jas jo-ann stores dec 2010 corporate presentation slides deck ppt

8/8/2019 JAS Jo-Ann Stores Dec 2010 Corporate Presentation Slides Deck PPT

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2010december

2010december

Investor Presentation


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22010december

This presentation contains forward-looking statements within themeaning of the safe harbor provisions of the Securities LitigationReform Act of 1995. Terms such as "expect," "believe," "continue,"and "grow," as well as similar comments, are forward-looking innature. Although the Company believes its plans are based uponreasonable assumptions, it can give no assurances that suchexpectations can be attained. Factors that could cause actualresults to differ materially from the Company's expectations include:general business and economic conditions, competitive factors, rawmaterials purchasing, and fluctuations in demand. Please refer tothe Company's Securities and Exchange Commission filings forfurther information.

Forward Looking Statement


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32010december

History1943 Founded as Cleveland Fabric Shop

1976 Listed on the NYSE

1994 Acquired 342 Clothworld stores

1995 First large-format store

1998 Acquired 261 House of Fabrics stores

2007 Acquired Joann.com

Today Leading specialty retailer of sewingand craft products in the U.S.


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2010december

4

National Presence756 stores48 states

234 large-format54 % of revenues35,900 sq. ft. avg.

522 small-format44 % of revenues14,900 sq. ft. avg.

Joann.com2% of revenues

Overview

*As of 10/30/10

Distribution Center

CT

10

MA24

NH

8

WY

MT

7

ND

4

WA

29

OR

24

CA

83

AZ

13

UT

11

NV

5CO

14

NM

6

TX

35

OK

4

KS

8

NE

4

SD

1

MN

19

IA

10

MO

11

AR

2

LA

4

MS

2

AL

4GA

13

FL

49

SC

2

NC

7TN 8

KY

4

OH

52IN

26IL

33

WI

19

PA

42

WV

5 VA

22

NY

36

ME

5

MD

16

DE

3

NJ

12

VT

4

ID8

MI

41

RI

1

>20 stores

10-20 stores

1-9 stores

AK

6

HI

AK

6

HI


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52010december

Industry Sewing and craft market is roughly

$27 billion with relatively flatvolume the past three years

Craft segment is approximately $20billion and has historically grown at

a faster rate than sewing

JAS share of the total industry lastyear was 7.4%; with a 16.6% shareamong specialty retailers

$27 Billion MarketCategory Mix

* Source: CHA Attitude and Usage Study December 2009

General Craft44%

Sewing &Needlecraft

26%

Painting &Finishing

20%

Floral10%

$2.7B

$11.9B

$7.0B

$5.4B


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62010december

Competition

*Source: CHA Attitude and Usage Study December 2009Parentheses represent change vs. last year

Other 37%

Specialty 43%

Discounters 20%

Fragmented market provides opportunity to capture share

Fabrics Crafts

Art StoresCraft Stores

Quilt ShopsFabric Stores

CatalogsInternet

(-2%)

(+5%)

(-3%)


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2010december

Customer 56% of U.S. households sew or craft

Favorable demographics: Women of baby boom generation College educated Higher than average income

Enjoys purchasing sewing and craftmerchandise at one store

Over 50% of purchases used to makehandicrafts for gift giving* Source: CHA Attitude and Usage Study December 2009, SIRS research and JAS data


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8

2010december

Customer Consumers have been changed by the economic crisis

Value systems shifting from conspicuous consumption

Consumers aspiring to a cost-effective life-better-lived

Emphasis on thoughtful purchases and products whichare customized, hand-crafted and eco-friendly

Recession has caused lasting behavioral change

JAS positioned to benefit from shift in consumer behavior

* Source: Wall Street Journal 12/17/2009


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2010december

Operating Priorities Accelerate new store growth

Accelerate remodel activity

Drive same-store sales

Expand gross margin

Invest in management training

Enhance technology


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2010december

Accelerate New Store Growth

30

55-60

2021

6

6070

80

0

20

40

60

80

100

FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15

Store closures of roughly 30 - 40 per year

Net store growth of over 100 units by FY15 Estimated 3% square footage CAGR FY11 FY15 Long term build-out opportunity for 1,000 stores

# NewStores

Smaller prototype stores+/- 22,000 square foot standard prototype+/- 15,000 square foot small market or urban prototype


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2010december

Accelerate Remodel Activity 114 small-format remodels complete thru FY11

Remodels averaging incremental 10% same-store saleslift and generating strong returns

Opportunity for over 250 remodels in next four years

Approximately 60 remodels planned for FY12 40 small-format remodels

10 large-format remodels

5 small-format store expansions 5 downsizing of oversized stores


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2010december

Drive Same-Store Sales Dynamic new craft product lines

Enhanced in-store presentations Update fabric quality to match

consumer demands

Regionalized fabric assortments

Strategic targeted marketing

Focus on education and productdemonstrations


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2010december

Expand Gross MarginDirect Sourcing Initiative

Moving beyond high volume basic fabrics to fashion Moving into basic craft categories Direct imports to exceed half of total imports in FY11

71%

26%

3%

Domestic

Import

Direct Import

Merchandising Technology Investments

JDA Demand & Fulfillment FY10 Promotional Planning FY12 Pricing Optimization FY13

