A view of the industry through the
eyes of a chain buyer.
Hancock and Jo-Ann: Fourth
Quarter, Fiscal Year Results
Profits are up!
by Staff Report (March 15, 2010)
Net sales for the year were $274.1 million compared with $276.4
million in the previous year, and same-store sales increased 0.2%.
Operating income increased by $4.6 million to $7.7 million from $3.1
million. The previous year's fourth quarter included a retirement
plan curtailment gain of $6.2 million. Excluding this gain in the
prior year, operating income increased $10.8 million.
Net income was $1.8 million ($0.09/share) compared to a net loss
of $12.4 million (-$0.65) a year ago. Adjusted EBITDA, which
excludes the $6.2 million retirement plan curtailment gain recorded
in the prior year, was $13.8 million, up $10.3 million. Inventories,
now at $91.5 million, are down $12.7 million.
At year's end, Hancock had outstanding borrowings under its
revolving line of credit of $13.6 million and outstanding letters of
credit of $6.0 million. The company paid down $18.4 million of gross
debt during the year. Additional amounts available to borrow under
its revolving line of credit at fiscal year-end were $42.9 million.
Net sales for the quarter were $77.7 million, down from $78.2
million a year ago, and same-store sales decreased 1.3%. Operating
income for the quarter decreased by $3.3 million as a result of a
$3.3 million profit in this quarter compared to a $6.6 million
profit a year ago. Excluding the retirement plan curtailment gain of
$6.2 million in the prior year, operating income increased $2.9
million over the previous year.
Net income was $1.9 million ($0.10) compared to income of $4.2
million ($0.22) a year ago. Adjusted EBITDA for the quarter was $4.6
million, up $2.5 million.
President/CEO Jane Aggers commented, "While our top line
results are indicative of the challenging environment in which we
operate, the significant improvements that have been made in
earnings is evidence that our operational plan is gaining traction.
We will continue to deleverage the balance sheet as we look at
various alternatives for growth."
For the year, gross margin improved by 110 basis points to 44.4%,
driven by lower merchandise and freight costs; those were partially
offset by an increase in sourcing and warehousing costs. Gross
margin for the fourth quarter of 40.8% down from 42.1% a year ago.
For the year, selling, general, and administrative expenses have
been reduced by $2.4 million to $109.7 million (40.0% of sales) from
$112.1 million (40.6% of sales). For the quarter, expenses increased
to $27.4 million (35.2% of sales) from $25.2 million (32.2% of
sales). The expense of the fourth quarter of the prior year included
a retirement plan curtailment gain of $6.2 million. Excluding this
curtailment gain, selling, general, and administrative expenses for
the fourth quarter decreased $4.0 million and for the year decreased
During the current fiscal year, the company opened 3 stores,
closed 1 store, and remodeled 9 locations. The current store count
is 266 stores.
To read the complete earnings release and/or to listen to a
replay of a conference call Hancock execs had with analysts, click HERE.
Jo-Ann Fabrics and Crafts
Net income for the fourth quarter ended Jan. 20 was $37.1 million
($1.36/diluted share), versus $20.4 million ($0.79) a year ago. The
prior year fourth quarter net income included a $1.3 million
after-tax gain ($0.05), related to the purchase of a portion of the
company’s senior subordinated notes. Excluding this gain, net
income for the prior year fourth quarter was $19.1 million ($0.74).
Net income for the year was $66.6 million ($2.51), compared with
$21.9 million ($0.86) in the prior year. The current fiscal year
includes a $0.8 million ($0.03) after-tax gain related to the
purchase of a portion of the company’s senior subordinated notes.
Excluding this gain, net income was $65.8 million ($2.48). The prior
year's income included a $2.6 million ($0.10) after-tax gain related
to the purchase of a portion of the company’s notes. Excluding
this gain, net income for the prior fiscal year was $19.3 million
Net sales for the quarter increased 5.3% to $602.2 million and
same-store sales increased 4.4%. Large-format store sales increased
7.9% to $323.8 million and same-store sales increased 3.1%.
Small-format store sales increased 2.6% to $266.1 million and
same-store sales increased 6.1%. Internet sales through Joann.com of
$12.3 million were flat.
Net sales for the year increased 4.7% to $1.99 billion and
same-store sales increased 3.1%. Large-format store sales increased
7.5% to $1.07 billion and same-store sales increased 1.4%.
Small-format store sales increased 1.4% to $879.9 million and
same-store sales increased 5.1%. Internet sales increased 6.2% to
Chair/CEO Darrell Webb stated, "During fiscal year 2010, the
Jo-Ann team effectively executed our strategic objectives. These
included: revitalizing our store base, expanding our gross margin
rate, capitalizing on changes in the competitive environment, and
leveraging our new systems capabilities. We achieved all of this
while maintaining tight control of our expenses, inventory, and
capital spending, which allowed us to report significant expansion
of operating margin and record earnings."
Gross margins for the quarter increased approximately 410 basis
points to 47.6% due to reduced product costs from global sourcing
initiatives, lower clearance levels, and reduced freight costs.
Selling, general, and administrative expenses for the quarter
increased 4.1% to $207.9 million, but improved as a percentage of
sales by approximately 40 basis points to 34.5%. Operating profit
for the quarter was $61.1 million versus $32.5 million a year ago.
The cash balance for the fiscal year improved by $136.5 million
to $217.1 million compared to year-end last year. Outstanding debt was $47.5 million, down $18.5 million from a year ago.
This $155 million improvement in cash, net of debt, was primarily
the result of cash generated from operations and improvements in
Subsequent to year-end, the company retired the remaining $47.5
million outstanding principal on its senior subordinated notes at
In the fiscal year the company opened 15 large-format and five
small-format stores, and closed three large-format and 35
small-format stores, and remodeled 30 stores, of which six were
transitioned from a small- to a large-format layout.. For fiscal
2011, the company expects to open approximately 30 new stores, close
approximately 30, and remodel at least 40 stores.
This year the company expects same-store sales to increase
2.5%-3.5%; the gross margin rate to improve 20-50 basis points; and
selling, general, and administrative expenses as a percentage of net
sales to improve 20-50 basis points.
Capital expenditures, net of landlord allowances, for the full
year of approximately $50 million. Earnings/diluted share should be
in the $2.75-$2.90 range.
To read the complete report click HERE.