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Running head: JO-ANN FABRIC STORE, INC 1
Jo-Ann Fabric Store, Inc.
Team B: Neil Bernardo, Stephanie Gelman, Will Hazlett, Aimalee Faasavalu
ACC/280 PRINCIPLES OF ACCOUNTING
January 4, 2011
Stanley Tanka
JO-ANN FABRIC STORE, INC. 2
Company History
Formerly known as Fabri-Centers of America, Jo-Ann Stores, Inc., is the country's largest
fabric retailer with sales of nearly $2 billion, 851 fabric stores in 48 states, and an estimated six
percent of the $29 billion retail fabric and craft-supplies market. The company's smaller
"traditional" stores and 35,000 square foot superstores carry wide selections of fabric, notions,
and craft goods. The chain boasts nearly double the sales and locations of its nearest competitor,
Hancock Fabrics. Surviving a dramatic shakeout in the retail fabric industry in the 1990s and
growth pains between 1998 and 2002, Jo-Ann made a strong recovery from its unprofitable years
and looked to expand to 600 or 700 superstores in the early decades of the 21st century.
Founding and Early Development
The chain was founded in 1943 by two German immigrant families, the Rohrbachs and
the Reichs. The Reichs had an importing business dealing in Swiss cheese, anchovy paste, and
pickles, and they invited their friends to start selling fabric in their suburban Cleveland
storefront. When Berthold Rohrbach died that same year, his 30-year-old daughter, Alma
Zimmerman, went to work full-time at the store with Hilda Reich. Hilda's daughter, Betty, joined
the family business in 1947, and she and Alma opened the chain's second store in Cleveland soon
thereafter. Betty married Martin Rosskamm in 1948, and he quit his upper-level management
position at a knitting mill to join the fabric company. Cofounder Hilda Reich continued to
supervise a Fabri-Center store until her death at the age of 87 in 1986. Alma, her husband,
JO-ANN FABRIC STORE, INC. 3
Freddy, and Betty continued to serve on the board of directors into the mid-1990s, but it was
Martin Rosskamm who became a driving force behind the chain's continual expansion
throughout the Midwest. Seeking a less geographically exclusive name to take the chain into the
Pittsburgh area, the families created Jo-Ann by merging two of their children's names: Jo from
Joan Zimmerman and Ann from Jackie Ann Rosskamm. Fabri-Centers' small specialty stores,
which were often located in the regional shopping malls that sprung up in the postwar era,
competed well with the fabric departments of larger general merchandise stores. The chain
incorporated as Cleveland Fabric Shops, Inc. in February 1951, changing its name to Fabri-
Centers of America, Inc. in 1968 and going public the following year. In 1998, the company
changed its name to Jo-Ann Stores, Inc.
Stock Exchange Listing
Jo-Ann Fabric Stores, Inc. is listed on the NYEX Euronext and uses the symbol JAS
Key Dates
1943: The business is founded when the Reich family invites the Rohrbach family to sell fabric
at their suburban Cleveland import store.
1947: The Company opens its second store, in Cleveland.
1951: The Company incorporates as Cleveland Fabric Shops, Inc.
1960s: The shops are renamed Jo-Ann Fabrics as the company expands outside of Cleveland.
1968: The Company changes its name to Fabri-Centers of America, Inc.
JO-ANN FABRIC STORE, INC. 4
1969: Fabri-Centers goes public.
1984: Jo-Ann launches Cargo Express, a discount housewares chain, in an attempt to diversify.
1988: The chain posts its first loss as the economy and the fabric market stagnate. Jo-Ann's
recovery strategy focuses on developing "superstores."
1992: The Company’s stock is reduced to junk-bond status, and it quickly institutes changes in
operations to counter the problem.
1990s: Craft supplies are introduced to the company's merchandise mix.
1993: Cargo Express is put up for sale.
1994: Unable to find a buyer, Jo-Ann liquidates Cargo Express at a loss of $5.2 million.
1998: The Company changes its name to Jo-Ann Stores, Inc.
