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Jo-Ann Q4 profit up 8.9%, will open 55 to 60 stores in 2011

NEW YORK -- The fabric and crafts business showed signs of growth, as Jo-Ann Stores reported fourth-quarter sales and income growth, and announced plans to open and remodel a number of stores this year.

Jo-Ann Stores reported Wednesday that net income for the quarter ended Jan. 29 rose 8.9% to $40.4 million, or $1.53 per diluted share, compared with $37.1 million, $1.36 per diluted share, in the year-ago period. Net income for the fourth quarter of fiscal 2011 includes expenses of $2 million after tax, or 7 cents per share, related to the pending acquisition by an affiliate of Leonard Green & Partners, L.P. announced on Dec. 23, 2010. Excluding these expenses, net income for the fourth quarter of fiscal 2011 was $1.60 per share.

Sales for the quarter increased 3.6% to $624.1 million, just missing Wall Street’s expected $625.1 million. Same-store sales rose 2%. 

By division, same-store sales were strongest at small-format stores with a 5.6% gain. Same-store sales at large-format stores were up 1.9%.  

Net income for the fiscal year ended Jan. 29, was $93.1 million, or $3.46 per diluted share, compared with net income of $66.6 million, or $2.51 per diluted share, in the prior year. Net income for fiscal year 2011 includes expenses of $2 million after tax, or 7 cents per share related to the pending merger. Excluding these expenses, net income for fiscal year 2011 was $3.53 per share.

Net sales for the fiscal year increased 4.4% to $2.079 billion versus $1.991 billion in the prior year. Same-store sales increased 3.5% for the fiscal year compared with a 3.1% increase in the prior year.

Chairman and CEO Darrell Webb said the fabric and crafts retailer plans to open 55 to 60 new stores and remodel 60 more this year.

Commenting on the results, Webb said, “Our record fourth quarter was driven by solid execution among our entire organization, which helped drive customers to our stores and delivered improved results despite the impact of unfavorable weather and raw material cost inflation. The new stores we opened in fiscal 2011 have been the strongest group of store openings relative to our sales projections since implementing our current store prototype. This performance continues to validate our long-term strategy for accelerating our store opening and remodeling activities for 2012 and beyond. We continue to believe that there are substantial opportunities to increase Jo-Ann Stores’ sales, market share, and profitability as we execute on our growth plans over the coming years."

Shareholders will vote on March 18 on a plan for Jo-Ann Stores to sell itself for $1.6 billion to Leonard Green & Partners.