Same-store sales at flat year-over-year is
certainly not bad given:
1) the weak
2) the lousy weather in December,
tough comparison with the previous year (SSS up 6.6% in
4) the SAP-related inventory
disruptions being perhaps not quite yet 100% sorted
JAS's year-over-year SSS comparisons should continue to
be, shall we say, challenging for about one more
quarter. They had an excellent first quarter in 2000
(February through April). But after that they will have
wonderfully easy comparisons against the SAP-impaired results
from the balance of 2000.
Add in (1) the
completion of the new California distribution centre (still
on schedule and on budget), (2) high growth and
shrinking losses at joann.com, (3) more openings of ETC
stores, and (4) a recovering economy, and people will
really start to see this for the earnings growth story
that it inevitably will be.
In the mean time
you can buy those "B" shares for about 5% of revenues
per share, and less than 2 times 2000 cfps and 10
times 2000 eps (with cash flow and earnings heavily
depressed by the non-recurring startup costs of the SAP
system and joann.com).
To the extent that it's
reasonable to speak of normalized cash flow and earnings,
JAS.B is selling at less than 1.5 times cfps and in the
neighborhood of 3 times eps.
A few months ago I offered
a JAS prediction: at least $15 by Xmas 2001. I
still feel OK with that, though I must admit that at
the time I just assumed that JAS.A and JAS.B would
trade at roughly the same price and so there was no
need to specify which class of stock I was talking
about. So here is an update on my prediction: this
gigantic (and really crazy) discount on JAS.B will shrink
dramatically and both JAS.A and JAS.B will exceed $15 by Xmas
Because in your scenario, the clerk would have to scan all 60 spools of thread. What the clerk should do is scan the red, enter 20 for the count, scan the blue, enter 20, scan the white, enter 20.
As I said that was an "over-the-top" example. What usually happens in real life is that somebody buys a dozen spools in all different colors and the person at the register scans one (doesn't matter which) and enters 12. Multiply that happening once or twice a day by 30 days and you can see how inventory could get out of whack. Why does the clerk do it? In most cases they don't understand the ramifications of their actions.
"4) the SAP-related inventory disruptions being
perhaps not quite yet 100% sorted out."
seeing you post about these "SAP-related" problems.
Where are you getting your information? Because I don't
think SAP has that much to do with the inventory
"I keep seeing you post about these "SAP-related"
problems. Where are you getting your information? Because I
don't think SAP has that much to do with the inventory
Spoken like a true defender of the
ShitAsProduct system. ;-) No, you're right. There was no
obvious malfunction of SAP itself. But then how would we
know unless smoke started coming out of the registers.
Mostly, according to my wife, there were several "nut
behind the keyboard" issues and bad upper management
They tried to completely
automate the process and not even allow the department
managers to do any reordering at all, but let the
inventory counts trigger reorders. As a result, shelves and
racks normally full of really good selling items (like
buttons) sat vacant because, for whatever reason, the
reorder didn't trigger. When they (management or
whomever) finally realized they had empty shelves
throughout the land they did two things; 1) They overreacted
and shipped multiple full stock amounts of inventory
out to the stores and, 2) They FINALLY let the
department managers, who should know their own departments
or they don't deserve to be managing them, do their
own ordering again.
That's one for the good,
and one for the not-so-good, if you're scoring at
home. I also get the feeling there wasn't a whole bunch
of parallel testing done before they cut over to
SAP. That's usually where the "gotcha's" take
Oh, and this is a good one, they also had their
District Manager tell them that they can no longer store
stock in their stockroom. Who knows what plans they
have for the bathrooms.
In suggesting that the losses at joann.com will
shrink over time I am admittedly being guided in part by
JAS's projections from the time the initial deal with
IdeaForest was signed. They projected, if I recall
correctly, that they would lose 30-40 cents per share in
2000 and then somewhere around 20 cents per share in
2001, with things turning profitable in
Now, of course, projections can turn out to be way
off, but the evidence so far is that the venture is
actually doing better than was initially expected. I don't
recall where I saw it, but I believe the venture is only
costing JAS about 25 cents per share for 2000. So if the
projections were too conservative for 2000 it seems
reasonable to me to suppose that they will probably turn out
to have been too conservative for 2001 as
In the mean time the web traffic numbers look very
good. Someone here a few weeks ago drew my attention to
topnine.com. If you go there and click on "arts & literature"
and then on "crafts" you will see that they have had
strong growth in unique visitors to their site. The
December numbers are just out and joann.com was up by
pushing 100,000 to over 500,000 while Michael's Stores
was almost unchanged in the high 300,000 area.
joann.com remains in second place just behind craftopia.com
but craftopia was really first out of the gate, and
with them having no stores to back up their site I'm
sure it can only be a matter of time (and probably not
very much time) before joann.com takes over the top
Does that answer your question?
For JAS.A type in JASA; for JAS.B type in JASB.
No JAS.B traded today. When I checked at some point
yesterday there were either 3,000 or 4,000 shares offered
at $4.50. Nobody seems interested in them, in spite
of the fact that people continue to buy JAS.A at
around $6.50. It beats me. I certainly don't see why a
JAS vote should be seen as worth $2. In fact, I can't
even see why it should be worth 25 cents. I'd buy
those $4.50 JAS.B shares myself but, as with everyone
else, there are limits to how much money I can spend.