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Jo-Ann accelerating new store openings in fiscal 2012

30 Aug '10

5 min read

Operating profit for the second quarter was $10.1 million versus an operating loss of $3.4 million for the same period last year.

Balance Sheet
The cash balance of $126.1 million at the end of the second quarter increased by $45.9 million compared to the end of the second quarter last year. The company had no debt outstanding at the end of the second quarter which was a reduction of $50.5 million compared to the end of the second quarter last year. This $96.4 million improvement in cash, net of debt, was primarily the result of cash generated from operations and improvements in working capital.

Store Openings, Closings and Remodels
During the second quarter of fiscal 2011, the company opened two large-format and two small-format stores and closed two small-format stores. Year-to-date, the company opened four large-format and ten small-format stores and closed eight small-format stores. For fiscal 2011, the company expects to open approximately 30 new stores and close approximately 25 stores.

During the second quarter of fiscal 2011, the company remodeled 16 stores of which one was transitioned from a small-format to a large-format layout. Year-to-date, the company remodeled 28 stores of which one was 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.

In fiscal 2012, the company expects to open at least 50 new stores and remodel at least 50 stores.

Fiscal 2011 Outlook
Based upon the company's second quarter results and management's operating assumptions for the remainder of the year, the company is increasing its previously announced expectations for fiscal 2011. The key considerations underlying its outlook for fiscal 2011 include:

• Same-store sales increase of approximately 3.0% to 4.0% for the year versus the previously announced range of approximately 2.5% to 3.5%;
• Gross margin rate improvement of 70 to 90 basis points for the year versus the previously announced range of 40 to 70 basis points;
• Selling, general and administrative expenses, as a percentage of net sales, improvement of 50 to 70 basis points for the year versus the previously announced range of 30 to 60 basis points;
• Capital expenditures, net of landlord allowances, for the full year in the range of $52 to $54 million versus the previously announced guidance of approximately $50 million;
• Earnings per diluted share in the range of $3.20 to $3.35 for the year versus the previously announced range of $2.95 to $3.10;
• Free cash flow in the range of $83 to $88 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 27.2 million shares for the year.

Jo-Ann Stores, Inc., is the leading national fabric and craft retailer with locations in 48 states, including 233 large-format stores and 519 small-format stores.

Jo-Ann Stores Inc

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