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Jo-Ann Stores, Inc. (JASA) Message Board

  • mr_moribund mr_moribund Jan 4, 2001 6:07 PM Flag

    Decent December Numbers

    Same-store sales at flat year-over-year is
    certainly not bad given:

    1) the weak
    economy,

    2) the lousy weather in December,

    3) the
    tough comparison with the previous year (SSS up 6.6% in
    December 1999),

    4) the SAP-related inventory
    disruptions being perhaps not quite yet 100% sorted
    out.

    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
    2001.

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    • 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."

      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
      issues....

      • 1 Reply to ren_ass_ance
      • "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
        issues.... "

        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
        restock decisions.

        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
        place.

        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.

    • I am not suggesting you are incorrect, but what leads you to belive the on-line effort is enjoying either strong growth or reduced expenses? Thanks for the input.

      • 1 Reply to ssfriedman
      • 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
        2002.

        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
        well.

        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
        spot.

        Does that answer your question?

    • How do I get a Yahoo quote on the series B stock ?

      Thanks

 

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