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Jo-Ann Stores reports tough first quarter

Hudson , Ohio -- Hobbled by falling same-store sales, weaker margins and higher costs, and then tripped up by a $27.1 million one-time charge, Jo-Ann Stores recorded a first-quarter loss of $18.0 million, reversing a year-before profit of $32.3 million.

The litany of first-quarter troubles began with a 3.0% drop in same-store sales, compared with a prior-year increase of 4.3%. Overall sales, helped by new store openings, rose by 2.7%, to $604.1 million.

Hampered by stepped-up promotional activity and markdowns, average gross margin thinned substantially, to 41.9% from 45.4% last year. Costs as a percentage of sales rose to 35.8% from 33.3% a year ago.

Chairman, ceo and president Alan Rosskamm said the company is “taking measures to restore gross margins; we expect this improvement to come through tighter purchasing disciplines on fashion and seasonal categories, to reduce end-of-season clearance sales as well as more discreet coupon usage and more disciplined promotional pricing guidelines.”

Rosskamm said a store reset in June will reduce the amount of home décor textiles and finished seasonal goods, while broadening assortments of craft components, reflecting the relative performance of these categories.

Jo-Ann Stores recorded a one-time goodwill impairment charge of $27.1 million reflecting the company's lower market capitalization, declining business trends, softness in the industry and deteriorating performance.

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