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8-K
0001834585false00018345852023-03-232023-03-23

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): March 23, 2023

 

 

JOANN Inc.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware

 

001-40204

 

46-1095540

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

5555 Darrow Road

Hudson, Ohio 44236

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (330) 656-2600

N/A

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

☐

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))

Securities registered pursuant to Section 12(b) of the Act:

 

 

 

 

 

 

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

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

Item 2.02 Results of Operations and Financial Condition.

 

On March 23, 2023, JOANN Inc. (the “Company”) issued a press release announcing its financial results for the fiscal quarter and fiscal year ended January 28, 2023. A copy of the Company’s press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.

 

The information furnished pursuant to Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1, is being furnished and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section. Furthermore, the information furnished pursuant to Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed to be incorporated by reference into any registration statement or other document filed pursuant to the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.

 

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits

 

Exhibit
Number

 

Description

99.1

 

Press release issued by JOANN Inc., dated March 23, 2023

104

 

Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 

 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

JOANN INC.

 

 

 

 

Dated: March 23, 2023

 

By:

/s/ Scott Sekella

 

 

Name:

Scott Sekella

 

 

Title:

Senior Vice President, Chief Financial Officer

 

 

 

 

 
EX-99

Exhibit 99.1

JOANN ANNOUNCES FOURTH QUARTER AND FULL YEAR FISCAL 2023 RESULTS

 

•
Topline sales gained momentum post-Black Friday, improving sequentially through the fourth quarter including positive total comparable sales in January 2023
•
Fiscal 2023 year-end inventories down 11% compared to last year with a clearance position less than 5%
•
Cost headwinds are becoming tailwinds through on-going progress of Focus, Simplify and Grow initiative
•
New credit facility agreement strengthens balance sheet for fiscal year 2024
 

HUDSON, OH (March 23, 2023) — JOANN Inc. (NASDAQ: JOAN) (“JOANN”), the nation’s category leader in fabric and sewing with one of the largest assortments of arts and crafts products, today reported results for its fourth quarter and full year ended January 28, 2023.

JOANN’s President and Chief Executive Officer Wade Miquelon commented, “In fiscal year 2023, we navigated a challenging environment spanning macroeconomic uncertainty, unprecedented inflation, continued supply chain disruption, as well as lapping pandemic fueled growth that positively impacted fiscal year 2022. We gained topline sales momentum at the end of the fourth quarter, delivering positive monthly comparable sales in January 2023. We also ended the year in an extremely clean inventory position with total inventory down 11% to last year and a clearance position of less than 5%.”

Miquelon concluded, “As we look to fiscal year 2024, our focus is on cash generation while continuing to deliver a great customer experience. We have already initiated multiple actions to support the enhancement of our free cash flow and liquidity position including our Focus, Simplify and Grow cost reduction initiative which we expect will reduce annual costs by approximately $200 million. Based on these efforts, combined with the positive momentum we saw in the fourth quarter, strong engagement with our core enthusiasts in the early Spring selling season, and our continued investments in strategic initiatives, we believe that JOANN is well-positioned for fiscal year 2024.”

Scott Sekella, JOANN’s Chief Financial Officer added, “While many of the cost headwinds we faced in fiscal year 2023 are becoming tailwinds, we believe it is prudent to continue to take proactive steps to strengthen our balance sheet. With this in mind, our new credit facility is another tool to improve our balance sheet as we focus on cash generation throughout fiscal year 2024."

 

Fourth Quarter Highlights:

 

•
Net sales declined by 5.8% compared to the same period last year to $692.8 million with total comparable sales decreasing 5.9%. E-Commerce sales declined at a more moderate rate of 4.6% compared to last year and accounted for 14% of revenue in the fourth quarter, a 20 basis point increase in the penetration rate over last year.
•
Gross profit of $303.7 million on a GAAP basis decreased by 6.4% compared to the fourth quarter of last year. After adjusting for $16.7 million of excess import freight costs, adjusted gross profit of $320.4 million declined 10.9% compared to the same quarter last year.
•
Gross margin was 43.8% on a GAAP basis, a decrease of 30 basis points compared to the fourth quarter last year. After adjusting for excess import freight costs, gross margin of 46.2% declined by 270 basis points compared to the fourth quarter last year.
•
Selling, general and administrative expenses increased by 3.1% from the same period last year.
•
Net loss of $91.1 million, which includes $95.0 million of non-cash, pre-tax impairment, compared to net income of $13.6 million in the same quarter last year.
•
Adjusted EBITDA of $48.6 million compared to $88.9 million the same quarter last year.