2000: Jo-Ann struggles with heavy debt and inventory system problems, posting the second loss
in its history.
2003: The Company returns to profitability.
Independent Audit Committee for Jo-Ann Fabric Store, Inc.
Chairperson: Tracey T. Travis Senior Vice President and Chief Financial Officer Polo Ralph Lauren
Scott CowenPresidentTulane University
Frank NewmanChairperson and Chief Executive Officer Medical Nutrition, Inc.
JO-ANN FABRIC STORE, INC. 5
David A. Perdue, Jr.Retired Chairperson and Chief Executive OfficerDollar General Corporation
JO-ANN FABRIC STORE, INC. 6
Cash equivalents at the end of last two
reporting years
January 31
2009
January 31
2008
$80.6 $25.4
Total assets at the end of last two
reporting periods (reported in most
current assets first)
January 31
2009
January 31
2008
$565.2 $547.8
2009 2008
Property, equipment and leasehold
improvements, net$314.8 297.5
Inventories $416.80 $429.4
Companies total assets at end of last
two annual reporting periods
January 31
2009
January 31
2008
JO-ANN FABRIC STORE, INC. 7
$901.1 $869.4
Accounts Payable totals at the end of
the last two annual reporting periods
January 31
2009
January 31
2008
$145.1 $129.4
Total current liabilities at the end of the
two most recent annual reporting
periods
January 31
2009
January 31
2008
$257.6 $239.4
JO-ANN FABRIC STORE, INC. 8
Companies total liabilities at the end of
two most recent annual reporting
periods
January 31
2009
January 31
2008
. $256.6 $239.4
Companies net revenues for last three
annual reporting periods
January 31
2009
January 31
2008
January 31
2007
$1,901.1 - $1,878.8 $1,850.6
Companies net revenues for last three
annual reporting periods
January 31
2009
January 31
2008
January 31
2007
$0.86 $.062 $0.08
Annual net income difference between 2010 and 2009
Period End
2009 Net Income $66.5
2008 Net Income 21.9
$45.4
JO-ANN FABRIC STORE, INC. 9
Annual net income difference between 2009 and 2008
Period End
2009 Net Income $21.9
2008 Net Income 15.4
$6.5
JO-ANN FABRIC STORE, INC. 10
Joan Stores, Inc. is considered a forward thinking company. They seem to be able to spot
and react quickly to changing trends. The corporation’s willingness to diversify in order to keep
their share of the market is one of their strongest characteristics, though not always successful as
with their Cargo Express Company, a discount housewares chain. The highs and lows of Joann
Stores, Inc. follow key economic indicators. From about 1988 to 2002 the high tech industry
was creating minor and major windfalls all over the country. This was a hard time for Joann
Stores and their competition. Sales plummeted and the company took strategic measures to
recover their market share. Though larger than their nearest competitor Hancock Fabrics they
were worth much less due to higher debt load, lower market value and lower profitability. To
rectify this they closed many of their smaller stores and decided to focus on a “Superstore” plan.
They were also forced to liquidate Cargo Express because of its very low profitability and their
inability to sell its assets.. Along with the new store format they also expanded their line to
include arts and craft supplies. Other measures included freezing salaries and reducing
inventory. After these improvements were implemented sales and stocks finally started to rise in
2004. They made a strong recovery by expanding 600 to 700 stores.
In the current market Jo-Ann Stores growth is smaller than in the last five years, though
they are still making a profit. Their stock, JAS just recently took a 36% surge because of the
news that Leonard Green & Partners, a private equity firm, plans to acquire Jo-Ann Stores Inc.
for $1.6 billion in early 2011. Though not looking for a buyer, the Board of Directors decided
that this would be in the best interest of the investors and stockholders.
