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Stock-outs plague Jo-Ann 3Q

HUDSON, OH -With same-store sales slacking off and plagued by stock-outs during an information systems conversion, fabric and crafts retailer Jo-Ann Stores said third-quarter profits tumbled by almost two-thirds, falling by 63.9 percent, to $3.0 million from $8.3 million last year.

Putting profits under even more pressure, the retailer recorded a $1.1 million loss, or 6 cents per share, on its Internet joint venture, IdeaForest.com.

Boosted by new store openings, sales advanced by 4.4 percent, to $362.5 million from $347.1 million. But same-store sales declined by 0.4 percent. Each one-percent decline in same-store sales, the company said, results in a $5 million decline in overall sales, putting margins, costs and profits under pressure.

Alan Rosskamm, chairman and ceo, commented: "As a result of our infrastructure investments and Internet joint venture, we had originally planned the earnings for the quarter to be less than the prior year. Due to several adverse factors, including out-of-stock issues caused by our SAP systems conversion and an apparent softness in the general environment, our actual results of $0.16 per share for the quarter came in below our original plan, but in line with the revised guidelines we issued in early October."

Rosskamm added: "As we enter the fourth quarter, we are in generally good shape on overall inventory levels and feel we have a compelling seasonal merchandise offering. The out-of-stock problems that plagued our third-quarter performance have been isolated to our craft business as we enter the fourth quarter. Our internal team is working hard to correct remaining craft out-of-stocks as quickly as possible."

JO-ANN STORES INC.


Qtr. 10/28 (x000) 2000 1999 %CHG

Sales

$362,500

$347,100

4.4

Oper. income (EBIT)

14,400

20,900

(31.1)

Net income

3,000a

8,300a

(63.9)

Per share (diluted)

0.16

0.45

(64.4)

Average gross margin

47.5%

48.8%

-

SG & A expenses

40.9%

40.4%

-

NINE MONTHS

2000

1999

%CHG

Sales

986,900

925,200

6.7

Oper. income (EBIT)

17,500

26,900

(34.9)

Net income

(4,300)b

5,100b

-

Per share

(0.24)

0.27

-

Average gross margin

48.8%

47.3%

-

SG & A expenses

41.9%

41.9%

-


( ): Denotes loss

a-Earnings in the third quarter include a $1.1 million loss on a minority investment.

b-Nine-month results include a $1.4 million income-tax benefit, compared with a prior-year tax liability of $3.1 million; results also include a $2.1 million loss on a minority investment.

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