 

Fiscal 2023 Full Year Financial and Business Highlights:

 

•
Net sales declined by 8.3% to $2.2 billion and total comparable sales declined by 8.1% compared to last year.
•
Gross profit of $1,040.3 million on a GAAP basis declined by 14.2% compared to last year. After adjusting for $91.2 million of excess import freight costs, adjusted gross profit of $1,131.5 million declined 10.1% compared to last year.
•
Gross margin was 46.9% on a GAAP basis, a decrease of 330 basis points compared to last year. After adjusting for excess import freight costs, gross margin of 51.0% declined by 110 basis points compared to last year.
•
Selling, general and administrative expenses increased by 3.9% from last year.
•
Net loss of $200.6 million, which includes $95.0 million of non-cash, pre-tax impairment, compared to net income of $56.7 million last year.
•
Adjusted EBITDA of $98.5 million compared to $242.5 million last year.
•
Added three million new customers to our database of which approximately 75% were acquired through digital channels. Our customer database has grown by 15 million over the past three years.

 

 

 

Balance Sheet Highlights:

 

•
Long-term debt, net was $976.0 million as of January 28, 2023 with cash and cash equivalents of $20.2 million.
•
Continued inventory receipt reductions resulted in total inventory down 11% compared to fiscal year 2022.

 

Recent Developments:

 

•
On March 10, 2023, the Company entered into the Third Amendment to the Amended and Restated Credit Agreement (dated October 21, 2016). The Third Amendment adds a series of first-in last-out loans in an aggregate amount of $100 million, the full amount of which was drawn on the closing date. This new credit facility is an incremental facility to the existing $500 million asset based revolving credit loan facility and bears interest at the Secured Overnight Financing Rate (“SOFR”) plus 975 basis points, with one 100 basis point step-down.

 


 

Webcast and Conference Call Information:

JOANN management will host a conference call and webcast to discuss the results today, Thursday, March 23, 2023 at 5:00 p.m. ET. The toll-free number to call for the live interactive teleconference is 1 (844) 481-2750 and the international dial-in number is 1 (412) 317-0666. The live broadcast of JOANN’s conference call will be available online at the Company's website, www.joann.com, under the Investor Relations section, on March 23, 2023, beginning at 5:00 p.m. ET. The online replay will follow shortly after the call and will be available for one year.

 

2

 

Table 1.

JOANN Inc.

Consolidated Statements of Income (Loss)

(Unaudited)

 

 

Thirteen Weeks Ended

 

 

Fifty-Two Weeks Ended

 

 

January 28,
2023

 

 

January 29,
2022

 

 

January 30,
2021

 

 

January 28,
2023

 

 

January 29,
2022

 

 

January 30,
2021

 

 

(In millions except per share data)

 

Net sales

$

692.8

 

 

$

735.3

 

 

$

840.8

 

 

$

2,216.9

 

 

$

2,417.6

 

 

$

2,762.3

 

Cost of sales

 

389.1

 

 

 

410.9

 

 

 

446.3

 

 

 

1,176.6

 

 

 

1,204.9

 

 

 

1,396.1

 

Gross profit

 

303.7

 

 

 

324.4

 

 

 

394.5

 

 

 

1,040.3

 

 

 

1,212.7

 

 

 

1,366.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

286.9

 

 

 

278.4

 

 

 

313.8

 

 

 

1,073.5

 

 

 

1,032.9

 

 

 

1,132.0

 

Depreciation and amortization

 

20.5

 

 

 

20.0

 

 

 

20.2

 

 

 

80.4

 

