This is a summary of the first quarter fiscal 2009 earnings call conducted by Jo-Anne Stores, Inc. (JAS) on May 28, 2008
Management:
-
Chairman, President and CFO Darrell Webb
-
CFO, Executive Vice President James Kerr
-
DIR Tim Ryan
Key Investor Issues:
- Net sales increased 5.2% to $446.1 million from $424.2 million in 2007.
- Net income was $3 million or 12 cents per share, up from a loss of $1.7 million or 7 cents a share.
- Large-format stores net sales increased 5% to $230.2 million.
First Quarter Highlights:
Net sales increased 5.2% to $446.1 million from $424.2 million in the prior year as same-store sales increased 4.5% compared with a 1.8% increase for the same period last year.
- Large-format stores net sales increased 5% to $230.2 million from $219.3 million last year as same-store sales for large-format stores increased 3.3%.
- Small-format stores net sales increased 1.4% to $207.7 million from $204.9 million last year.
- Same-store sales performance for small-format stores increased 5.8% compared with an increase of 0.8% for the same period last year.
- Net earnings were $3.0 million, or 12 cents per diluted share, from a loss of $1.7 million, or 7 cents a share in 2007 on revenue growth.
Gross margin decreased 90 basis points from 47.7% in 2007 due to the carryover of seasonal product as well as the integration of the Joann.com business.
- Operating profit was $7.4 million versus $0.1 million for the prior year’s first quarter.
- Selling, general and administrative expenses improved by 230 basis points to 41.4% of net sales from 43.7% in the prior year due to leverage from increase in sales as well as continued cost control efforts.
-Interest expense decreased by $0.3 million primarily due to a lower average debt level.
- Cash and cash equivalents were $57.9 million, from $19.9 million reported in the same period last year.
- Capital expenditures were $12.7 million net of landlord allowances of $0.6 million.
The company closed one large-format store and one small-format store and expects to open 20 to 23 new stores, up from the company''s prior expectation of 12 to 15 stores.
- This increase reflects the company''s decision to take advantage of opportunities in the real estate market.
- The company remodeled 12 stores, of which four were transitioned from a small-format to a large-format layout.
- The company expects to remodel 25-30 stores during the year, of which five are expected to transition from a small-format to a large-format layout.
Fiscal 2009 Outlook:
- Full year earnings per diluted share to be in the range of 75 cents to 85 cents a share.
- Same-stores sales growth is expected to be 1% to 3% for the year.
- Capital expenditures for the full year will be $50 to $55 million.
Key questions and answers from the first quarter fiscal 2009 earnings call conducted by Jo-Anne Stores, Inc. on May 28, 2008
William Armstrong:
Elaborate on what types of real estate opportunities you are seeing out there?
James Kerr: We have not changed the overall range. We will operate towards the higher end of that range given the increased number of store openings. We will continue to monitor that and if it needs to go up we will address that as part of our second quarter guidance.
William Armstrong:
Are there particular types of shopping centers or malls that you are finding these opportunities or particular areas of the country?
James Kerr: Nothing specific at this point.
William Armstrong:
Could you elaborate a little bit on labor cost savings?
Darrell Webb: Ken Haverkost and his team have been working on how to project weekly sales and then allocate store labor based on those sales projections.
