This summary is based on the fourth quarter fiscal 2008 earnings call conducted by Jo-Ann Stores Inc. (JAS: chart) on March 12, 2008.

Management:
- Chairman, President and Chief Executive Officer: Darrell Webb
- Chief Financial Officer: Jim Kerr
- Investor Relations: Tim Ryan

Key Investors Issues

- Net earnings roe 7% to $27.5 million or $1.10 a share.
- Sales dropped 2.5% to $586 million from $601 million in the prior year.
- Average debt levels improved from a $147 million outstanding in fiscal 2007 to an average of a $142 million.

Full Year Highlights:

- Net earnings were $15.4 million or 62 cents per share versus a net loss of $1.9 million or 8 cents per share in the prior year.
- Net sales rose 2% to $1.9 billion from $1.85 billion in the prior year
- Capital expenditures were $29 million net of landlord allowances of approximately $9 million.

Fourth Quarter Highlights

Net earnings were $27.5 million or $1.10 per share, up 6.6% from $25.8 million or $1.05 per share in the prior year due to gross margin improvement in retail stores offset by the impact of sales from newly acquired Internet business.

- Total net sales declined 2.5% to $586 million from $601 million in the prior year due in part to an extra week in fiscal 2007 which added $28.8 million in sales to last year’s results.
- Same stores sales increased 3.3% versus a decrease of 6% for the same period last year, driven by higher average ticket due to new product assortments, better in-stocks or effective marketing in the benefit of competitive withdrawals from the sewing business.
- Large-format stores accounted for a 50% of sales and small format stores accounted for 48% and internet sales through joann.com accounted for the remaining 2% of sales.

Same-store sales for large format stores increased 2.4% compared to a decrease of 7.2% for the same period last year, due to higher average ticket.

- Same-store sales in small format stores increased 4.2% versus a decrease of 5.1% for the same period last year as a result of higher average ticket as well.
- The firm continued to experience positive same-store sales in the majority of the fabric and selling notions merchandise categories.
- The non-sewing business represented 53% of sales volume and decreased approximately 3% on a same-store sales basis, impacted by lower sales of Christmas shop and seasonal fall.

Craft sales were also up slightly compared to the fourth quarter of last year and those increases were partially offset by a decrease in Christmas seasonal categories.

- Gross margin was flat due to the consolidation of the Joann.com business which carries a lower margin than the retail stores.
- Excluding the effect of Joann.com, gross margin expanded 50 basis points due to reduced clearance and promotional markdowns and benefits from global sourcing initiatives.
- In terms of SG&A expense management, the firm continues to make progress in reducing operating cost in a number of areas, with largest savings emanating from store level expenses and distribution centers.
- As, a percentage of net sales, SG&A expense improved by approximately a 140 basis points to 34.5% due to the continued efforts to control expenses.
- The additional sales from joan.com which has a lower expense structure than the retail stores contributed to the improved leverage.

Depreciation and amortization expense increased to $13.2 million from $12.7 million last year due to the depreciation associated with additional new stores.

- Interest expense decreased by $100,000 primarily due to lower average debt levels.
- Average debt levels improved from a $147 million outstanding in fiscal 2007 to an average of a $142 million.
- The firm ended the quarter at $472.2 million in inventory, an $18.8 million increase versus a year ago due to higher investment in the basic categories and the timing of spring merchandise received somewhat offset by a decrease in fashion in clearance merchandise levels.
- It also ended the year with a $100 million in total borrowings versus a $125.3 million at the end of last year and currently has $238 million of excess availability under our senior bank credit facility.

Strategic Perspectives:

- The new strategic growth plan to improve the customer shopping experience in stores, enhance marketing and merchandizing offers and refine store development program is progressing smoothly.
- These broad themes were supported by dozens of initiatives and enabled by investments in people, systems and supply chain along with tight control of expenses and inventory.
- As planned there were no store openings or remodels completed in the fourth quarter, with six new stores and 26 remodels for fiscal year 2008 all completed by the end of the third quarter.

In fiscal year 2009, the firm expects to open 12 to 15 new stores averaging just under 30,000 square feet and plans to remodel 25 to 30 stores averaging just under 20,000 square feet.

- Key priorities in fiscal 2009 will include rolling out the new point-of-sale and store systems package as well as new human resource and workforce management applications.
- It will also continue integrating the Joann.com Internet business to achieve better synergy with retail stores and will continue to focus on updating stores by remerchandising dozens of small-format stores.

Fiscal 2009 Outlook:

- Capital expenditures is expected to be $50 to $55 million net of landlord allowances of approximately a $11 million, with the increase attributable to additional spending on store activity and investments in IT projects.
- EPS is expected to range between 70 cents to 85 cents per diluted share, reflecting expectation for same-store sales growth of 1% to 3%, improvement in gross margin rate and an improvement in SG&A expense as a percent of net sales.
- Same-store sales are expected to increase in the range of 2% to 4% per year on average with improvements in both gross margin and SG&A as a percent of net sales.
- Depreciation and amortization expense is expected to come in at $54 million.