Jo-Ann Stores Closing More Units

HUDSON, OH-Jo-Ann Stores Inc., which lost $18.4 million in the second quarter ended Aug. 4 despite higher sales and higher same-store results, expects to close more stores than it opens for the rest of this year, the chain reported Wednesday. For the balance of the year, the company expects to open one large-format store and close eight small-format stores and one large-format store, company officials said in a conference call with financial analysts.

Company executives outlined the outlook for store openings and closings as they explained a new set of terms that Jo-Ann now employs to describe its store formats. The company now classifies its stores as large-format and small-format, versus the previous description of superstore and traditional stores. As the company continues to remodel stores, the distinction between traditional stores and superstores becomes less clear, execs said, with the new dividing line between large-format and small-format stores at approximately 24,000 sf to 25,000 sf. However, they said that the most important distinction is whether or not stores in that size range have been recently opened or remodeled, and therefore contain a broad assortment of craft categories.

Before store format name change, the company listed 177 superstore and 612 traditional store locations. Following the change, it now categorizes thos as 194 large-format and 595 small-format locations.

The $18.4 million second-quarter loss amounted to 76 cents per share and compared with a loss of $21.2 million and 90 cents per share in the second quarter last year. Sales increased 7% to $388.5 million and same-store sales increased 7% versus a decrease of 8.4% for the same period last year. During the second quarter, the company opened two large-format stores and closed seven small-format stores.

Despite the quarterly loss, Jo-Ann Stores CEO Darrell Webb said in the call that the company is “encouraged by our sales momentum.” Webb said that the company is continuing to execute various elements of a strategic plan that is designed to result in “profitable growth over the long term.”

The strategic plans are expected to bear fruit in terms of improved full-year earnings guidance. It expects “improvement in business performance,” based upon same-store sales improving to positive, an improvement in its gross margins, reductions in selling and general administrative expenses. With these improvements, it is forecasting earnings per diluted share in the range of 60 cents to 70 cents.