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Jo-Ann Stores delivers solid operating results

28 May '09

5 min read

Balance Sheet
The cash balance for the quarter ended May 2, 2009 of $85.0 million was an increase of $27.1 million versus the end of the first quarter last year. Long-term debt totaled $50.5 million, a reduction of $49.5 million compared to the end of the first quarter last year. The improvements in cash and debt balances were primarily the result of cash generated from operations and improvements in working capital.

During the first quarter the company purchased $15.5 million of its senior subordinated notes at an average discount of approximately 9% to par value, and recorded a $1.2 million pre-tax gain including the write-off of deferred financing costs.

Store Openings, Closings and Remodels
During the first quarter of fiscal 2010, the company opened 11 large-format stores and one small-format store and closed one large-format store and 12 small-format stores. For fiscal 2010, the company expects to open approximately 20 new stores and close approximately 30 stores.

During the first quarter of fiscal 2010, the company remodeled two stores. In fiscal 2010, the company expects to remodel approximately 30 stores.

Fiscal 2010 Outlook
The company is reaffirming its previously announced outlook for fiscal 2010. 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% for the year;
• Gross margin rate improvement for the year;
• Higher selling, general and administrative expenses as a percentage of net sales for the year;
• Capital expenditures, net of landlord allowances, for the full year of $30 to $32 million;
• Earnings per diluted share in the range of $0.70 to $0.85 for the year (excluding any gains on debt purchases);
• Free cash flow in the range of $50 to $58 million for the year; (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 for the year.

Jo-Ann Stores Inc

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