FY08 Sales

72%

15%

13%

Domestic

Direct Import

Import

FY11 Sales


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2010december

Invest in Management Training Management training

Developed new training programs for

store managers and assistants Performance management

New system provides on-line access toperformance reviews, compensation

management and succession planning Mystery shoppers

New secret shopper program initiatedin FY11

Provides independent feedback on storeconditions and service


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2010december

Enhance TechnologyCurrent Status SAP core enterprise software updated in FY08

Point of sale hardware and software replaced in FY09 New HR systems and labor management systems in FY09

New replenishment system in FY10

E-commerce platform and site updated in FY10

Future Enhancements IT hardware rationalization

Merchandising systems upgrades

HR performance management systems

Ongoing e-commerce investment


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17

2010december

FY10 ResultsFY 10 FY 09

Sales (millions) $1,991 $1,901

Total sales growth % 4.7% 1.2%

Same-store sales % 3.1% 0.5%

Gross Margin % 49.0% 46.4%

SG&A % 39.9% 40.8%

Operating Profit 5.7% 2.1%EPS $2.51 $0.86


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2010december

FY11 Q3 YTD ResultsFY 11 FY 10Sales (millions) $1,455 $1,389

Total sales growth % 4.8% 4.5%

Same-store sales % 4.2% 2.5%

Gross Margin % 50.9% 49.6%

SG&A % 41.2% 42.2%

Operating Profit 6.1% 3.8%

EPS $1.95 $1.12


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2010december

Positive Sales Trends

-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

Q1 Q2 Q3 Q4 Q1 Q2 Q3

Same-store sales Transactions Ticket

FY11FY10


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2010december

Gross Margin and SG&A

37%

39%

41%

43%

45%

47%

49%

51%

2006 2007 2008 2009 2010 Q3 LTM

Fiscal Year

%

o f S a l e s

Gross Margin SG&A

45.6%46.4% 46.4%

49.0%49.9%

46.5%

41.1%

42.7%

41.2% 40.8%39.9%

39.2%


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2010december

Operating Profit

$1,851$1,879

$1,901

$1,991

$1,883

$2,057

7.3%

5.7%

2.1%2.0%

0.5%1.0%

$1,700

$1,750

$1,800

$1,850

$1,900

$1,950

$2,000

$2,050

$2,100

2006 * 2007 2008 2009 2010 Q3 LTM

Fisc al Year

N e

t S a

l e s

0%

1%

2%

3%

4%

5%

6%

7%

8%

O p

e r a

t i n g

P r o

f i t %

Net Sales %Op. Profit

* Excluding FY06 goodwill impairmentOperating Profit defined as profit before interest and taxes

($s in millions)


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2010december

$65 $65

$98 $104

$181

$220

3.5% 3.5%

5.2%5.5%

9.1%

10.7%

-$25

$25

$75

$125

$175

$225

2006 * 2007 2008 2009 2010 Q3 LTM

E B I T D A

2.5%

4.0%

5.5%

7.0%

8.5%

10.0%

11.5%

E B I T D A %

EBITDA %EBITDA

EBITDA

* Excludes FY06 goodwill impairmentEBITDA defined as earnings before interest, taxes, depreciation and stock based compensation

($s in millions)


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2010december

$0.18($0.08)

$0.62$0.86

-$0.30

$0.20

$0.70

$1.20

$1.70

$2.20

$2.70

$3.20

2006 * 2007 2008 2009 2010 2011

Fiscal Year

E P S

Earnings Per Share

* Excludes FY06 goodwill impairment

$2.51

$3.35 - $3.45

Guidance


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2010december

Balance Sheet

$204

$125

$100

$66

$0$18 $18 $25

$81

$217

$98$112

$48

$0

$50

$100

$150

$200

$250

2006 2007 2008 2009 2010 2010 Q3 2011 Q3

Fiscal Year

Debt Cash

($s in millions)

Quarter

$48


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2010december

Return on Invested Capital

-5.4%

-1.7%

7.0% 6.4%

15.3%

18.8%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

FY06 FY07 FY08 FY09 FY10 FY11 Q3 LTM

ROIC = (Operating Profit Cash Taxes) / (Avg. Total Assets Avg. Cash Avg. Current Liabilities)


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2010december

Compelling Store Economics

Large SmallFormat Format Yr 1 Yr 4 Yr 1 Yr 4

Size 36,509 14,708 22,000 15,000

Sales (thousands) 4,706$ 1,699$ 2,622$ 2,865$ 1,647$ 1,800$Sales / Sq Foot 129$ 115$ 119$ 130$ 110$ 120$

Cash Flow (a) 663$ 268$ 341$ 423$ 254$ 303$Cash Flow % 14.1% 15.8% 13.0% 14.8% 15.4% 16.8%

Store Investment, net new:Capital, net (b) 592$ 531$Inventory, net (c) 466$ 288$Pre-opening costs 160$ 130$Total 1,218$ 949$

(a) Excludes depreciation, corporate margin items, distribution center expenses and corporate administrative expenses(b) Net of landlord allowances(c) Net of Accounts Payable support

Existing Stores 22,000 Sf Pro Forma 15,000 Sf Pro Forma

Proforma sales represent minimum required to achieve 16% IRR

FY11 openings exceeding proforma targets by a double digit percentage


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2010december

Long-Term Outlook Same-store sales growth of 2% to 4% per year

Annual improvement in gross margin rate

Annual improvement in SG&A leverage

Open approximately 290 stores over next five years

Remodel approximately 300 stores over next five years


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2010december

Thank You

jas jo-ann stores dec 2010 corporate presentation slides deck ppt

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