 

 

80.1

 

 

 

80.0

 

Trade name impairment

 

95.0

 

 

 

—

 

 

 

—

 

 

 

95.0

 

 

 

—

 

 

 

—

 

Operating profit (loss)

 

(98.7

)

 

 

26.0

 

 

 

60.5

 

 

 

(208.6

)

 

 

99.7

 

 

 

154.2

 

Interest expense, net

 

21.5

 

 

 

11.4

 

 

 

14.0

 

 

 

64.0

 

 

 

51.2

 

 

 

69.0

 

Debt related loss (gain)

 

—

 

 

 

0.3

 

 

 

(2.2

)

 

 

—

 

 

 

3.3

 

 

 

(155.1

)

Investment remeasurement

 

—

 

 

 

—

 

 

 

—

 

 

 

(1.0

)

 

 

—

 

 

 

—

 

(Gain) on sale leaseback

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(24.5

)

 

 

—

 

Income (loss) before income taxes

 

(120.2

)

 

 

14.3

 

 

 

48.7

 

 

 

(271.6

)

 

 

69.7

 

 

 

240.3

 

Income tax provision (benefit)

 

(31.3

)

 

 

0.7

 

 

 

10.4

 

 

 

(73.2

)

 

 

13.0

 

 

 

28.0

 

Loss from equity method investments

 

2.2

 

 

 

—

 

 

 

—

 

 

 

2.2

 

 

 

—

 

 

 

—

 

Net income (loss)

$

(91.1

)

 

$

13.6

 

 

$

38.3

 

 

$

(200.6

)

 

$

56.7

 

 

$

212.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

(2.23

)

 

$

0.33

 

 

$

1.10

 

 

$

(4.93

)

 

$

1.39

 

 

$

6.08

 

Diluted

$

(2.23

)

 

$

0.32

 

 

$

1.06

 

 

$

(4.93

)

 

$

1.35

 

 

$

5.93

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

40.9

 

 

 

40.9

 

 

 

34.9

 

 

 

40.7

 

 

 

40.8

 

 

 

34.9

 

Diluted

 

40.9

 

 

 

41.9

 

 

 

36.3

 

 

 

40.7

 

 

 

42.1

 

 

 

35.8

 

 

3

 

Table 2.

JOANN Inc.

Consolidated Balance Sheets

(Unaudited)

 

 

January 28,
2023

 

 

January 29,
2022

 

 

(In millions)

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

$

20.2

 

 

$

22.5

 

Inventories

 

584.1

 

 

 

658.6

 

Prepaid expenses and other current assets

 

38.6

 

 

 

39.2

 

Total current assets

 

642.9

 

 

 

720.3

 

 

 

 

 

 

 

Property, equipment and leasehold improvements, net

 

287.8

 

 

 

256.8

 

Operating lease assets

 

778.4

 

 

 

818.0

 

Goodwill

 

162.0

 

 

 

162.0

 

Intangible assets, net

 

272.1

 

 

 

370.3

 

Other assets

 

37.6

 

 

 

34.8

 

Total assets

$

2,180.8

 

 

$

2,362.2

 

 

 

 

 

 

 

Liabilities and shareholders’ equity (deficit)

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

$

197.5

 

 

$

253.8

 

Accrued expenses

 

119.2

 

 

 

142.4

 

Current portion of operating lease liabilities

 

177.5

 

 

 

173.8

 

Current portion of long-term debt

 

6.8

 

 

 

6.8

 

Total current liabilities

 

501.0

 

 

 

576.8

 

 

 

 

 

 

 

Long-term debt, net

 

976.0

 

 

 

778.6

 

Long-term operating lease liabilities

 

707.3

 

 

 

733.0

 

Deferred income taxes

 

16.9

 

 

 

87.7

 

Other long-term liabilities

 

28.7

 

 

 

36.3

 

 

 

 

 

 

 

Shareholders’ equity (deficit):

 

 

 

 

 

Common stock, stated value $0.01 per share

 

0.4

 

 

 

0.4

 

Additional paid-in capital

 

208.0

 

 

 

203.3

 

Retained deficit

 

(239.2

)

 

 

(24.9

)

Accumulated other comprehensive income

 

8.3

 

 

 

1.8

 

Treasury stock at cost

 

(26.6

)

 

 

(30.8

)

Total shareholders’ equity (deficit)

 

(49.1

)

 

 

149.8

 

Total liabilities and shareholders’ equity (deficit)

$

2,180.8

 

 

$

2,362.2

 

 

4

 

Table 3.

