Joann Inc. on Monday halted its dividend and targeted millions of dollars in cost cuts in order to shore up its balance sheet and liquidity after swinging to a surprise quarterly loss the arts and crafts retailer blamed on inflation.
lost $17.5 million, or 43 cents a share, in the fiscal third quarter, vs. earnings of $22.8 million, or 53 cents a share, in the year-ago quarter. Adjusted for one-time items, Joann earned 6 cents a share.
Sales fell 7.9% to $562.8 million, the company said. Same-store sales fell 8%, while “omni-channel” sales, which usually include buy online and pick up at the store transactions as well as online sales, dropped 4.4%.
FactSet consensus called for earnings of 18 cents a share on sales of $569 million.
Halloween was a bright spot and the company also enjoyed “momentum” with Black Friday and Cyber Monday sales, Chief Executive Wade Miquelon said in a statement. Not so recently, the CEO said.
It’s “clear that consumers are increasingly pressured by inflation and are being more selective with their purchases in the current holiday season, prioritizing household essentials over many discretionary activities,” Miquelon said.
Joann targeted $200 million in annualized cost savings from lower supply-chain and product costs as well as other operating expenses to “maximize cash generation and liquidity in a challenging macro environment,” it said. It took the decision to pause the dividend “in order to strengthen our liquidity and balance sheet.”
Joann said it had $1.062 billion in long-term debt as of late October, with cash and equivalents of $27.5 million. Inventory was $747 million, roughly flat compared to last year, it said. Its inventory in-transit benefited from “improvement” in the supply chain, it said.
Shares of Joann have lost 58% this year, compared with losses of around 16% for the S&P 500 index.