidate
     any Stock Option granted by such committee. 

          (k)  "Stock Option" means the right to purchase
     one or more shares of Common Stock upon exercise of an
     option granted pursuant to Paragraph 5.  

          (l)  "Subsidiary" means any corporation,
     partnership, joint venture or other entity in which the
     Company owns or controls, directly or indirectly, not less
     than 50% of the total combined voting power or equity
     interests represented by all classes of stock issued by such
     corporation, partnership, joint venture or other entity.

      3.  Shares Available Under Plan.  The shares of
Common Stock which may be issued under the Plan will not
exceed in the aggregate 6,800,000 shares, subject to adjustment as
provided in this Paragraph 3.  Such shares may be shares of
original issuance or treasury shares or a combination of the
foregoing.

          (a)  Any shares of Common Stock which are
     subject to Stock Options that are terminated unexercised,
     forfeited or surrendered or that expire for any reason will
     again be available for issuance under the Plan.

          (b)  If, as of the close of business on the last day
     of each fiscal quarter of the Company following the
     effective date of the Plan, the sum of (i) the total number of
     shares of Common Stock previously issued upon the
     exercise of Stock Options, (ii) the total number of shares of
     Common Stock then subject to outstanding Stock Options,
     and (iii) the total number of shares of Common Stock then
     remaining available for future Stock Option grants under
     the Plan (such sum being the "Plan Shares") is less than
     20% of the total number of shares of Common Stock then
     outstanding computed on a fully diluted basis (such total
     number being the "Outstanding Shares"), the number of
     shares of Common Stock available for issuance under the
     Plan will be increased (but not decreased) so that the
     number of Plan Shares will be equal to 20% of the number
     of Outstanding Shares.  For purposes of the foregoing
     adjustment, all outstanding Stock Options and stock options
     granted under other Company plans will be treated as fully
     exercised in computing the number of outstanding shares of
     Common Stock on a fully diluted basis, without regard to
     whether such stock options are then fully exercisable.

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          (c)  The shares available for issuance under the
     Plan also will be subject to adjustment as provided in
     Paragraph 7.

      4.  Individual Limitation on Stock Options.  The
maximum aggregate number of shares of Common Stock with
respect to which Stock Options may be granted to any Participant
during any single calendar year will not exceed 1,500,000 shares.

      5.  Grants of Stock Options.  The Stock Option
Committee or the Board may from time to time authorize grants to
any Participant of Stock Options upon such terms and conditions
as such committee or the Board, as applicable, may determine in
accordance with the provisions set forth below.

          (a)  Each grant will specify the number of shares
     of Common Stock to which it pertains.

          (b)  Each grant will specify the Option Price,
     which will not be less than 100% of the Market Value per
     Share on the Date of Grant.

          (c)  Successive grants may be made to the same
     Participant whether or not any Stock Options previously
     granted to such Participant remain unexercised.

          (d)  Each grant will specify the required period
     or periods (if any) of continuous service by the Participant
     with the Company or any Subsidiary and/or any other
     conditions to be satisfied before the Stock Options or
     installments thereof will become exercisable, and any grant
     may provide, or may be amended to provide, for the earlier
     exercise of the Stock Options in the event of a change in
     control of the Company (as defined in the stock option
     agreement evidencing such grant or in any agreement
     referred to in such stock option agreement) or in the event
     of any other similar transaction or event.

          (e)  Each Stock Option granted pursuant to this
     Paragraph 5 may be made subject to such transfer
     restrictions as the Stock Option Committee or the Board, as
     applicable, may determine. 

          (f)  Each grant will be evidenced by a stock
     option agreement executed on behalf of the Company by
     the Chief Executive Officer (or another officer designated
     by the Stock Option Committee or the Board, as applicable)
     and delivered to the Participant and containing such further
     terms and provisions, consistent with the Plan, as such
     committee or the Board, as applicable, may approve.

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     6.   Payment.  The Option Price will be payable, as
required by the Stock Option Committee or the Board in such
Committee's or the Board's sole discretion, as applicable, (i) in
cash or by check acceptable to the Company, (ii) by the transfer to
the Company of shares of Common Stock owned by the Participant
for at least six months (or, with the consent of the Stock Option
Committee or the Board, as applicable, for less than six months)
having an aggregate fair market value per share at the date of
exercise equal to the aggregate Option Price, (iii) by authorizing
the Company to withhold a number of shares of Common Stock
otherwise issuable to the Participant having an aggregate fair
market value per share on the date of exercise equal to the
aggregate Option Price, (iv) in any other form of valid
consideration or (v) by a combination of such methods of payment;
provided, however, that the payment methods described in
clauses (ii) and (iii) will not be available at any time that the
Company is prohibited from purchasing or acquiring such shares
of Common Stock.  The Stock Option Committee or the Board, as
applicable, may permit deferred payment of the Option Price from
the proceeds of sale through a bank or broker of some or all of the
shares to which such exercise relates.  