JOANN Inc.

Consolidated Statements of Cash Flows

(Unaudited)

 

 

 

Fiscal Year Ended

 

 

 

January 28,
2023

 

 

January 29,
2022

 

 

January 30,
2021

 

 

 

(In millions)

 

Net cash provided by (used for) operating activities:

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

(200.6

)

 

$

56.7

 

 

$

212.3

 

Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities:

 

 

 

 

 

 

 

 

 

Non-cash operating lease expense

 

 

171.5

 

 

 

162.6

 

 

 

152.4

 

Depreciation and amortization

 

 

80.4

 

 

 

80.1

 

 

 

80.0

 

Deferred income taxes

 

 

(73.0

)

 

 

(0.4

)

 

 

(3.9

)

Stock-based compensation expense

 

 

7.3

 

 

 

2.5

 

 

 

1.5

 

Amortization of deferred financing costs and original issue discount

 

 

2.0

 

 

 

2.5

 

 

 

3.7

 

Debt related loss (gain)

 

 

—

 

 

 

3.3

 

 

 

(155.1

)

Investment remeasurement

 

 

(1.0

)

 

 

—

 

 

 

—

 

(Gain) on sale leaseback

 

 

—

 

 

 

(24.5

)

 

 

—

 

Loss on disposal and impairment of fixed assets

 

 

1.7

 

 

 

0.9

 

 

 

3.4

 

Trade name impairment

 

 

95.0

 

 

 

—

 

 

 

—

 

Loss from equity method investments

 

 

2.2

 

 

 

—

 

 

 

—

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

Decrease (increase) in inventories

 

 

74.5

 

 

 

(102.7

)

 

 

93.8

 

Decrease (increase) in prepaid expenses and other current assets

 

 

4.5

 

 

 

32.3

 

 

 

(22.5

)

Increase (decrease) in accounts payable

 

 

(56.3

)

 

 

3.7

 

 

 

23.0

 

Increase (decrease) in accrued expenses

 

 

(12.7

)

 

 

(29.5

)

 

 

62.0

 

(Decrease) in operating lease liabilities

 

 

(153.9

)

 

 

(190.4

)

 

 

(130.8

)

Increase (decrease) in other long-term liabilities

 

 

(15.7

)

 

 

(18.3

)

 

 

9.4

 

Other, net

 

 

(1.1

)

 

 

(2.4

)

 

 

(2.1

)

Net cash provided by (used for) operating activities

 

 

(75.2

)

 

 

(23.6

)

 

 

327.1

 

 

 

 

 

 

 

 

 

 

 

Net cash provided by (used for) investing activities:

 

 

 

 

 

 

 

 

 

Capital expenditures

 

 

(96.9

)

 

 

(59.1

)

 

 

(36.0

)

Proceeds from sale leaseback

 

 

—

 

 

 

48.1

 

 

 

—

 

Other investing activities

 

 

(4.3

)

 

 

(2.2

)

 

 

0.3

 

Net cash (used for) investing activities

 

 

(101.2

)

 

 

(13.2

)

 

 

(35.7

)

 

 

 

 

 

 

 

 

 

 

Net cash provided by (used for) financing activities:

 

 

 

 

 

 

 

 

 

Term loan proceeds, net of original issue discount

 

 

—

 

 

 

671.6

 

 

 

—

 

Term loan payments

 

 

(6.8

)

 

 

(708.0

)

 

 

(2.3

)

Borrowings on revolving credit facility

 

 

663.2

 

 

 

568.4

 

 

 

584.7

 

Payments on revolving credit facility

 

 

(460.2

)

