Jo-Ann Stores announces financial results for fiscal year 2009
17 Mar '09
6 min read
Mr. Webb concluded, "While fiscal year 2010 will be somewhat unpredictable due to the economic environment, we believe our company is positioned very well to serve consumers as their values and shopping behaviors change.”
Operating Results Gross margins for the fourth quarter decreased approximately 150 basis points to 43.5% from 45.0% in the fourth quarter of the prior year, due to markdowns taken to sell through seasonal merchandise.
Selling, general and administrative expenses for the quarter decreased to $199.7 million from $202.1 million last year. Selling, general and administrative expenses as a percentage of net sales increased slightly to 34.9% compared with 34.5% in the fourth quarter of the prior year due to de-leveraging of net sales, partially offset by initiatives to manage operating costs.
Operating profit for the fourth quarter was $32.5 million versus $46.8 million for the prior year's fourth quarter.
Balance Sheet The cash balance for the fiscal year ended January 31, 2009 increased by $55.2 million compared to the prior year to $80.6 million. Long-term debt totaled $66.0 million, a reduction of $34.0 million compared to the prior year. The improvements in cash and debt balances were primarily the result of cash generated from operations and improvements in working capital.
During the fourth quarter the company repurchased $13.6 million of its senior subordinated notes at a discount of approximately 16% to par value, and recorded a $2.1 million pre-tax gain including the write-off of deferred finance charges.
For the full year the company repurchased $34.0 million of its senior subordinated notes at a discount of approximately 13% to par value, and recorded a $4.2 million pre-tax gain including the write-off of deferred finance charges.
Subsequent to fiscal 2009 year-end, the company repurchased $13.9 million of its senior subordinated notes at a discount of approximately 9% to par value, and will record a $1.1 million pre-tax gain including the write-off of deferred finance charges in the first quarter of fiscal year 2010. The company currently has $52.1 million of its senior subordinated notes outstanding.
Store Openings, Closings and Remodels During the fourth quarter of fiscal 2009, the company closed ten small-format stores. In fiscal year 2009, the company opened 11 large-format and ten small-format stores and closed two large-format and 29 small-format stores. The year-end store count was 210 large-format stores and 554 small-format stores, for a total of 764 stores. For fiscal 2010, the company expects to open approximately 20 new stores and close approximately 30 stores.
During fiscal 2009, the company remodeled 29 stores. In fiscal 2010, the company expects to remodel approximately 30 stores.
Fiscal 2010 Outlook Based upon management's operating assumptions and current economic conditions, the company's key considerations underlying its outlook for fiscal 2010 include: • Same-store sales decline of 2% to 4%; • Gross margin rate improvement; • Higher selling, general and administrative expenses as a percentage of net sales; • Capital expenditures, net of landlord allowances, of $30 to $32 million; • Earnings per diluted share in the range of $0.70 to $0.85 (excluding any gains on debt repurchase); • Free cash flow in the range of $50 to $58 million; (free cash flow defined as net income plus depreciation and amortization, stock-based compensation expense and changes in working capital, less capital expenditures) • Weighted-average diluted share count of approximately 26 million shares.