JOANN(JOAN) - 2024 Q3 - Quarterly Report

Financial Performance - Net sales decreased by 4.1% to $539.8 million compared to the third quarter of fiscal 2023, with total comparable sales also decreasing by 4.1%[74] - The net loss for the third quarter of fiscal 2024 was $21.6 million, compared to a net loss of $17.5 million in the same period last year[74] - Adjusted EBITDA for the thirteen weeks ended October 28, 2023, was $37.5 million, representing 6.9% of net sales[82] - Total comparable sales decreased by 4.1% compared to the prior year, while the prior year's comparable sales decrease was 8.0%[82] - The operating loss for the third quarter was $15.4 million, which is 2.9% of net sales[82] - The company experienced a decrease in net sales for the thirty-nine weeks ended October 28, 2023, totaling $1,471.7 million, down from $1,524.1 million in the prior year[82] - Net sales for the thirteen weeks ended October 28, 2023, were $539.8 million, a decrease of $23.0 million or 4.1% compared to the same period in fiscal 2023[84] - Net sales for the thirty-nine weeks ended October 28, 2023, were $1,471.7 million, a decline of $52.4 million or 3.4% compared to the same period in fiscal 2023[94] Profitability Metrics - Gross profit increased by 0.4% to $282.1 million, resulting in a gross margin of 52.3%, which is a 240 basis point increase from the prior year[74] - Gross profit was $282.1 million for the thirteen weeks ended October 28, 2023, an increase of $1.1 million or 0.4%, with a gross margin of 52.3%, up 240 basis points from the prior year[85] - The gross margin for the thirty-nine weeks ended October 28, 2023, was 51.9%, an increase from 48.3% in the previous year[82] - Gross profit for the thirty-nine weeks ended October 28, 2023, was $763.1 million, an increase of $26.5 million or 3.6%, with a gross margin of 51.9%, up 360 basis points[95] Expenses - SG&A expenses increased to $273.4 million, representing 50.6% of net sales for the quarter[82] - SG&A expenses were $273.4 million for the thirteen weeks ended October 28, 2023, an increase of $4.4 million or 1.6%, representing 50.6% of net sales, an increase of 280 basis points[88] - Interest expense for the thirteen weeks ended October 28, 2023, was $28.4 million, an increase of $10.3 million, with an average debt level of $1,144.6 million[89] Cash Flow and Liquidity - Net cash used for operating activities for the thirty-nine weeks ended October 28, 2023, was $(150.9) million, an improvement from $(173.6) million in the prior year[106] - Net cash used for operating activities decreased to $150.9 million for the thirty-nine weeks ended October 28, 2023, from $173.6 million in the same period of 2022, primarily due to declining carrier and fuel rates[107] - Net cash provided by financing activities was $163.5 million for the thirty-nine weeks ended October 28, 2023, compared to $263.4 million in the same period of fiscal 2023[110] - The company has the ability to borrow an additional $72.1 million under its ABL Facility as of October 28, 2023[111] - Liquidity is not currently dependent on off-balance sheet transactions, other than typical letters of credit[113] Capital Expenditures - Total capital expenditures for the thirty-nine weeks ended October 28, 2023, were $36.1 million, down from $80.4 million in the prior year, with significant reductions in spending on store locations and information technology[109] - The company incurred capital outlays for equipment and facility investments in distribution centers, store locations, and corporate offices[108] Market and Operational Insights - The total store location count at the end of the period was 829, down from 840 in the previous year[82] - The business exhibits seasonality, with net sales typically stronger in the second half of the year, particularly from September to December[114] - The fair value of the JOANN reporting unit exceeded its carrying value by approximately $103.0 million, or 10.1%, based on the last quantitative assessment[116] - No material changes in market risk exposure were reported during the thirty-nine weeks ended October 28, 2023[118]