 

 

(532.9

)

 

 

(672.7

)

Purchase and retirement of debt

 

 

—

 

 

 

(0.9

)

 

 

(190.5

)

Principal payments on finance lease obligations

 

 

(10.3

)

 

 

(7.7

)

 

 

(3.4

)

Issuance of common stock, net of underwriting commissions and offering costs

 

 

—

 

 

 

76.9

 

 

 

—

 

Purchase of common stock

 

 

—

 

 

 

(20.0

)

 

 

—

 

Proceeds from employee stock purchase plan and exercise of stock options

 

 

1.7

 

 

 

1.8

 

 

 

—

 

Payments of taxes related to the net issuance of employee stock rewards

 

 

(0.1

)

 

 

—

 

 

 

—

 

Dividends paid

 

 

(13.4

)

 

 

(12.6

)

 

 

—

 

Financing fees paid

 

 

—

 

 

 

(4.9

)

 

 

(4.2

)

Other, net

 

 

—

 

 

 

0.2

 

 

 

—

 

Net cash provided by (used for) financing activities

 

 

174.1

 

 

 

31.9

 

 

 

(288.4

)

Net increase (decrease) in cash and cash equivalents

 

 

(2.3

)

 

 

(4.9

)

 

 

3.0

 

Cash and cash equivalents at beginning of period

 

 

22.5

 

 

 

27.4

 

 

 

24.4

 

Cash and cash equivalents at end of period

 

$

20.2

 

 

$

22.5

 

 

$

27.4

 

 

 

 

 

 

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

 

 

 

 

Interest

 

$

60.9

 

 

$

49.6

 

 

$

62.1

 

Income taxes, net of (refunds)

 

 

(8.8

)

 

 

4.2

 

 

 

55.2

 

 

5

 

Table 4.

JOANN Inc.

Reconciliation of Net Income (Loss) to Adjusted EBITDA

(Unaudited)

 

 

Thirteen Weeks Ended

 

 

Fifty-Two Weeks Ended

 

 

January 28,
2023

 

 

January 29,
2022

 

 

January 30,
2021

 

 

January 28,
2023

 

 

January 29,
2022

 

 

January 30,
2021

 

 

(In millions)

 

Net income (loss)

$

(91.1

)

 

$

13.6

 

 

$

38.3

 

 

$

(200.6

)

 

$

56.7

 

 

$

212.3

 

Income tax provision (benefit)

 

(31.3

)

 

 

0.7

 

 

 

10.4

 

 

 

(73.2

)

 

 

13.0

 

 

 

28.0

 

Interest expense, net

 

21.5

 

 

 

11.4

 

 

 

14.0

 

 

 

64.0

 

 

 

51.2

 

 

 

69.0

 

Depreciation and amortization

 

20.5

 

 

 

20.0

 

 

 

20.2

 

 

 

80.4

 

 

 

80.1

 

 

 

80.0

 

Other amortization (1)

 

0.6

 

 

 

0.2

 

 

 

0.2

 

 

 

1.8

 

 

 

0.7

 

 

 

0.6

 

Debt related loss (gain) (2)

 

—

 

 

 

0.3

 

 

 

(2.2

)

 

 

—

 

 

 

3.3

 

 

 

(155.1

)

Investment remeasurement (3)

 

—

 

 

 

—

 

 

 

—

 

 

 

(1.0

)

 

 

—

 

 

 

—

 

(Gain) on sale leaseback (4)

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(24.5

)

 

 

—

 

Excess import freight costs (5)

 

16.7

 

 

 

35.3

 

 

 

—

 

 

 

91.2

 

 

 

46.6

 

 

 

—

 

Other COVID-19 costs (6)

 

—

 

 

 

0.2

 

 

 

16.6

 

 

 

—

 

 

 

1.5

 

 

 

65.0

 

Strategic initiatives (7)

 

4.9

 

 

 

2.3

 

 

 

2.1

 

 

 

9.5

 

 

 

3.7

 

 

 

6.2

 

Technology development expense (8)

 

2.7

 

 

 

2.8

 

