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At Jo-An Stores, sewing businesses still dominant in Q1

Hudson, Ohio – While home decorating fabric sales were still “slightly” negative at Jo-Ann Stores during its first quarter, the fabric and craft retailer did see sewing-related business continue to dominate sales and grow in comp sales in the period.

“The sewing business represented 53% of our first-quarter sales volume and increased 5.5% on a same-store-sales business. We continue to experience positive same store sales in a majority of our fabric and sewing notion product categories,” said Darrell Webb, chairman and ceo.

Non-sewing comprised 47%, representing an increase of 3.2% on a same-store-sales basis. “Core craft categories remain strong and our seasonal business turned positive for the first time in two years,” Webb continue, later adding “Sales were well balanced across our sewing and non-sewing businesses. But home decorating fabric sales were still slightly negative as a result of subdued activity in the housing market.”

Specifically, categories that “performed exceptionally well” in the first quarter included floral, kids crafts and food crafting in the non-sewing segment and quilting, fleece and notions in the sewing side of the business.

For the first quarter, which ended May 1, Jo-Ann Stores’ net sales increased 4.4% to $480.3 million from $460.0 million for the same period last year, and same-store sales increased 4.1% compared with a 1.0% same-store sales increase last year.

Driving this gain in same store sales was a 2.9% increase in transactions and 1.2% increase in average ticket.

“This is our second consecutive quarter of average ticket growth, as some higher-ticket and discretionary categories began to show improving sales trends,” Webb said.

First-quarter net income was $18.2 million, or $0.66 per diluted share, compared $8.6 million, or 33 cents per diluted share, in the year-ago period. The prior year first quarter net income included a $0.7 million after-tax gain, or 3 cents per diluted share, related to the purchase of a portion of the company's senior subordinated notes. Excluding this gain, net income for the prior year first quarter was $7.9 million, or 30 cents per diluted share.

Another highlight stemming from the quarter was healthy e-commerce sales growth of 8.4%. Jo-Ann Stores made updates and improvements to its website last year and has since experienced gains.

 “This year we focused on expanding the product assortment on the site,” Webb said. “We now have over 75,000 skus available for purchase online, or about 33% more than this time last year.”

During the first quarter, the company opened two large-format and eight small-format stores and closed six small-format stores. Also during the quarter, the company remodeled 12 stores of which one was transitioned from a small-format to a large-format layout.

For fiscal 2011, Jo-Ann Stores expects to open about 30 new stores and close about 25, and the company expects to remodel at least 40 stores during the year.

Jo-Ann Stores updated its outlook for fiscal 2011, “based upon the company's first quarter results and management's operating assumptions for the remainder of the year.” 

The company is increasing its previously announced expectations to include: a same-store-sales increase of approximately 2.5% to 3.5% for the year; a gross margin rate improvement of 40 to 70 basis points for the year versus the previously announced range of approximately 20 to 50 basis points; and earnings per diluted share in the range of $2.95 to $3.10 for the year versus the previously announced range of $2.75 to $2.90.

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