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Joann loss widens; ups full-year top-line outlook

Joann storefront
Joann operates 829 stores across 49 states.

Joann reported a wider fiscal third-quarter loss and declining net sales even as e-commerce sales surged.

The arts-and-crafts and fabrics retailer reported a loss of $21.6 million, or $0.51 a share, in the quarter ended Oct. 28, compared with a loss of $17.5 million, or $0.43 a share, in the year-ago quarter. The adjusted loss came to  $0.21 per share, in line with analysts’ estimates.

Sales fell 4.1% to $539.8 million, missing estimates $547 million. Total comparable sales  dropped 4.1%. E-Commerce sales rose 11.5% compared to last year and accounted for 13.1% of total company net sales in the third quarter.

“With continued progress and strong execution against our strategic priorities, we were pleased with our third quarter results in what remains a dynamic consumer environment,” stated Chris DiTullio, chief customer officer and co-lead of the interim office of the CEO. “Loyal customers are engaging with us at a greater rate. We are winning in our core categories, and we entered the fourth quarter with very clean inventory quality.”

DiTullio, who was named co-lead in May following the departure of CEO Wade Miquelon, added that the chain’s e-commerce performance was particularly strong “as we delivered a better and faster consumer experience, and benefitted from site enhancements driving increased conversion.”

Joann said it has increased the target for its cost reduction initiative from $200 million in annual savings across savings across supply chain, product, and SG&A expenses to $225 million, with the majority of the over-delivery in SG&A and Supply Chain expenses.”

“As we implement these cost savings initiatives, we are driving meaningful cash flow improvements that we expect will continue for the remainder of this fiscal year and beyond,” stated Scott Sekella, CFO and co-lead of the interim office of the CEO. “With the strategic shifts we have implemented this year, combined with our ongoing cost reduction strategies, we are pleased to increase the top-line and reaffirm the bottom line full-year outlook.”

For the full year, Joann now expects sales to be down 1% to 2% (including the benefit of an extra week). In August, the company called for a drop between 1% and 3%.

Joann operates 829 stores across 49 states.

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