JO-ANN FABRIC STORE, INC. 11
Jo-Ann Stores, Inc. Income Statement
All amounts in millions of US Dollars except per share amounts.Jan 10 Jan 09 Jan 08
Revenue 1,990.7 1,901.1 1,878.8Cost of Goods Sold 1,015.0 1,018.6 1,006.4Gross Profit 975.7 882.5 872.4Gross Profit Margin 49% 46.4% 46.4%SG&A Expense 805.3 787.6 783.2Depreciation & Amortization 56.3 54.2 51.8Operating Income 114.1 40.7 37.4Operating Margin 5.7% 2.1% 2%Nonoperating Income 1.3 4.2 (12.5)Nonoperating Expenses (6.3) -- --Income Before Taxes 109.1 35.5 24.9Income Taxes 42.5 13.6 9.5Net Income After Taxes 66.6 21.9 15.4Continuing Operations 66.6 21.9 15.4Discontinued Operations -- -- --Total Operations 66.6 21.9 15.4Total Net Income 66.6 21.9 15.4Net Profit Margin 3.3% 1.2% 0.8%Diluted EPS from Total Net Income 2.51 0.86 0.62Dividends per Share -- -- --
JO-ANN FABRIC STORE, INC. 12
Jo-Ann Stores, Inc. Balance Sheet
All amounts in millions of US Dollars except per share amounts.Assets Jan 10 Jan 09 Jan 08Current AssetsCash 217.1 80.6 25.4Net Receivables -- -- --Inventories 416.8 429.4 472.2Other Current Assets 52.2 55.2 50.2Total Current Assets 686.1 565.2 547.8Net Fixed Assets 293.7 314.8 297.5Other Noncurrent Assets 20.6 21.1 24.1Total Assets 1,000.4 901.1 869.4Liabilities and Shareholder's Equity Jan 10 Jan 09 Jan 08Current LiabilitiesAccounts Payable 151.1 145.1 145.3Short-Term Debt 47.5 -- --Other Current Liabilities 128.6 112.5 97.1Total Current Liabilities 327.2 257.6 242.4Long-Term Debt 105.4 162.6 187.0Other Noncurrent Liabilities 2.2 3.2 0.0Total Liabilities 434.8 423.4 429.4Shareholder's EquityPreferred Stock Equity 0.0 -- --Common Stock Equity 565.6 477.7 440.0Total Equity 565.6 477.7 440.0Shares Outstanding (thou.) 26,332.2 26,332.2 26,332.2
JO-ANN FABRIC STORE, INC. 13
Jo-Ann Stores, Inc. Cash Flow Statement
All amounts in millions of US Dollars except per share amounts.Jan 10 Jan 09 Jan 08
Net Operating Cash Flow 184 158 74Net Investing Cash Flow (42.8) (77.8) (49.4)Net Financing Cash Flow (4.7) (24.9) (17.2)Net Change in Cash 136.5 55.2 7.0Depreciation & Amortization 56.3 54.2 51.8Capital Expenditures (39.7) (74.7) (37.7)Cash Dividends Paid
JO-ANN FABRIC STORE, INC. 14
References
Daily Finance. (January 4,2011). Jo-Ann Store, Inc. Retrieved from
http://www.dailyfinance.com/company/jo-ann-stores-inc/jas/nys
Hoovers.com. (2010). Jo-ann Stores, Inc.. Retrieved from http://www.hoovers.com/company/Jo-
Ann_Stores_inc/rfhcyi-1-1njea5
Jo-Ann Fabric Store, Inc.. (2010). Committee Compisition. Retrieved from
http://www.joann.com/joann/common/content_corporate.jsp?catName=irCorpGovCom
annualreports.com. (2010). Jo Ann Fabrics, Inc. Retrieved from
http://annualreports.com/HostData/AnnualReports/PDFArchive?jas.PDF.
www.annualreports.com. (2009). Jo-Ann Stores, Inc 2009 Annual Report. Retrieved from
http://www.annualreports.com/HostedData/AnnualReports/PDFArchive/jas2009.pdf
www.bizjournals.com. (January 23,2010). Washington Business Journal. Retrieved from
http://www.bizjournals.com/washington/news/2010/12/23/private-equity-firm-bids-16b-
for.html
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