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Jo-Ann on pace for strong year

A strong third-quarter showing has set Jo-Ann Stores Inc. on pace for what its chairman and ceo Alan Rosskamm promises will be a strong fiscal year.

The specialty craft and fabrics retailer posted a net profit of $8.9 million in the quarter just completed, a turnaround from last year's $11.3 million third-quarter loss. Its operating income ballooned by more than 16,000 percent in the quarter, reaching $32.5 million. Last year's operating number included a pretax charge of $19.7 million relating to the company's shuttering of 106 stores. But even without this charge, Jo-Ann's operating number grew by more than 63 percent.

Jo-Ann's third-quarter sales edged up 4.1 percent, to $430.1 million. Impressively, its same-store sales increased 6.5 percent during the quarter and were up 9.0 percent for the first three quarters of 2002.

But the retailer's expense control proved to be the star of its third-quarter report. By reducing its selling, general and administrative expenses by 8.5 percent, Jo-Ann sliced its SG&A ratio to sales by 540 basis points, to 38.8 percent. The company also reported a 170-basis-point improvement in its average gross margin, which finished the quarter at 45.9 percent.

"Jo-Ann Stores has now delivered four consecutive quarters of significantly improved earnings performance," Rosskamm said. Much of this was due to the company's stringent cost controls, improvements in store shrink rates and the absence of clearance sales.

Regarding the sales side, the ceo added, "Our core businesses, particularly sewing and home decorating, continue to perform well, and we achieved a good sell-though of our Halloween seasonal product."

Jo-Ann Stores Inc.

Qtr. 11/2 (x000) 2002 2001 % chg
( ): loss
a: Includes a $19.7 million pretax charge related to 106 store closings. Without this charge, Jo-Ann would have recorded an operating profit of $19.9 million.
Net sales $430,100 $413,000 4.1
Oper. income 32,500 200a 16,150.0
Net income 8,900 (11,300)
Per share (diluted) 0.46 (0.61)
Average gross margin 45.9% 44.2%
SG&A expenses 38.8% 44.2%
9 months 2002 2001 % chg
Net sales 1,156,200 1,072,100 7.8
Oper. income 78,700 600 13,016.7
Net income 19,600 (33,800)
Per share 1.03 (1.84)
Average gross margin 47.6% 44.1%
SG&A expenses 40.7% 44.1%


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