JOANN Focuses on Controllable Factors to Connect With Customers

During this quarter, JOANN opted to refine its retail approach to align better with customer demand.

During the craft retailers’ latest earnings call on Monday (Dec. 4), Chris DiTullio, JOANN’s chief customer officer and co-lead of the interim office of the CEO said: “We remain focused on controlling what we can control while maximizing our opportunities in this market and delivering a great customer experience both in-store and digitally.”

What that meant was that JOANN has homed in on operational retail fundamentals, weaving an agile, data-driven approach to excel in core categories — a move the retailer has leaned into for quarters beyond the third quarter.

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The company has reportedly implemented the “Focus, Simplify, and Grow” cost savings initiative, stabilizing the overall business, streamlining expenses, and knitting together growth in trending areas.

Despite the intricate retail landscape, JOANN showcased progress in executing strategic priorities and maintaining a customer-centric approach.

To enhance shopper conversion and maximize gross profit dollars, JOANN is employing advanced data analytics for real-time, selective pulse promotions. The company anticipates optimizing average unit retails in the upcoming quarters, aligning with a shift to a tailwind in fiscal 2025.

What JOANN Is Seeing

The third quarter showcased notable performance in eCommerce, boasting double-digit growth year over year. This success, spun from a nimble business approach, was stitched together by JOANN’s swift response to customer experience and site performance issues, fostering increased shopper conversion and laying the groundwork for sustained online expansion.

Efforts to drive gross profit included optimizing operations and leveraging the West Jefferson, Ohio, omnichannel fulfillment center. These initiatives aim to lower order fulfillment costs and enhance the overall customer experience.

Despite feeling a bit of basket pressure from shifts in customer shopping behavior, JOANN observed a rise in engagement and transactions from loyal customers, showcasing the strength of their brand positioning and product assortments.

“With continued progress and strong execution against our strategic priorities, we were pleased with our third quarter results in what remains a dynamic consumer environment. Loyal customers are engaging with us at a greater rate,” DiTullio said in a company statement.

The company entered the fourth quarter with clean inventory quality and a focus on core categories, experiencing success in holiday floral and décor. Black Friday and Cyber Monday extended events proved successful, with customers increasingly embracing both physical and digital channels.

Looking ahead, JOANN is optimistic about the progress achieved through strategic actions, resulting in an increased full-year top-line outlook while maintaining bottom-line guidance. The company remains dedicated to winning in core categories, leveraging data-driven capabilities, and advancing cost reduction initiatives.

JOANN by the Numbers

In the third quarter, JOANN faced a 4.1% decline in net sales and comparable sales. Notably, eCommerce sales increased by 11.5%, constituting 13.1% of total net sales. Gross profit rose by 0.4%, and the gross margin increased to 52.3%.

Selling, general, and administrative expenses increased by 1.6%. JOANN reported a net loss of $21.6 million, compared to $17.5 million in the same quarter last year. Adjusted EBITDA decreased to $37.5 million from $40.2 million.

Cash used for operations increased by $61.1 million, and free cash flow decreased by $38.1 million. Diluted loss per share was $0.51, and adjusted diluted loss per share was $0.21, a shift from diluted earnings per share of $0.06 in the same quarter last year.