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Jo-Ann poised for completion of turnaround

Hudson, OH — Now on the tail end of its turnaround, Jo-Ann Stores Inc. is well-positioned for the fourth quarter in spite of the uncertain holiday climate as well as comparisons against record earnings in last year's fourth quarter with fewer selling days, executives said during the company's third quarter conference call.

The executives also noted that next year should exceed expectations and that at the end of this fiscal year the company will have essentially achieved all of its turnaround milestones in just one year, well ahead of the scheduled two-year plan. "We've completed our transition from a turnaround story to a growth story," said Alan Rosskamm, chairman and ceo. "Over the past 12 months, we have surprised ourselves at the speed and strength of our recovery."

In addition, next year the company will expand its supercenter format with 15 to 20 new units opening in the second and third quarters. Superstores, now at 35,000 square feet, or 25 percent smaller than the original format, accounted for 25 percent of year-to-date total revenue. At the end of the third quarter, the company had 71 supercenters and 870 traditional stores.

With improved margins from strong sales momentum and increased cost controls, Jo-Ann improved its net income for the quarter and so the company raised its full-year earnings estimates.

Net income for the third quarter ended Nov. 2 totaled $8.9 million, or $0.44 per diluted share, compared with a net loss of $11.3 million, or $0.61 per diluted share in the prior year. Prior year results included a charge for store closings of $12.2 million, or $0.66 per diluted share.

Net sales for the third quarter increased 4.1 percent to $430.1 million from $413.0 million in the prior year. Same-store sales increased 6.5 percent, compared to an 8.0 percent same-store sales increase for the same period in the prior year.

Based on the strength of the third quarter performance, the company is raising its fiscal 2003 earnings guidance by $0.20 per share and now expects to earn between $2.00 to $2.10 per share, compared with its previous guidance of $1.80 to $1.90 per share.

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