JOANN(US:JOAN)2022-03-18 13:28Sales and Market Performance - Sewing category accounted for 43% of total net sales in fiscal 2022, indicating strong market leadership with approximately one-third market share in the Creative Products industry [24]. - E-commerce generated net sales of approximately $299 million, $511 million, and $126 million in fiscal years 2022, 2021, and 2020, respectively, showcasing significant growth in online sales channels [24]. - JOANN's net sales are stronger in the second half of the year, with net income peaking from September to December due to significant operating leverage [66]. Customer Engagement and Acquisition - The company has approximately 77 million addressable customers in its database, with 19 million in the email database and over 4 million in the SMS text database, reflecting a robust customer engagement strategy [24]. - The company has acquired over 10 million new customers since February 1, 2020, highlighting effective customer acquisition strategies [25]. - Over 70% of JOANN customers create items to give or donate, indicating a strong community-oriented customer base [25]. Store and Distribution Network - As of January 29, 2022, the company operated 848 store locations across 49 states, averaging about 22,000 square feet per location, providing a comprehensive selection of products [28]. - The company operates three distribution centers, with approximately 89% of products shipped through this network [40]. - The company has a total of 848 store locations across the United States as of January 29, 2022 [46]. Financial Position and Risks - The company had $794.3 million of outstanding debt as of January 29, 2022, which may impact its ability to raise additional capital [22]. - The company faces risks from increased freight costs, evolving U.S. trade regulations, and competition, which could adversely affect its financial condition and results of operations [22]. - The top supplier represented approximately 8.5% of total annual purchase volume, while the top 10 suppliers accounted for about 28% [39]. Digital and Marketing Strategies - The company has expanded its digital marketing capabilities, utilizing a centralized database to personalize customer interactions and improve engagement [26]. - The omni-channel platform offers various fulfillment options, including buy online pick-up in store (BOPIS) and curbside pick-up, enhancing customer convenience [24]. Employee and Workplace Initiatives - Approximately 22,000 full- and part-time team members were employed as of January 29, 2022, with 20,100 working in store locations [55]. - The company offers a 401(K) Savings Plan with an employer match and an Employee Stock Purchase Plan at a 15% discount for eligible team members [62]. - JOANN has established an internal Diversity & Inclusion Council to promote inclusivity and support underrepresented groups in the industry [58]. - The company actively invests in training and development for team members, focusing on career growth and leadership development [63]. Compliance and Ethical Standards - The company maintains a commitment to ethical conduct and compliance with its Code of Business Conduct and Ethics [57]. - JOANN's business is subject to various federal, state, and local regulations, which may impact growth and financial condition [65]. Supply Chain and Sourcing - The company sourced approximately 64% of its purchases from domestic suppliers and 36% from international sources, with over one-third of international products sourced from China [38]. - Approximately 36% of the company's purchases were sourced internationally in fiscal 2022, primarily from China and other Asian countries [270]. Currency and Financial Management - The company believes foreign currency exchange rate fluctuations do not pose significant market risk due to all merchandise contracts being denominated in U.S. dollars [270]. - A weakening of the U.S. dollar could lead to significantly higher product costs due to increased foreign sourcing [270]. - The company has hedging arrangements in place, including an interest rate swap agreement hedging $200.0 million of principal under its First Lien Facility [271]. - A hypothetical 1% change in interest rates would not have had a material impact on the company's consolidated financial statements [271]. Community Engagement - The company raised more than $3.5 million for various charitable partners, including the National 4-H Council and Susan G. Komen Foundation [35]. Strategic Partnerships and Acquisitions - The company has recently acquired WeaveUp to expand its digital textile solutions and formed a joint venture with SVP Worldwide for sewing and crafting projects [48]. - The company has a strategic partnership with JDM Growth Group to develop new business-to-business wholesale channels [48]. Health and Safety Measures - The company has implemented various health and safety measures during the COVID-19 pandemic, including providing personal protective equipment and expanding healthcare benefits [60]. - The company aims for zero serious injuries through investment in safety programs and specialized training for team members [59]. Leadership - JOANN's executive team includes experienced leaders, with Wade Miquelon serving as President and CEO since February 2019 [69].