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Jo-Ann profits plummet

Hudson, OH — Hit by $4.6 million in costs tied to the repurchase of debt and the way it now accounts for the stock options it gives to managers, first-quarter profits at Jo-Ann Fabrics Inc. were slashed by more than half, falling by 52.9 percent, to $4.1 million from $8.7 million last year.

Held in check in a sluggish retail environment, sales were virtually flat, edging up by 0.6 percent, to $374.8 million from $372.4 million last year. Same-store sales were off by 2.6 percent, up against a difficult comparison with a 13.5 percent increase a year ago.

Operating profits fell by 20.6 percent, to $16.2 million from $20.4 million last year. Adding an extra layer of pressure, the retailer added on $2.12 million in store pre-opening and closing costs. By the end of the quarter, the company's store base had contracted by 34 units from year-ago levels, to 917 from 951. The retailer shuttered 41 smaller traditional stores, while opening seven larger superstores.

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