Joann reported a first-quarter loss of $35.1 million.
Joann Inc. swung to a surprise first-quarter loss and reported lower sales, challenged by “unprecedented” supply chain disruptions and a “difficult” environment for discretionary categories.
The retailer cited the “significant” impact of excess ocean freight costs during the quarter, but said that costs have moderated on a sequential basis as compared to the previous quarter.
“While we know that supply chains will continue to be challenged, we have added carrier capacity and operating flexibility to better manage through those challenges and ensure we deliver exciting product assortments to our customers at the best possible cost,” said Joann president and CEO Wade Miquelon.
The sewing and arts-and-crafts retailer lost $35.1 million, or $0.86 cents a share, in the quarter ended April 30, compared to earnings of $15.1 million, or $0.38 a share, in the year-ago period. Analysts had expected earnings per share of $0.11.
Net sales fell 13.3% to $498 million, missing estimates of $525 million. Same-store sales fell 12.9% against a total comparable sales increase of 15.0% last year.
Selling and general and administrative expenses rose nearly 4% during the quarter, driven by expenses to support an increase in store refresh projects as well as higher labor and distribution costs, the company said.
“Against a difficult operating environment for the retail industry during the latest quarter, our merchandising and store level execution was extremely resilient,” stated Miquelon. “Despite unprecedented supply chain disruptions and high levels of inflation, our product assortments and service standards remain very strong as evidenced by our continuously improving Net Promoter Scores.”
The company acknowledged that it is in a “difficult environment” for consumer discretionary categories.”
“While we have seen strength in our event-based categories, that has not offset weakness in our higher-ticket technology assortments,” Miquelon said. “Joann has effectively navigated tough economic cycles over our over 75-year history, and we remain confident in our ability to similarly overcome the current set of macro challenges to emerge in a position of strength within the creative products industry.”
Joann was “resilient” against “a difficult operating environment for the retail industry,” Chief Executive Wade Miquelon said in a statement.
“Despite unprecedented supply-chain disruptions and high levels of inflation, our product assortments and service standards remain very strong,” Miquelon said.
The impact of “excess ocean freight costs was significant in the quarter,” but costs have moderated in the current quarter.
“While we know that supply chains will continue to be challenged, we have added carrier capacity and operating flexibility to better manage through those challenges and ensure we deliver exciting product assortments to our customers at the best possible cost,” Miquelon said.