     7.   Adjustments.  The Stock Option Committee or the
Board may make or provide for such adjustments in the maximum
number of shares specified in Paragraph 3, in the number of shares
of Common Stock covered by outstanding Stock Options granted
hereunder, in the Option Price applicable to any such Stock
Options, and/or in the kind of shares covered thereby (including
shares of another issuer), as such committee or the Board, as
applicable, in its sole discretion, exercised in good faith, may
determine is equitably required to prevent dilution or enlargement
of the rights of Participants that otherwise would result from any
stock dividend, stock split, combination of shares, recapitalization
or other change in the capital structure of the Company, merger,
consolidation, spin-off, reorganization, partial or complete
liquidation, issuance of rights or warrants to purchase securities or
any other corporate transaction or event having an effect similar to
any of the foregoing.  In the event the Stock Option Committee
shall disagree with the Board with respect to the foregoing
adjustments, the Board's determination will be final and
conclusive.  Any fractional shares resulting from the foregoing
adjustments will be eliminated.

     8.   Withholding of Taxes.  To the extent that the
Company is required to withhold federal, state, local or foreign
taxes in connection with any benefit realized by an optionee under
the Plan, or is requested by an optionee to withhold additional
amounts with respect to such taxes, and the amounts available to
the Company for such withholding are insufficient, it will be a
condition to the realization of such benefit that the optionee make
arrangements satisfactory to the Company for payment of the
balance of such taxes required or requested to be withheld.  In
addition, if permitted by the Stock Option Committee or the Board,
an optionee may elect to have any withholding obligation of the
Company satisfied with shares of Common Stock that would
otherwise be transferred to the optionee on exercise of the Stock
Option.

     9.   Administration of the Plan.  (a) The Plan will be administered by 
the Stock Option Committee and the Board.  For purposes of any action taken  
by the Stock Option Committee or the Board, whichever is applicable, a
majority of the members will constitute a quorum, and the action
of the members present at any meeting at which a quorum is
present, or acts unanimously approved in writing, will be the acts
of the Stock Option Committee or the Board.

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          (b)  The Stock Option Committee and the Board
have the full authority and discretion to administer the Plan and to
take any action that is necessary or advisable in connection with the
administration of the Plan, including without limitation the
authority and discretion to interpret and construe any provision of
the Plan or of any agreement, notification or document evidencing
the grant of a Stock Option.  The interpretation and construction by
the Stock Option Committee or the Board, as applicable, of any
such provision and any determination by the Stock Option
Committee or the Board pursuant to any provision of the Plan or
of any such agreement, notification or document will be final and
conclusive; provided, that in the event the Stock Option Committee
shall disagree with the Board with respect to such interpretation,
construction or determination, the Board's determination will be
final and conclusive.  No member of the Stock Option Committee
or the Board will be liable for any such action or determination
made in good faith.

          (c)  Notwithstanding any provision of the Plan to
the contrary, the Stock Option Committee will have the exclusive
authority and discretion to take any action required or permitted to
be taken under the provisions of Paragraph 7, Paragraph 9(a),
Paragraph 9(b), Paragraph 10(a) and Paragraph 10(b) with respect
to Stock Options granted under the Plan that are intended to
comply with the requirements of Section 162(m) of the Code. 
          
     10.  Amendments, Etc.  (a)  The Stock Option Committee or the Board, as
applicable, may, without the consent of the optionee, amend any agreement
evidencing a Stock Option granted under the Plan, or otherwise
take action, to accelerate the time or times at which the Stock
Option may be exercised, to extend the expiration date of the Stock
Option, to waive any other condition or restriction applicable to
such Stock Option or to the exercise of such Stock Option, to
reduce the exercise price of such Stock Option, to amend the
definition of a change in control of the Company (if such a
definition is contained in such agreement) to expand the events that
would result in a change in control of the Company and to add a
change in control provision to such agreement (if such provision is
not contained in such agreement) and may amend any such
agreement in any other respect with the consent of the optionee.  

          (b)  The Plan may be amended from time to time
by the Board or any duly authorized committee thereof.  In the
event any law, or any rule or regulation issued or promulgated by
the Internal Revenue Service, the Securities and Exchange
Commission, the National Association of Securities Dealers, Inc.,
any stock exchange upon which the Common Stock is listed for
trading, or any other governmental or quasi-governmental agency
having jurisdiction over the Company, the Common Stock or the
Plan, requires the Plan to be amended, or in the event Rule 16b-3
is amended or supplemented (e.g., by addition of alternative rules)
or any of the rules under Section 16 of the Act are amended or
supplemented, in either event to permit the Company to remove or
lessen any restrictions on or with respect to Stock Options, the
Stock Option Committee and the Board each reserves the right to
amend the Plan to the extent of any such requirement, amendment
or supplement, and all Stock Options then outstanding will be
subject to such amendment.

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          (c)  The Plan may be terminated at any time by
action of the Board.  The termination of the Plan will not adversely
affect the terms of any outstanding Stock Option.

          (d)  The Plan will not confer upon any Participant
any right with respect to continuance of employment or other
service with the Company or any Subsidiary, nor will it interfere
in any way with any right the Company or any Subsidiary would
otherwise have to terminate a Participant's employment or other
service at any time.

                                MICHAELS STORES, INC.
                                
                                
                                
                                By ___________________________
                                   Name: R. Michael Rouleau
                                
                                  Title: President and Chief               
                                         Executive Officer