Among our key initiatives for fiscal year 2010, we believe margin expansion provides the most significant opportunity to improve financial results. Margin expansion in this economic environment might seem counterintuitive but several factors give us confidence that we can deliver the improvement.

First, the percentage of products that we source directly from Asia will increase again this year. Second, the inflationary pressure that we experienced a year ago on product sourced from Asia has sharply reversed and we are now seeing product cost deflation. Third, freight expense has decreased along with the price of oil which reduces our cost of sourcing products both globally and domestically. Fourth, we will again buy significantly less fashion and seasonal merchandise in fiscal year 2010 which will reduce our exposure to promotional and clearance markdowns. And fifth, the new store systems we rolled out last year will provide additional tools for managing markdowns and will give us new promotional capabilities that enhance margins.

In addition to this work on gross margin expansion, we are focused on a number of initiatives to drive sales and further enhance our customer shopping experience. For example, we will modify our marketing content to deliver a stronger value message. We will also enhance our industry leading education and in store demonstration programs and we will again expand the product offering and functionality on the JoAnn.com website.

In terms of capital spending we believe it’s important to continue updating our store base but given the economic environment, we intend to reduce capital spending by approximately 50% from last year to between $30 and $32 million. However, most of that reduction will come from normalizing our investments in information technology following the major store systems upgrade last year. Our new store and remodel activity will actually be comparable to fiscal 2009 with approximately 20 new stores and 30 remodels. And I’m pleased to note we have already opened eight of these new stores in the first five weeks of this new fiscal year.

We also have 110 leases expiring in fiscal year 2010 and given the current market conditions we believe there are opportunities to improve the lease terms in a number of these locations going forward.

In closing, I’m optimistic that the strength of our core sewing and craft business is a reflection of the changing values and behaviors of consumers which should bode well for our industry and for Jo-Ann Stores over the longer term.

At this point, I’ll turn the call over to Jim Kerr.

James Kerr

Thanks Darrell. First I’ll go through the fourth quarter and full year financial results, then I’ll wrap up with our outlook for fiscal 2010. Net income for the fourth quarter decreased to $20.4 million or $0.79 per share versus net income of $27.5 million or $1.10 per share for the same period last year. The current quarter includes a $1.3 million net after tax gain or $0.05 per share related to the repurchase of the portion of our senior subordinated notes. Excluding this gain, earnings for the fourth quarter were $0.74 per share.

For the full year, net income was $21.9 million or $0.86 per share versus net income of $15.4 million or $0.62 per share in the prior year. The full year includes a $2.6 million net after tax gain or $0.10 per share related to the repurchase of a portion of our senior subordinated notes. Excluding this gain earnings for the full year were $0.76 per share.

Net sales for the fourth quarter were $571.9 million compared to $585.9 million in the prior year. Same store sales decreased 2.9% versus an increase of 3.3% for the same period last year. Same store sales were down due to a combination of both lower average ticket and a reduction in traffic.

Large format stores accounted for 51.8% of total fourth quarter sales and small format stores accounted for 46.1%. Internet sales through JoAnn.com accounted for the remaining 2.1% of sales. Same store sales for large format stores decreased 4.1% for the fourth quarter versus an increase of 2.4% for the same period last year. Large format stores have a greater mix of seasonal product and higher ticket items compared to our small format stores which contributed to the weaker performance during the quarter.

Same store sales in small format stores decreased 1.4% for the fourth quarter versus an increase of 4.2% for the same period last year as sales in our basic sewing and craft categories continued to perform relatively well. Our sewing business represented 49% of our fourth quarter sales volume and increased 2.5% on a same store sales basis. We continued to experience positive same store sales in the majority of our fabric and sewing notions merchandise categories, especially in quilting and fleece.

Our non-sewing business represented 51% of our fourth quarter sales volume and was down 7.6% on a same stores sales basis due to declines in seasonal categories. Excluding seasonal categories, craft same store sales were slightly positive for the quarter and particularly strong in the yarn and basis craft shops.

For the full fiscal year net sales increased 1.2% to $1.9 billion. For the full fiscal year same store sales increased 0.5% versus a same store sales increase of 3.5% last year. Full year same store sales for large format stores decreased 1% while small format stores increased by 2.1%. Fourth quarter gross margin rate decreased 150 basis points to 43.5%. The decrease in gross margin rate was primarily due to markdowns taken to sell through seasonal merchandise. The gross margin rate for the full fiscal year remained consistent year-over-year at 46.4%.

Fourth quarter SG&A dollars were down $2.4 million compared to last year as we continued to manage our operating cost. However, as a percentage of net sales SG&A expense of 34.9% was up compared to 34.5% last year due to deleveraging of sales. Full year SG&A expense leverage improved by approximately 40 basis points to 40.8%.

For the full year store pre-opening and closing costs increased by $3.9 million to $12.3 million. During the year we opened 21 stores and closed 31 stores compared to last year when we opened six stores and closed 33 stores. During the fourth quarter we repurchased $13.6 million of our senior subordinated notes at a discount of approximately 16% to Par value and recorded a $2.1 million net pre-tax gain. For the full year we repurchased $34 million of our notes at a discount of approximately 13% to Par value and recorded a $4.2 million pre-tax gain.

Interest expense in the fourth quarter decreased by $1 million due to lower average debt levels. Our fourth quarter debt levels improved to an average of $86 million in fiscal 2009 compared to an average of $142 million outstanding for the same period last year. We ended the year with $429.4 million in inventory, a $42.8 million or 9% decrease from last year. Average store level inventory was down 5% with the balance of the inventory reduction coming out of our distribution centers.

As Darrell mentioned, the overall quality of our inventory is very good. We have maintained consistent store in stocks throughout the year and had no holiday merchandise carry over at year end. Year end debt of $66 million represents the remaining balance of our senior subordinated notes. We had no borrowings under our revolving credit facility. We currently have approximately $237 million of availability under this facility.

Subsequent to year-end we have purchased an additional $13.9 million of our notes at a discount of approximately 9% to Par value for a net pre-tax gain of $1.1 million which will be recorded in the first quarter of 2010. We currently have $52.1 million of senior subordinated notes outstanding.