Soft Goods Slow at Jo-Ann

By Cecile B. Corral -- Home Textiles Today, 6/4/2007 12:00:00 AM

Hudson, Ohio —

While admittedly the first quarter was "historically, our weakest quarter in terms of financial results," Jo-Ann Stores found silver linings in a few "significant milestones" it reached.

The 794-unit fabric and craft retailer (operating 619 Jo-Ann Fabric and Craft traditional stores and 175 Jo-Ann superstores) reported that for the first time in six quarters, its comp sales turned positive — up 1.8% — while its superstores outpaced traditional store, said Darrell Webb, chairman, president and ceo.

"I'm pleased with our progress and believe it is the result of our very disciplined approach to executing our strategic plan initiative," he said. This plan has three themes: improving the customer shopping experience, enhancing marketing and merchandising offers, and refining new store and remodel investments.

Plans aside, it is important to note flat results in home textiles. Softlines, or all sewing-related businesses, represented 51% of the volume, and grew 1.4% on a same-store-sales basis, the company said — below the storewide average. This qualified improvement was driven by sportswear, sewing accessories, and sewing constructions — and was offset by underperformance in fashion fabrics and home décor fabrics.

Net sales rose just 0.1% to $424.2 million. The company reported a quarterly net loss of $1.7 million, considerably better than last year's $6.6 million loss. Jo-Ann said gross margins improved to 47.3% due to reduced sales of clearance inventory; SG&A expenses fell a full point to 43.7% of sales.

Key to the turnaround effort is Jo-Ann's revamped print advertising program, about which Webb said, "In terms of enhancing our merchandising and marketing … this represents our most visible change." He added, "I believe our improving sales performance is due at least in part to those changes in advertising. Same-store sales were up 3.0% for superstores in the first quarter."

Another facelift proving beneficial is the customer's shopping experience, which Webb described as "dramatically different" since last year. The stores are cleaner, in-stock levels, particularly for basic goods, are up, and there is a more focused product assortment, he said.