 

 

2.2

 

 

 

9.7

 

 

 

9.0

 

 

 

5.8

 

Stock-based compensation expense

 

1.2

 

 

 

0.4

 

 

 

0.4

 

 

 

7.3

 

 

 

2.5

 

 

 

1.5

 

Loss on disposal and impairment of fixed and operating lease assets

 

3.6

 

 

 

1.2

 

 

 

2.0

 

 

 

4.7

 

 

 

1.1

 

 

 

5.6

 

Trade name impairment (9)

 

95.0

 

 

 

—

 

 

 

—

 

 

 

95.0

 

 

 

—

 

 

 

—

 

Loss from equity method investments (10)

 

2.2

 

 

 

—

 

 

 

—

 

 

 

2.2

 

 

 

—

 

 

 

—

 

Other (11)

 

2.1

 

 

 

0.5

 

 

 

1.9

 

 

 

7.5

 

 

 

(2.4

)

 

 

4.4

 

Adjusted EBITDA

$

48.6

 

 

$

88.9

 

 

$

106.1

 

 

$

98.5

 

 

$

242.5

 

 

$

323.3

 

 



 

(1)
“Other amortization” represents amortization of content and capitalized cloud-based system implementation costs.
(2)
“Debt related loss (gain)” represents net losses and gains associated with debt repurchases and the write off of unamortized fees and original issue discount associated with debt refinancings.
(3)
"Investment remeasurement" represents net gains and losses associated with our equity investments without readily determinable fair values.
(4)
“(Gain) on sale leaseback” represents the gain attributable to the sale leaseback of our distribution center in Opelika, Alabama.
(5)
As discussed in greater detail below, "Excess import freight costs" represents excess inbound freight costs (compared to our standard costs based on recently negotiated carrier rates) due to increased freight rates, in particular the significant transitory impact of constrained ocean freight capacity and incremental domestic transportation costs incurred due to unprecedented congestion in U.S. ports arising from surging market demand for shipping capacity as economies recovered from the COVID-19 pandemic.
(6)
“Other COVID-19 costs” represents costs incurred for store location cleaning and capacity management labor, store location cleaning supplies and deep clean services.
(7)
“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.
(8)
“Technology development expense” represents one-time IT project management and implementation expenses, such as temporary labor costs, 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.
(9)
“Trade name impairment” represents impairment charges recorded on the JOANN Trade Name, which resulted from the quantitative impairment analysis completed during fiscal 2023.
(10)
“Loss from equity method investments” represents the loss recognized for our equity method investments.
(11)
“Other” represents the one-time impact of severance, sponsor management fees, certain legal matters, employee recruitment, employee transition and business transition activities.

 

6

 

Table 5.

JOANN Inc.

Reconciliation of Net Income (Loss) to Adjusted Net Income (Loss)

(Unaudited)

 

 

 

Thirteen Weeks Ended

 

 

Fifty-Two Weeks Ended

 

 

January 28,
2023

 

 

January 29,
2022

 

 

January 30,
2021

 

 

January 28,
2023

 

 

January 29,
2022

 

 

January 30,
2021

 

 

(In millions except per share data)

 

Net income (loss)

$

(91.1

)

 

$

13.6

 

 

$

38.3

 

 

$

(200.6

)

 

$

56.7

 

 

$

212.3

 

Debt related loss (gain)

 

—

 

 

 

0.3

 

 

 

(2.2

)

 

 

—

 

 

 

3.3

 

 

 

(155.1

)

Investment remeasurement

 

—

 

 

 

—

 

 

 

—

 

 

 

(1.0

)

 

 

—

 

 

 

—

 

(Gain) on sale leaseback

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(24.5

)

 

 

—

 

Excess import freight costs

 

16.7

 

 

 

35.3

 

 

 

—

 

 

 

91.2

 

 

 

46.6

 

 

 

—

 

Other COVID-19 costs

 

—

 

 

 

0.2

 

 

 

16.6

 

 

 

—

 

 

 

1.5

 

 

 

65.0

 

Strategic initiatives

 

4.9