JOANN(US:JOAN)2023-06-06 20:17Financial Performance - Net sales for the thirteen weeks ended April 29, 2023, were $478.1 million, a decrease of 4.0% compared to the same period in fiscal 2023 [83]. - Total comparable sales decreased by 4.0%, compared to a 12.9% decrease in the same period of the prior fiscal year [83]. - Gross profit increased by 3.4% to $249.0 million, with a gross margin of 52.1%, reflecting a 380 basis point increase year-over-year [84]. - SG&A expenses rose by 1.5% to $262.9 million, representing 55.0% of net sales, an increase of 300 basis points compared to the prior year [85][86]. - Adjusted EBITDA was $3.5 million, down from $18.6 million in the same period last year, representing 0.7% of net sales [82][81]. - Net loss for the thirteen weeks ended April 29, 2023, was $54.2 million, compared to a net loss of $35.1 million in the same period of fiscal 2023 [90]. - Adjusted EBITDA for the same period was $3.5 million, a decrease from $18.6 million in fiscal 2023 [91]. Debt and Interest - Interest expense for the period was $25.3 million, an increase of $14.1 million due to higher interest rates and increased average debt levels [87]. - The average debt level was $1,058.6 million, compared to $892.9 million in the same period last year, with a weighted average interest rate of 8.74% [87][88]. - The ratio of consolidated net debt to Credit Facility Adjusted EBITDA was 4.8 to 1.0, indicating compliance with debt covenants [93]. Cash Flow and Capital Expenditures - Net cash used for operating activities was $33.8 million in Q1 fiscal 2024, significantly improved from $122.2 million in Q1 fiscal 2023 [96]. - Total capital expenditures for the thirteen weeks ended April 29, 2023, were $18.5 million, slightly down from $19.3 million in the same period of fiscal 2023 [98]. - Net cash provided by financing activities was $53.3 million in Q1 fiscal 2024, compared to $145.6 million in the same period of fiscal 2023 [99]. - The company anticipates capital requirements will peak during the second and third fiscal quarters due to inventory buildup for the peak selling season [94]. - The company has the ability to borrow an additional $61.3 million under the ABL Facility as of April 29, 2023 [100]. Operational Metrics - The total store location count at the end of the period was 831, down from 846 in the previous year [82]. - The decline in comparable sales was primarily driven by decreased transaction volume, particularly in craft technology and seasonal businesses [83]. - The company has started to see a decline in overall ocean freight rates, positively impacting cash payments [74]. Taxation - The effective income tax rate for Q1 fiscal 2024 was 13.1%, down from 30.8% in Q1 fiscal 2023, due to the need for a valuation allowance against deferred tax assets [89]. Impairment and Future Assessments - No impairment charges were recognized for goodwill or intangible assets during the quarter, but future assessments may be necessary due to macroeconomic uncertainties [105].