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Strategic initiatives drive Jo-Ann Q1 performance
29 May '08
4 min read
Operating Results:
Gross margins for the first quarter decreased approximately 90 basis points to 46.4% from 47.3% in the first quarter of the prior year, largely due to the carryover of seasonal product sold through the month of February as well as the integration of the Joann.com business, which was acquired last November and has a lower margin than the Jo-Ann retail stores.
Selling, general and administrative expenses for the quarter declined to $184.5 million from $185.5 million last year. Selling, general and administrative expenses improved by approximately 230 basis points to 41.4% of net sales from 43.7% in the first quarter of the prior year due to expense leverage from the increase in sales as well as continued cost control efforts.
Operating profit for the first quarter was $7.4 million versus $0.1 million for the prior year's first quarter.
Store Openings, Closings and Remodels:
During the first quarter of fiscal 2009, the company closed one large-format store and one small-format store. For fiscal 2009, the company now expects to open approximately 20 to 23 new stores, up from the company's prior expectation of 12 to 15 stores and close approximately 30 stores, up from the company's prior expectation of 25 stores. This increase reflects the company's decision to take advantage of opportunities in the real estate market.
During the first quarter of fiscal 2009, the company remodeled 12 stores, of which four were transitioned from a small-format to a large-format layout. The company expects to remodel approximately 25-30 stores during the year, of which five are expected to transition from a small-format to a large-format layout.
Fiscal 2009 Outlook:
The company is updating its previously announced outlook for fiscal 2009. Based upon the company's first quarter results, management's operating assumptions for the remainder of the year, continued implementation of Jo-Ann Stores' strategic growth plans and current uncertain economic conditions, the company expects year-over-year improvement in its performance in fiscal 2009. The key considerations underlying the company's outlook for fiscal 2009 include:
• Same-store sales growth of 1% to 3% for the year;
• Gross margin rate improvement for the year;
• Selling, general and administrative expense leverage improvement as a percentage of net sales for the year;
• Capital expenditures for the full year of $50 to $55 million;
• Earnings per diluted share in the range of $0.75 to $0.85 for the year versus the previously announced range of $0.70 to $0.85;
• Weighted-average diluted share count of approximately 25.5 million shares for the year.
Gross margins for the first quarter decreased approximately 90 basis points to 46.4% from 47.3% in the first quarter of the prior year, largely due to the carryover of seasonal product sold through the month of February as well as the integration of the Joann.com business, which was acquired last November and has a lower margin than the Jo-Ann retail stores.
Selling, general and administrative expenses for the quarter declined to $184.5 million from $185.5 million last year. Selling, general and administrative expenses improved by approximately 230 basis points to 41.4% of net sales from 43.7% in the first quarter of the prior year due to expense leverage from the increase in sales as well as continued cost control efforts.
Operating profit for the first quarter was $7.4 million versus $0.1 million for the prior year's first quarter.
Store Openings, Closings and Remodels:
During the first quarter of fiscal 2009, the company closed one large-format store and one small-format store. For fiscal 2009, the company now expects to open approximately 20 to 23 new stores, up from the company's prior expectation of 12 to 15 stores and close approximately 30 stores, up from the company's prior expectation of 25 stores. This increase reflects the company's decision to take advantage of opportunities in the real estate market.
During the first quarter of fiscal 2009, the company remodeled 12 stores, of which four were transitioned from a small-format to a large-format layout. The company expects to remodel approximately 25-30 stores during the year, of which five are expected to transition from a small-format to a large-format layout.
Fiscal 2009 Outlook:
The company is updating its previously announced outlook for fiscal 2009. Based upon the company's first quarter results, management's operating assumptions for the remainder of the year, continued implementation of Jo-Ann Stores' strategic growth plans and current uncertain economic conditions, the company expects year-over-year improvement in its performance in fiscal 2009. The key considerations underlying the company's outlook for fiscal 2009 include:
• Same-store sales growth of 1% to 3% for the year;
• Gross margin rate improvement for the year;
• Selling, general and administrative expense leverage improvement as a percentage of net sales for the year;
• Capital expenditures for the full year of $50 to $55 million;
• Earnings per diluted share in the range of $0.75 to $0.85 for the year versus the previously announced range of $0.70 to $0.85;
• Weighted-average diluted share count of approximately 25.5 million shares for the year.
Jo-Ann Stores Inc
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