JOANN Inc. (NASDAQ: JOAN) reported results for its fourth quarter and full year ended January 28, 2023.
The company reported Q4 EPS results of $0.07, which was $0.55 lower than a consensus of $0.62. And the revenue for the quarter was $692.8 million compared to a consensus estimate of $670.32 million.
Q4 Highlights:
— Net sales declined by 5.8% compared to the same period last year to $692.8 million with total comparable sales decreasing 5.9%. E-Commerce sales declined at a more moderate rate of 4.6% compared to last year and accounted for 14% of revenue in the fourth quarter, a 20 basis point increase in the penetration rate over last year.
— Gross profit of $303.7 million on a GAAP basis decreased by 6.4% compared to the fourth quarter of last year. After adjusting for $16.7 million of excess import freight costs, the adjusted gross profit of $320.4 million declined 10.9% compared to the same quarter last year.
— The gross margin was 43.8% on a GAAP basis, a decrease of 30 basis points compared to the fourth quarter last year. After adjusting for excess import freight costs, the gross margin of 46.2% declined by 270 basis points compared to the fourth quarter of last year.
— Selling, general and administrative expenses increased by 3.1% from the same period last year.
— Net loss of $91.1 million, which includes $95.0 million of non-cash, pre-tax impairment, compared to net income of $13.6 million in the same quarter last year.
— Adjusted EBITDA of $48.6 million compared to $88.9 million the same quarter last year.
Fiscal 2023 Full Year Financial and Business Highlights:
— Net sales declined by 8.3% to $2.2 billion and total comparable sales declined by 8.1% compared to last year.
— Gross profit of $1,040.3 million on a GAAP basis declined by 14.2% compared to last year. After adjusting for $91.2 million of excess import freight costs, the adjusted gross profit of $1,131.5 million declined 10.1% compared to last year.
— The gross margin was 46.9% on a GAAP basis, a decrease of 330 basis points compared to last year. After adjusting for excess import freight costs, the gross margin of 51.0% declined by 110 basis points compared to last year.
— Selling, general and administrative expenses increased by 3.9% from last year.
— Net loss of $200.6 million, which includes $95.0 million of non-cash, pre-tax impairment, compared to net income of $56.7 million last year.
— Adjusted EBITDA of $98.5 million compared to $242.5 million last year.
— Added 3 million new customers to our database of which approximately 75% were acquired through digital channels. Our customer database has grown by 15 million over the past three years.
JOAN’s stock price is down over 15% at last check
KEY QUOTES:
“In fiscal year 2023, we navigated a challenging environment spanning macroeconomic uncertainty, unprecedented inflation, continued supply chain disruption, as well as lapping pandemic fueled growth that positively impacted fiscal year 2022. We gained topline sales momentum at the end of the fourth quarter, delivering positive monthly comparable sales in January 2023. We also ended the year in an extremely clean inventory position with total inventory down 11% to last year and a clearance position of less than 5%.”
“As we look to fiscal year 2024, our focus is on cash generation while continuing to deliver a great customer experience. We have already initiated multiple actions to support the enhancement of our free cash flow and liquidity position including our Focus, Simplify and Grow cost reduction initiative which we expect will reduce annual costs by approximately $200 million. Based on these efforts, combined with the positive momentum we saw in the fourth quarter, strong engagement with our core enthusiasts in the early Spring selling season, and our continued investments in strategic initiatives, we believe that JOANN is well-positioned for fiscal year 2024.”
— JOANN’s President and Chief Executive Officer Wade Miquelon
“While many of the cost headwinds we faced in fiscal year 2023 are becoming tailwinds, we believe it is prudent to continue to take proactive steps to strengthen our balance sheet. With this in mind, our new credit facility is another tool to improve our balance sheet as we focus on cash generation throughout fiscal year 2024.”
— Scott Sekella, JOANN’s Chief Financial Officer
