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JOANN (JOAN) Q3 Loss Wider Than Expected, Sales Decline Y/Y
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JOANN Inc. reported third-quarter fiscal 2024 results, wherein the top line missed the Zacks Consensus Estimate and declined year over year. This specialty retailer of sewing and fabrics, and arts and crafts category products reported a wider-than-expected loss.
JOANN reported satisfying results in the fiscal third quarter amid a fluctuating consumer environment. Its loyal customer base has shown increased engagement and the company is excelling in its core categories. It entered the fiscal fourth quarter with high-quality inventory.
There was significant e-commerce growth, marked by double-digit increases, attributed to enhanced customer experience, site improvements and higher conversion rates. Customer engagement during Black Friday week was strong, aligning with JOANN's goal to provide value, inspiration and guidance for holiday season crafting.
The ongoing "Focus, Simplify and Grow" cost-reduction initiative bodes well. Originally targeting $200 million in annual savings across various areas, the target has now been increased to $225 million due to the successful implementation, especially in SG&A and supply-chain expenses. This initiative is contributing to significant cash flow improvements.
In response to the uncertain consumer environment, JOANN is managing its business prudently, leveraging advanced data analytics for better decision-making.
Image Source: Zacks Investment Research
Q3 in Details
JOANN posted an adjusted loss of 21 cents per share in the fiscal third quarter, wider than the Zacks Consensus Estimate of a loss of 19 cents. The company delivered adjusted earnings of 6 cents per share in the year-ago period.
Net sales were $539.8 million, down 4.1% year over year. Also, the top line missed the Zacks Consensus Estimate of $541 million.
Comparable sales decreased 4.1% year over year. However, e-commerce sales demonstrated growth of 11.5% from the year-ago quarter, contributing to 13.1% of revenues in the fiscal third quarter, which signifies an increase of 180 basis points (bps) in the penetration rate.
The adjusted gross profit amounted to $282.1 million, down from the $299.5 million reported in the year-ago quarter. The adjusted gross margin contracted 90 bps to 52.3% from the prior-year period.
Selling and administrative expenses rose 1.6% to $273.4 million. As a percentage of net revenues, selling and administrative expenses increased 280 bps to 50.6% in the third quarter of fiscal 2024.
The adjusted EBITDA amounted to $37.5 million, down from the $40.2 million reported in the year-ago quarter. The adjusted EBITDA margin contracted 20 bps to 6.9% from the prior-year period.
Other Financial Details
JOANN ended the quarter with cash and cash equivalents of $28.3 million, long-term debt of $1.15 billion, and shareholders’ deficit of $183 million.
FY24 Guidance
For fiscal 2024, JOANN anticipates a 1-2% decline in net revenues (inclusive of a nearly 2% impact from the 53rd week). The company earlier anticipated net sales to decline 1-3% year over year.
The company reaffirmed its adjusted EBITDA guidance between $85 million and $95 million.
Management anticipates a capital expenditure (net of Landlord Contributions) of $35-$40 million. Also, the company expects year-over-year free cash flow growth between $115 million and $135 million in fiscal 2024. Earlier, it expected a year-over-year free cash flow improvement between $150 million and $170 million.
Shares of this Zacks Rank #3 (Hold) company have lost 11% in the past three months against the industry's growth of 6.1%.
3 Red-Hot Stocks to Consider
Here we have highlighted three better-ranked stocks, namely Regis Corporation (RGS - Free Report) , Abercrombie & Fitch Co. (ANF - Free Report) and Deckers Outdoor Corporation (DECK - Free Report) .
Regis Corp owns, franchises and operates beauty salons. It currently flaunts a Zacks Rank #1 (Strong Buy) at present. The company reported an EPS surprise of 137.5% in the last reported quarter.
The Zacks Consensus Estimate for Regis Corp’s current fiscal-year earnings suggests growth of 43.5% from the year-ago period’s reported figure. RGS has a trailing four-quarter earnings surprise of 22%, on average.
Abercrombie & Fitch operates as a specialty retailer of premium, high-quality casual apparel. It currently sports a Zacks Rank #1. The company reported an EPS surprise of 60.5% in the last reported quarter.
The Zacks Consensus Estimate for Abercrombie & Fitch’s current fiscal-year sales suggests growth of 12.8% from the year-ago reported numbers. ANF has a trailing four-quarter earnings surprise of 713%, on average.
Deckers is a leading designer, producer and brand manager of innovative, niche footwear and accessories developed for outdoor sports and other lifestyle-related activities. It currently has a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for Deckers’s current fiscal-year sales and earnings suggests growth of 11.4% and 20.9%, respectively, from the year-ago reported number. DECK has a trailing four-quarter earnings surprise of 26.3%, on average.
