Joann reported a tough first quarter as the chain as consumers cut back on discretionary purchases.
The sewing and arts-and-craft retailer posted a net loss of $54.2 million, or $1.31 a share, compared with a loss of $35.1 million, or $0.86 a share, in the year-ago period. The adjusted loss was $0.93 a share, Analysts had expected a loss of $0.69 a share.
Net sales declined by 4.0% to $478.1 million, missing estimates of $480.6 million. Total comparable sales also fell 4.0%. E-commerce sales were down 1.0% compared to last year and accounted for 11.8% of revenue in the first quarter, a 30-basis point increase in the penetration rate over last year.
Joann is on the hunt for a new CEO following the retirement of Wade Miquelo in May. While the board searches for a replacement, Chris DiTullio, executive VP and chief customer officer, and Scott Sekella, executive VP and CFO, are leading the “interim office of the chief executive officer.”
The company has been working to stabilize its business. In December, it launched an initiative, called “Focus, Simplify and Grow,” that is targeted to save $200 million in annual costs by early fiscal 2025, with about half of the reduction to come from supply chain savings.
More recently, in March, the retailer announced a new credit facility that adds a series of $100 million first-in last-out loans, adding to its existing $500 million asset-based revolving credit loan.
In the earnings statement, DiTullio said that Joann saw “healthy customer engagement” in its core sewing and craft businesses during the first quarter.
“While the discretionary portion of the economy remains under pressure, these category enthusiasts are returning to creative activities for themselves, their families, and to sell as part of their household income,” he said. “We believe our first quarter performance combined with the continuing progress of our Focus, Simplify and Grow cost reduction initiative leaves us well positioned to deliver strong results in fiscal year 2024.”
DiTullio said the company’s focus in its current fiscal year includes leaning in on “our strategic priorities of winning in our core sewing and craft categories, creating a high-quality in-store and online customer experience, and operating with high efficiency to help us reinvest to drive long-term growth.”