Jo-Ann Keeps Plugging Away
March 14, 2005-- Home Textiles Today,
Hudson, Ohio — Reporting success over the past year with the continued rollout of its superstores, Jo-Ann Stores Inc. is plunging forward with the revamped store format this new fiscal year and making inventory adjustments to improve its future sales performance, the company said during its fourth quarter and year-end call last week.
“We are excited about the progress we made on validating our superstore model,” said Alan Rosskamm, chairman and CEO. “Our superstores that have been open at least a year produced more than 20 percent more cash flow per square foot than our traditional stores.”
Rosskamm said the company achieved this by adjusting its sourcing, promotional strategies and staffing. In addition, he noted that the superstore task force meets regularly, “to scrutinize every aspect of our superstore income statement, investment and operation, and we continuously fine-tune our model so we can maximize our returns while providing our customers a best-in-class shopping experience.”
Superstores are projected to represent about 40 percent of total company revenue this fiscal year, which began in February.
The company said it will open about 40 new superstores — 11 of which are slated to open this first quarter — and close about 50 traditional units. The store openings and closings are expected to coincide, with most occurring in the first three quarters and only a “handful” during the fourth quarter, Rosskamm said.
By comparison, last fiscal year the company opened 29 superstores — almost double the number opened the prior year at 16 superstores — and closed 72 traditional stores.
Long-term, Jo-Ann Stores expects to reach $3 billion in annual revenue in the next five years, “and we believe our superstore model is the right path to achieve this goal,” Rosskamm said. As growth persists, the company sees the potential for 700 superstores “in top 100 or so markets in the U.S. alone. We are currently serving less than 10 percent of the craft market and are confident our superstores will help us grow our market share,” he said.
On the back end, the company this month begins construction on its third distribution center, a 700,000-square-foot space in Opelika, Ala. Set to cost about $45 million to build, this site is intended to serve key growth regions like Florida, Georgia and Texas. It is scheduled to open in early 2006. The company's two other distribution centers are located in Visalia, Calif., and Hudson, Ohio.
The best category performers last year were sewing and crafting — excluding home décor and textiles — which represented 61 percent of the company's total year revenues and posted up by about 6.6 percent according to a same-store sales basis on improved margin rates.
The poorest category was finished seasonal, which was down 8.3 percent on a same-store sales basis for the full year. Also, businesses tied more closely to home décor, such as home textiles, experienced softness, with the home décor textiles business down about 1.9 percent on a same-store sales basis last fiscal year.
“Our investment in core category components, such as fleece fabrics, scrap-booking and needle arts, paid off as these categories fueled our sales growth during the year,” Rosskamm said. “We continue to be dissatisfied with the performance of finished seasonal and are working aggressively to address this issue as an opportunity for fiscal 2006.”
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