Higher sales help 4th-qtr profit soar 82 pct at fabric chain Jo-Ann Stores; tops Wall Street

Jo-Ann Stores posts 4Q profit surge as sales gain

HUDSON, Ohio — Craft and fabric retailer Jo-Ann Stores Inc. on Wednesday posted an 82 percent surge in fourth-quarter profit, buoyed by cost-cutting and higher sales across its product lines.

The results and the company’s forecast for the current fiscal year both topped Wall Street estimates, but its shares slipped in aftermarket electronic trading.

For the three months that ended Jan. 30, the company earned $37.1 million, or $1.36 per share, compared with $20.4 million, or 79 cents per share, a year earlier.

Sales rose 5 percent to $602.2 million, from $571.9 million. Analysts polled by Thomson Reuters, on average, expected profit of $1.33 per share and sales of $600.4 million.

The results topped the company’s own forecast for quarterly profit of $1.32 and $1.34 per share, which it revised upward in early February after reporting quarterly sales figures.

Jo-Ann said fourth-quarter sales in its large-format stores rose 8 percent to $323.8 million. Small-format store sales rose 3 percent to $266.1 million. Internet sales were flat with the prior year at $12.3 million. The company operates about 746 stores nationwide.

Last month, the chain said its sales of sewing products jumped 6 percent while non-sewing product sales rose nearly 3 percent, due mostly to craft sales. Seasonal and custom framing sales were weak.

The company said sales at stores open at least a year rose 4.4 percent in the quarter, reversing a 2.9 percent decline a year earlier. The measure is an important gauge of retail health because it is not skewed by stores that open or close during the year.

The company kept its expenses in check during the period. The cost of sales dipped 2 percent to $315.8 million as prices declined. The company also had lower clearance levels and reduced freight costs. Selling, general and administrative expenses rose 4 percent to $207.9 million.

During the quarter, Jo-Ann opened one small-format store and closed one large-format store and 12 small stores. It also remodeled four stores, including one that was shifted to large-format from small.

For the fiscal year, Jo-Ann Stores earned $66.6 million, or $2.51 per share, compared with $21.9 million, or 86 cents per share, the year before. Adjusted for an after-tax gain related to the repurchase of company debt, of $800,000, or 3 cents per share, 2009 profit was $65.8 million, or $2.48 per share. Sales for the year rose 5 percent to $2 billion, from $1.9 billion in 2008.

For the current fiscal year, Jo-Ann said it expects sales at stores open at least a year to rise between 2.5 percent and 3.5 percent. Profit is expected to range between $2.75 and $2.90 per share.

Analysts expect profit for the year of $2.85 per share.

Jo-Ann expects to open approximately 30 new stores and close about 30 others this year. It also plans to remodel at least 40 stores, and it forecast capital expenditures of about $50 million.

In after-hours trading, Jo-Ann shares fell 26 cents to $39.75, from their close in the regular session of $40.01.