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JOANN (JOAN) Q3 Loss Wider Than Expected, Sales Decline Y/Y
JOANN Inc. reported third-quarter fiscal 2024 results, wherein the top line missed the Zacks Consensus Estimate and declined year over year. This specialty retailer of sewing and fabrics, and arts and crafts category products reported a wider-than-expected loss.
JOANN Inc. Price, Consensus and EPS Surprise
JOANN Inc. price-consensus-eps-surprise-chart | JOANN Inc. Quote
Operational Information
JOANN reported satisfying results in the fiscal third quarter amid a fluctuating consumer environment. Its loyal customer base has shown increased engagement and the company is excelling in its core categories. It entered the fiscal fourth quarter with high-quality inventory.
There was significant e-commerce growth, marked by double-digit increases, attributed to enhanced customer experience, site improvements and higher conversion rates. Customer engagement during Black Friday week was strong, aligning with JOANN's goal to provide value, inspiration and guidance for holiday season crafting.
The ongoing "Focus, Simplify and Grow" cost-reduction initiative bodes well. Originally targeting $200 million in annual savings across various areas, the target has now been increased to $225 million due to the successful implementation, especially in SG&A and supply-chain expenses. This initiative is contributing to significant cash flow improvements.
In response to the uncertain consumer environment, JOANN is managing its business prudently, leveraging advanced data analytics for better decision-making.
Image Source: Zacks Investment Research
Q3 in Details
JOANN posted an adjusted loss of 21 cents per share in the fiscal third quarter, wider than the Zacks Consensus Estimate of a loss of 19 cents. The company delivered adjusted earnings of 6 cents per share in the year-ago period.
Net sales were $539.8 million, down 4.1% year over year. Also, the top line missed the Zacks Consensus Estimate of $541 million.
Comparable sales decreased 4.1% year over year. However, e-commerce sales demonstrated growth of 11.5% from the year-ago quarter, contributing to 13.1% of revenues in the fiscal third quarter, which signifies an increase of 180 basis points (bps) in the penetration rate.
The adjusted gross profit amounted to $282.1 million, down from the $299.5 million reported in the year-ago quarter. The adjusted gross margin contracted 90 bps to 52.3% from the prior-year period.
Selling and administrative expenses rose 1.6% to $273.4 million. As a percentage of net revenues, selling and administrative expenses increased 280 bps to 50.6% in the third quarter of fiscal 2024.
The adjusted EBITDA amounted to $37.5 million, down from the $40.2 million reported in the year-ago quarter. The adjusted EBITDA margin contracted 20 bps to 6.9% from the prior-year period.
Other Financial Details
JOANN ended the quarter with cash and cash equivalents of $28.3 million, long-term debt of $1.15 billion, and shareholders’ deficit of $183 million.
FY24 Guidance
For fiscal 2024, JOANN anticipates a 1-2% decline in net revenues (inclusive of a nearly 2% impact from the 53rd week). The company earlier anticipated net sales to decline 1-3% year over year.
The company reaffirmed its adjusted EBITDA guidance between $85 million and $95 million.
Management anticipates a capital expenditure (net of Landlord Contributions) of $35-$40 million. Also, the company expects year-over-year free cash flow growth between $115 million and $135 million in fiscal 2024. Earlier, it expected a year-over-year free cash flow improvement between $150 million and $170 million.
Shares of this Zacks Rank #3 (Hold) company have lost 11% in the past three months against the industry's growth of 6.1%.
3 Red-Hot Stocks to Consider
Here we have highlighted three better-ranked stocks, namely Regis Corporation (RGS - Free Report) , Abercrombie & Fitch Co. (ANF - Free Report) and Deckers Outdoor Corporation (DECK - Free Report) .
Regis Corp owns, franchises and operates beauty salons. It currently flaunts a Zacks Rank #1 (Strong Buy) at present. The company reported an EPS surprise of 137.5% in the last reported quarter.
You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Regis Corp’s current fiscal-year earnings suggests growth of 43.5% from the year-ago period’s reported figure. RGS has a trailing four-quarter earnings surprise of 22%, on average.
Abercrombie & Fitch operates as a specialty retailer of premium, high-quality casual apparel. It currently sports a Zacks Rank #1. The company reported an EPS surprise of 60.5% in the last reported quarter.
The Zacks Consensus Estimate for Abercrombie & Fitch’s current fiscal-year sales suggests growth of 12.8% from the year-ago reported numbers. ANF has a trailing four-quarter earnings surprise of 713%, on average.
Deckers is a leading designer, producer and brand manager of innovative, niche footwear and accessories developed for outdoor sports and other lifestyle-related activities. It currently has a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for Deckers’s current fiscal-year sales and earnings suggests growth of 11.4% and 20.9%, respectively, from the year-ago reported number. DECK has a trailing four-quarter earnings surprise of 26.3%, on average.