Skus slashed, Jo-Ann still reels
August 24, 2001,
Hudson, OH — With margins under pressure as it sold off discontinued goods in widespread clearance sales, and nicked by $1.4 million in severance charges in connection with a recent downsizing, Jo-Ann Fabrics recorded a sharply widening loss of $16.1 million, compared with a $10.0 million year-ago deficit.
Boosted by the previously announced sku-reduction drive to sell off obsolete product, sales climbed higher at a double-digit pace, rising by 10.4 percent, to $330.2 million from $299.0 million last year. Same-store sales shot up 9.7 percent.
Bolstered by the double-digit sales gain, the expense ration improved by 60 basis points, to 44.3 percent from 44.9 percent. But measured in absolute dollars, operating costs rose by 9.1 percent, to $146.4 million from $134.2 million — hurt by a $1.4 million pre-tax severance charge rung up in a corporate down-sizing.
Alan Rosskamm, chairman and ceo, commented, "Overall, our performance in the second quarter was better than our internal expectations. Historically, the second quarter [is] our weakest quarter, which typically results in a net loss." Complicating the seasonal downturn this year, said Rosskamm, "We expected this year's second quarter to be especially difficult given the zero margin sales from our sku-reduction initiative, the temporary operation of three distribution centers and the deterioration in store shrink trends we had identified in the first quarter."