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Jo-Ann posts Q4 & fiscal year 2010 results
15 Mar '10
5 min read
Darrell Webb, chairman and chief executive officer stated, "During fiscal year 2010, the Jo-Ann team effectively executed our strategic objectives. These included: revitalizing our store base, expanding our gross margin rate, capitalizing on changes in the competitive environment, and leveraging our new systems capabilities. We achieved all of this while maintaining tight control of our expenses, inventory, and capital spending, which allowed us to report significant expansion of operating margin and record earnings."
Operating Results
Gross margins for the fourth quarter increased approximately 410 basis points to 47.6% compared to the same period last year due to reduced product costs from global sourcing initiatives, lower clearance levels and reduced freight costs.
Selling, general and administrative expenses for the quarter increased 4.1% to $207.9 million compared to the same period last year. Selling, general and administrative expenses as a percentage of net sales improved by approximately 40 basis points to 34.5% of net sales compared to the same period last year due to expense leverage from the increase in sales as well as continued efforts to control expenses.
Operating profit for the fourth quarter was $61.1 million versus $32.5 million for the same period last year.
Store Openings, Closings and Remodels
During the fourth quarter of fiscal 2010, the company opened one small-format store and closed one large-format store and 12 small-format stores. In fiscal year 2010, the company opened 15 large-format and five small-format stores and closed three large-format and 35 small-format stores. For fiscal 2011, the company expects to open approximately 30 new stores and close approximately 30 stores.
During the fourth quarter of fiscal 2010, the company remodeled four stores of which one was transitioned from a small-format to a large-format layout. During fiscal 2010, the company remodeled 30 stores, of which six were transitioned from a small-format to a large-format layout. For fiscal 2011, the company expects to remodel at least 40 stores during the year.
Fiscal 2011 Outlook
Based upon management's operating assumptions, the company's key considerations underlying its outlook for fiscal 2011 include:
• Same-store sales increase of approximately 2.5% to 3.5% for the year;
• Gross margin rate improvement of 20 to 50 basis points for the year;
• Selling, general and administrative expenses, as a percentage of net sales, improvement of 20 to 50 basis points for the year;
• Capital expenditures, net of landlord allowances, for the full year of approximately $50 million;
• Earnings per diluted share in the range of $2.75 to $2.90 for the year;
• Free cash flow in the range of $75 to $80 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, net of landlord allowances);
• Weighted-average diluted share count of approximately 27.7 million shares for the year.
Operating Results
Gross margins for the fourth quarter increased approximately 410 basis points to 47.6% compared to the same period last year due to reduced product costs from global sourcing initiatives, lower clearance levels and reduced freight costs.
Selling, general and administrative expenses for the quarter increased 4.1% to $207.9 million compared to the same period last year. Selling, general and administrative expenses as a percentage of net sales improved by approximately 40 basis points to 34.5% of net sales compared to the same period last year due to expense leverage from the increase in sales as well as continued efforts to control expenses.
Operating profit for the fourth quarter was $61.1 million versus $32.5 million for the same period last year.
Store Openings, Closings and Remodels
During the fourth quarter of fiscal 2010, the company opened one small-format store and closed one large-format store and 12 small-format stores. In fiscal year 2010, the company opened 15 large-format and five small-format stores and closed three large-format and 35 small-format stores. For fiscal 2011, the company expects to open approximately 30 new stores and close approximately 30 stores.
During the fourth quarter of fiscal 2010, the company remodeled four stores of which one was transitioned from a small-format to a large-format layout. During fiscal 2010, the company remodeled 30 stores, of which six were transitioned from a small-format to a large-format layout. For fiscal 2011, the company expects to remodel at least 40 stores during the year.
Fiscal 2011 Outlook
Based upon management's operating assumptions, the company's key considerations underlying its outlook for fiscal 2011 include:
• Same-store sales increase of approximately 2.5% to 3.5% for the year;
• Gross margin rate improvement of 20 to 50 basis points for the year;
• Selling, general and administrative expenses, as a percentage of net sales, improvement of 20 to 50 basis points for the year;
• Capital expenditures, net of landlord allowances, for the full year of approximately $50 million;
• Earnings per diluted share in the range of $2.75 to $2.90 for the year;
• Free cash flow in the range of $75 to $80 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, net of landlord allowances);
• Weighted-average diluted share count of approximately 27.7 million shares for the year.
Jo-Ann Stores Inc
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