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Jo-Ann Stores profits up by 7.1 percent

Don Hogsett -- Home Textiles Today, March 15, 2004

Helped by stronger sales, wider margins and lower interest costs, fabric and crafts retailer Jo-Ann Stores Inc. drove fourth-quarter profits up by 7.1 percent, to $27.1 million from $25.3 million last year.

Sales increased by 5.1 percent, to $552.6 million from $525.8 million. Same-store sales grew by 4.5 percent, up against a tough comparison with a same-store gain of 6.9 percent the preceding year.

Acting as a prop to the bottom line, average gross margin improved by 60 basis points, or six-tenths of a percentage point, to 43.9 percent from 43.3 percent. Fueling the margin growth was "a less promotional pricing strategy," the company said. Operating costs held relatively steady at 32.2 percent, up slightly from 32.1 percent.

In another lift to profits, the specialty retailer knocked its interest costs down by 28.8 percent, to $4.2 million from $5.9 million last year, generating a savings of $1.7 million. Debt levels were slashed by more than half, or 57 percent, to $49 million from $114 million.

During the year, Jo-Ann opened 16 superstores, converted four larger traditional stores to the superstore format, and opened three traditional stores. The company shuttered 45 traditional stores and a superstore. This year, Jo-Ann plans to open about 30 new superstores, while closing about 70 smaller traditional stores.

Jo-Ann Stores Inc.

Qtr. 1/31 (x000) 2003 2002 % chg
a-Fourth-quarter results include $1.6 million in stock option compensation expense and $900,000 in debt repurchase and share reclassification expenses.
b-12-month results include $5.7 million in stock option compensation expense; and $5.5 million in debt repurchase and share reclassification expense vs. $1.9 million last year.
Sales $552,600 $525,800 5.1
Oper. income (EBIT) 64,400 58,800 9.5
Net income 27,100a 25,300a 7.1
Per share (diluted) 1.22 1.15 6.1
Average gross margin 43.9% 43.3% --
SG&A expenses 32.2% 32.1% --
12 months 2003 2002 % chg
Sales 1,734,100 1,682,000 3.1
Oper. income (EBIT) 144,400 142,400 1.4
Net income 41,000b 44,900b -8.7
Per share (diluted) 1.86 2.08 -10.6
Average gross margin 46.7% 46.2% --
SG&A expenses 38.4% 37.8% --


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