Delaware

001-40204

46-1095540

(State or Other Jurisdiction

of Incorporation)

(Commission

File Number)

(IRS Employer

Identification No.)

☐

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Title of Each Class

Trading

Symbol

Name of Each Exchange

on which Registered

Common stock, par value $0.01 per share

JOAN

The Nasdaq Global Market

Exhibit
Number

Description

99.1

Press release issued by JOANN Inc., dated April 1, 2021.

JOANN INC.

Dated: April 1, 2021

By:

/s/ Matt Susz

Name:

Matt Susz

Title:

Senior Vice President, Chief Financial Officer

•

Fiscal year net income of $212.3 million, with Adjusted EBITDA increasing 110.8% to $323.3 million and a total comparable sales increase of 23.5%

•

Fourth quarter revenue and comparable sales increased 21% over the comparable period last year

•

Omni-channel net sales grew by 194% in the quarter over the comparable period last year

•

Files Annual Report on Form 10-K with the Securities and Exchange Commission for the fiscal year ended January 30, 2021

•

Net sales increased 20.9% compared to the same period in the prior fiscal year, to $840.8 million, with total comparable sales increasing 21.2%.

•

Omni-channel net sales grew by 194% in the fourth quarter as compared to the same period in the prior year and represented 16% of total sales.

•

Gross margin increased 20.2% compared to the same period in the prior fiscal year, to $394.5 million, at a rate to net sales of 46.9% compared to 47.2% for the same period in the prior fiscal year.

•

Net income was $38.3 million in the fourth quarter fiscal year 2021, compared to a $358.1 million loss in the same period in the prior fiscal year, which included a $356.4 million write-off of goodwill and other intangible assets.

•

Adjusted EBITDA increased 31.6% compared to same period in the prior fiscal year, to $106.1 million, or 12.6% as a percentage of net sales compared to 11.6% as a percentage of net sales for the same fiscal period last year.

•

Net sales increased 23.3% compared to the prior fiscal year, to $2,762.3 million, with total comparable sales increasing 23.5%.

•

Gross margin increased 23.6% compared to the prior fiscal year, to $1,366.2 million, at a rate to net sales of 49.5% compared to 49.3% for the prior fiscal year.

•

Net income was $212.3 million in fiscal year 2021, including $155.1 million of gain from early retirement of debt below par value, compared to a $546.6 million loss in the prior fiscal year, which included a $486.8 million write-off of goodwill and other intangible assets.

•

Adjusted EBITDA increased 110.8% in fiscal 2021 compared to fiscal 2020, to $323.3 million, or 11.7% as a percentage of net sales in fiscal 2021 compared to 6.8% as a percentage for fiscal 2020.

•

Long term debt, including current portion, was $786.3 million as of January 30, 2021, a decrease of $433.0 million from February 1, 2020.

•

Cash and cash equivalents were $27.4 million as of January 30, 2021, up $3.0 million from February 1, 2020.

•

Inventories were $555.9 million as of January 30, 2021, a decrease of $93.8 million or 14.4% from February 1, 2020.

Thirteen Weeks Ended

Fifty-Two Weeks Ended

January 30,

2021

February 1,

2020

January 30,

2021

February 1,

2020

(Dollars in millions except per share data)

Net sales

$

840.8

$

695.6

$

2,762.3

$

2,241.2

Cost of sales

446.3

367.3

1,396.1

1,135.9

Selling, general and administrative expenses

313.8

254.4

1,132.0

977.4

Depreciation and amortization

20.2

20.2

80.0

77.5

Goodwill and trade name impairment

—

356.4

—

486.8

Operating profit (loss)

60.5

(302.7

)

154.2

(436.4

)

Interest expense, net

14.0

24.3

69.0

101.9

Debt related gain

(2.2

)

(3.8

)

(155.1

)

(3.8

)

Income (loss) before income taxes

48.7

(323.2

)

240.3

(534.5

)

Income tax provision

10.4

34.9

28.0

12.1

Net income (loss)

$

38.3

$

(358.1

)

$

212.3

$

(546.6

)

Earnings (loss) per common share:

Basic

$

1.10

$

(10.26

)

$

6.08

$

(15.67

)

Diluted

$

1.05

$

(10.26

)

$

5.93

$

(15.67

)

Weighted-average common shares outstanding:

Basic

34,902,380

34,902,380

34,902,380

34,882,306

Diluted

36,288,050

34,902,380

35,798,491

34,882,306

January 30,

2021

February 1,

2020

(Dollars in millions)

Assets

Current assets:

Cash and cash equivalents

$

27.4

$

24.4

Inventories

555.9

649.7

Prepaid expenses and other current assets

71.5

45.7

Total current assets

654.8

719.8

Property, equipment and leasehold improvements, net

280.5

309.0

Operating lease assets

837.0

707.1

Goodwill

162.0

162.0

Intangible assets, net

377.2

384.2

Other assets

25.8

19.2

Total assets

$

2,337.3

$

2,301.3

Liabilities and Shareholders’ Equity (Deficit)

Current liabilities:

Accounts payable

$

250.1

$

227.1

Accrued expenses

171.3

105.0

Current portion of operating lease liabilities

187.2

157.0

Current portion of long-term debt

—

9.1

Total current liabilities

608.6

498.2

Long-term debt, net

786.3

1,210.2

Long-term operating lease liabilities

766.4

645.2

Long-term deferred income taxes

87.3

91.0

Other long-term liabilities

46.3

28.7

Shareholders’ equity (deficit):

Common stock, par value $0.01 per share; 200,000,000 authorized; issued 36,822,658 shares at January 30, 2021 and February 1, 2020

0.3

0.3

Additional paid-in capital

124.7

123.2

Retained deficit

(69.0

)

(281.3

)

Accumulated other comprehensive loss

(0.3

)

(0.9

)

Treasury stock at cost; 1,920,278 shares at January 30, 2021 and February 1, 2020

(13.3

)

(13.3

)

Total shareholders’ equity (deficit)

42.4

(172.0

)

Total liabilities and shareholders’ equity (deficit)

$

2,337.3

$

2,301.3

Thirteen Weeks Ended

Fifty-Two Weeks Ended

(In millions)

January 30,

2021

February 1,

2020

January 30,

2021

February 1,

2020

Net income (loss)

$

38.3

$

(358.1

)

$

212.3

$

(546.6

)

Income tax provision

10.4

34.9

28.0

12.1

Interest expense, net

14.0

24.3

69.0

101.9

Debt related gain (1)

(2.2

)

(3.8

)

(155.1

)

(3.8

)

Depreciation and amortization (2)

20.4

20.3

80.6

78.0

Strategic initiatives (3)

2.1

1.2

6.2

9.0

COVID-19 costs (4)

16.6

—

65.0

—

Technology development expense (5)

2.2

2.7

5.8

6.4

Stock-based compensation expense

0.4

0.3

1.5

1.2

Loss on disposal and impairment of fixed and operating lease assets

2.0

0.6

5.6

1.0

Goodwill and trade name impairment (6)

—

356.4

—

486.8

Sponsor management fee (7)

0.5

1.2

1.3

5.0

Other (8)

1.4

0.6

3.1

2.4

Adjusted EBITDA

$

106.1

$

80.6

$

323.3

$

153.4

(1)

“Debt related gain” represents gains associated with debt repurchases below par and write off of unamortized fees and original issue discount associated with debt refinancings.

(2)

“Depreciation and amortization” represents depreciation, amortization of intangible assets, amortization of favorable and unfavorable lease rights, and amortization of content costs.

(3)

“Strategic initiatives” represents non-recurring costs, such as third-party consulting costs and one-time start-up costs, that are not part of our ongoing operations and are incurred to execute differentiated, project-based strategic initiatives, including costs (i) to design a new prototype and assortment optimization process for locations, (ii) related to our efforts to initially evaluate and implement opportunities to offset the significant costs incurred due to the new U.S. tariffs on merchandise produced in China, (iii) to start up a new technology product that would traditionally be incurred by our vendors, (iv) to evaluate our opportunity in new potential lines of business, (v) to analyze improved supply chain capabilities, (vi) related to one-time legal and accounting fees associated with our initial public offering and (vii) to establish our foreign sourcing office.

(4)

“COVID-19 costs” represents premium pay for location team members (including cleaning and location capacity management labor), incremental seasonal clearance associated with location closures, donations for our mask making initiative and additional location cleaning supplies.

(5)

“Technology development expense” represents one-time IT project management and implementation expenses, such as internal project management labor, third-party consulting fees and user fees incurred during the development period of a new software application, that are not part of our ongoing operations and are typically redundant during the initial implementation of software applications or other technology systems across different functional operations of our business before they are in productive use.

(6)

Based on our evaluation for impairment of the carrying amount of goodwill and trade name on our balance sheet. Impairment recorded was driven predominantly by the result of negative total comparable sales and declining margins, primarily resulting from the incremental U.S. tariffs on Chinese imports, along with a weaker than expected peak selling season. See Note 8—Goodwill and Other Intangible Assets to our audited financial statements included in our Annual Report on Form 10-K for the fiscal year ended January 30, 2021 for further details.

(7)

“Sponsor management fee” represents management fees paid to our sponsor, LGP (or advisory affiliates thereof), in accordance with our management services agreement, which terminated upon the consummation of our initial public offering. Following our initial public offering, LGP does not provide managerial services to us in any form.

(8)

“Other” represents one-time severance, certain legal, executive leadership transition and business transition expenses.

•

Adjusted EBITDA does not reflect its cash expenditures or future requirements for capital expenditures or contractual commitments;

•

Adjusted EBITDA does not reflect changes in its cash requirements for its working capital needs;

•

Adjusted EBITDA does not reflect the interest expense and the cash requirements necessary to service interest and principal payments on its debt;

•

Adjusted EBITDA does not reflect cash requirements for replacement of assets that are being depreciated and amortized;

•

Adjusted EBITDA does not reflect non-cash compensation, which is a key element of its overall long-term incentive compensation;

•

Adjusted EBITDA does not reflect the impact of certain cash charges or cash receipts resulting from matters it does not find indicative of its ongoing operations; and

•

other companies in JOANN’s industry may calculate Adjusted EBITDA differently, limiting its usefulness as a comparative measure.