Understated Retailer
February 12, 2008
By Greg Sushinsky
Tucked into the folds of the retail crack-up this year are all types
of diverse companies. Their stories and prospects are sometimes
as diverse as their businesses. Jo-Ann Stores (NYSE: JAS) is a
small specialty retailer based in Ohio which features crafts,
decorating, fabrics and sewing. They have over 800 stores spread
across the country, including nearly 50 crafts superstores which
feature 45,000 square feet of retail space as opposed to their
normal 14,500 square foot stores.
These stores feature a strongly traditional approach and cater to
a relatively loyal customer base which sees a more stable
demographic than some other types of retail. This approach
involves education—classes for consumers—in addition to selling.
Furthermore, despite the general downturn in consumer spending,
ultimately such activities as crafting and sewing, which are more
home oriented, may prove more recession resistant than traditional
consumption spending. Crafting, for example, appeals to a repeat
customer more than many other consumer spending models. Also,
competition is usually among local or regional chains even though
some of the goods are available at national discount retailers.
The market cap for Jo-Ann Stores is just under $400M. They
recently announced an increase of 3.3% for same store sales,
though the figure was blurred by a net –2.5% figure due to the fiscal
year 2007 having a 53rd week. Net sales for the fiscal year 2008
rose 1.5% from $1.851B to $1.879B. The company will report
earnings for the full year on March 12, 2008. Earnings are expected
to be 61 cents a share, with prospects for 93 cents per share in
2009, but with its recent quarter results expected to be $1.12 a
share. (The year’s earnings will be lower due to earlier quarters’
substantial losses.) Its trailing twelve months EPS has been 59
cents. The company took a $1.9M loss on 1.9B revenues in 2007,
which involved the company re-positioning itself for its current and
future competitive strategies.
What is striking about the numbers is the recent same-store
sales increases in the face of the recessionary headwinds blowing
strongly into the economy. One only has to look at big box and most
of the other retailers. Also, Jo-Ann Stores’ business is not tied to
fashion trends but has a relatively stable core of customers. These
things bode well for any retailer now with such a solid customer
base, specialty or otherwise, and with its leaner, focused approach,
the company looks to be on solid footing for the future.
The stock has traded from 9.03-34.75 in the last year, with a
recent price of nearly $16 a share. Its stock price fell off the table in
the take-no-prisoners sell off of retailers, which dropped it sharply
from its highs straight down to its lows. Given the way the markets
are behaving, its likely the business has recovered far sooner than
its share price will.
February 12, 2008
By Greg Sushinsky
Tucked into the folds of the retail crack-up this year are all types
of diverse companies. Their stories and prospects are sometimes
as diverse as their businesses. Jo-Ann Stores (NYSE: JAS) is a
small specialty retailer based in Ohio which features crafts,
decorating, fabrics and sewing. They have over 800 stores spread
across the country, including nearly 50 crafts superstores which
feature 45,000 square feet of retail space as opposed to their
normal 14,500 square foot stores.
These stores feature a strongly traditional approach and cater to
a relatively loyal customer base which sees a more stable
demographic than some other types of retail. This approach
involves education—classes for consumers—in addition to selling.
Furthermore, despite the general downturn in consumer spending,
ultimately such activities as crafting and sewing, which are more
home oriented, may prove more recession resistant than traditional
consumption spending. Crafting, for example, appeals to a repeat
customer more than many other consumer spending models. Also,
competition is usually among local or regional chains even though
some of the goods are available at national discount retailers.
The market cap for Jo-Ann Stores is just under $400M. They
recently announced an increase of 3.3% for same store sales,
though the figure was blurred by a net –2.5% figure due to the fiscal
year 2007 having a 53rd week. Net sales for the fiscal year 2008
rose 1.5% from $1.851B to $1.879B. The company will report
earnings for the full year on March 12, 2008. Earnings are expected
to be 61 cents a share, with prospects for 93 cents per share in
2009, but with its recent quarter results expected to be $1.12 a
share. (The year’s earnings will be lower due to earlier quarters’
substantial losses.) Its trailing twelve months EPS has been 59
cents. The company took a $1.9M loss on 1.9B revenues in 2007,
which involved the company re-positioning itself for its current and
future competitive strategies.
What is striking about the numbers is the recent same-store
sales increases in the face of the recessionary headwinds blowing
strongly into the economy. One only has to look at big box and most
of the other retailers. Also, Jo-Ann Stores’ business is not tied to
fashion trends but has a relatively stable core of customers. These
things bode well for any retailer now with such a solid customer
base, specialty or otherwise, and with its leaner, focused approach,
the company looks to be on solid footing for the future.
The stock has traded from 9.03-34.75 in the last year, with a
recent price of nearly $16 a share. Its stock price fell off the table in
the take-no-prisoners sell off of retailers, which dropped it sharply
from its highs straight down to its lows. Given the way the markets
are behaving, its likely the business has recovered far sooner than
its share price will.
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