Larger format gains share at Jo-Ann

HUDSON, OH — Now with 72 superstore units in its portfolio, Jo-Ann Stores will continue to roll out the 35,000-square-foot format over the next few years, executives said during the fourth quarter conference call last week.

The larger format generated 25 percent of its revenues last year, with the balance from its 840 traditional stores.

The challenge for Jo-Ann has been to court non-sewing customers in the larger markets where superstores are usually placed, since Jo-Ann is historically known as a destination for sewing products, said Alan Rosskamm, chairman and ceo. As a result, the company devotes a large portion of its ad budget in these markets to newspaper inserts.

Superstores comps increased 4.8 percent in the fourth quarter, said Brian Carney, cfo, with the entire increase driven by customer traffic, while the average ticket dropped. For the year, it was up 7.8 percent, also mostly due to traffic.

Traditional stores grew 7.7 percent in the fourth quarter and 8.5 percent for the year, mostly to a higher average ticket.

Carney also mentioned that seasonal goods, a category where Jo-Ann faces competition from discounters, were priced more aggressively than planned for the quarter, resulting in good sell-through. However, this year it planned to avoid such aggressive markdowns to improve margins. Otherwise for the fourth quarter, all major categories were strong, particularly in sewing and home decorating.

The majority of the 20 new stores slated for this year will be in the larger format, and 40 traditional stores will close — half to be replaced by the superstores and the remaining as part of a previously announced store closing initiative. Of the 148 stores on the closing list, 120 have already been shuttered, and the balance will close within the next year.

This year, sales growth will be modest due to the 40 fewer stores, Rosskamm said. It will be a year of transition to strengthen operations.