UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ____________ to ____________
Commission File Number:
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer |
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(Address of principal executive offices) |
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Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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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. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of June 2, 2023, the registrant had
Table of Contents
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PART I. |
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Item 1. |
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4 |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
13 |
Item 3. |
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Item 4. |
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PART II. |
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Item 1. |
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Item 1A. |
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Item 2. |
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Item 3. |
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Item 4. |
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Item 5. |
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Item 6. |
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FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). You can generally identify forward-looking statements by our use of forward-looking terminology such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “seek,” “vision,” “should,” or the negative thereof or other variations thereon or comparable terminology. Forward-looking statements include those we make regarding the following matters:
The preceding list is not intended to be an exhaustive list of all of our forward-looking statements. We have based these forward-looking statements on our current expectations, assumptions, estimates and projections. While we believe these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond our control. Given these risks and uncertainties, you are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements included elsewhere in this Quarterly Report on Form 10-Q are not guarantees of future performance, and our actual results of operations, financial condition and liquidity and the development of the industry in which we operate may differ materially from the forward-looking statements included elsewhere in this Quarterly Report on Form 10-Q. In addition, even if our results of operations, financial condition and liquidity and events in the industry in which we operate are consistent with the forward-looking statements included elsewhere in this Quarterly Report on Form 10-Q, they may not be predictive of results or developments in future periods. Any forward-looking statement that we make in this Quarterly Report on Form 10-Q speaks only as of the date of such statement. Except as required by law, we do not undertake any obligation to update or revise, or to publicly announce any update or revision to, any of the forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this Quarterly Report on Form 10-Q.
1
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
JOANN Inc.
Consolidated Balance Sheets
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(Unaudited) |
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April 29, |
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April 30, |
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January 28, |
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(In millions) |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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$ |
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Inventories |
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Prepaid expenses and other current assets |
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Total current assets |
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Property, equipment and leasehold improvements, net |
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Operating lease assets |
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Goodwill, net |
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Intangible assets, net |
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Other assets |
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Total assets |
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$ |
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$ |
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$ |
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Liabilities and Shareholders’ Equity (Deficit) |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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$ |
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Accrued expenses |
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Current portion of operating lease liabilities |
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Current portion of long-term debt |
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Total current liabilities |
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Long-term debt, net |
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Long-term operating lease liabilities |
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Long-term deferred income taxes |
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Other long-term liabilities |
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Shareholders’ equity (deficit): |
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Common stock, stated value $ |
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Additional paid-in capital |
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Retained (deficit) |
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Accumulated other comprehensive income |
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Treasury stock at cost; |
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Total shareholders’ equity (deficit) |
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( |
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Total liabilities and shareholders’ equity (deficit) |
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$ |
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$ |
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$ |
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See notes to unaudited consolidated financial statements.
2
JOANN Inc.
Consolidated Statements of Comprehensive Income (Loss)
(Unaudited)
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Thirteen Weeks Ended |
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April 29, |
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April 30, |
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(In millions except per share data) |
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Net sales |
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$ |
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$ |
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Cost of sales |
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Selling, general and administrative expenses |
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Depreciation and amortization |
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Operating (loss) |
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Interest expense, net |
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Investment remeasurement |
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(Loss) before income taxes |
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Income tax (benefit) |
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Loss from equity method investments |
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Net (loss) |
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$ |
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$ |
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Other comprehensive income (loss): |
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Cash flow hedges |
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Income tax (provision) on cash flow hedges |
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Other comprehensive income |
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Comprehensive (loss) |
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$ |
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$ |
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(Loss) per common share: |
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Basic |
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$ |
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$ |
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Diluted |
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$ |
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Weighted-average common shares outstanding: |
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Basic |
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Diluted |
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See notes to unaudited consolidated financial statements.
3
JOANN Inc.
Consolidated Statements of Cash Flows
(Unaudited)
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Thirteen Weeks Ended |
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April 29, |
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April 30, |
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(In millions) |
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Net cash provided by (used for) operating activities: |
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Net (loss) |
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$ |
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$ |
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Adjustments to reconcile net (loss) to net cash (used for) |
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Non-cash operating lease expense |
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Depreciation and amortization |
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Deferred income taxes |
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( |
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Stock-based compensation expense |
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Amortization of deferred financing costs and original issue discount |
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Investment remeasurement |
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Loss on disposal and impairment of fixed assets |
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Loss on equity method investment |
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Changes in operating assets and liabilities: |
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(Increase) in inventories |
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( |
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(Increase) in prepaid expenses and other current assets |
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( |
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Increase (decrease) in accounts payable |
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(Decrease) in accrued expenses |
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( |
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(Decrease) in operating lease liabilities |
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(Decrease) in other long-term liabilities |
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Other, net |
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Net cash (used for) operating activities |
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Net cash (used for) investing activities: |
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Capital expenditures |
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( |
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Other investing activities |
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Net cash (used for) investing activities |
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Net cash provided by (used for) financing activities: |
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Term loan payments |
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FILO proceeds |
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Borrowings on revolving credit facility |
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Payments on revolving credit facility |
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Principal payments on finance lease obligations |
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Proceeds from employee stock purchase plan and exercise of stock options |
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Payments of taxes related to the net issuance of team member stock awards |
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( |
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Dividends paid |
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Financing fees paid |
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Net cash provided by financing activities |
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Net (decrease) in cash and cash equivalents |
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Cash and cash equivalents at beginning of period |
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Cash and cash equivalents at end of period |
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$ |
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$ |
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Cash paid (received) during the period for: |
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Interest |
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$ |
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$ |
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Income taxes, net of (refunds) |
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( |
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( |
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See notes to unaudited consolidated financial statements.
4
JOANN Inc.
(Unaudited)
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Net |
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Treasury |
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Common |
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Additional |
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Treasury |
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Retained |
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Accumulated |
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Total |
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(In millions) |
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Balance, January 28, 2023 |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
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$ |
( |
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Net (loss) |
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— |
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— |
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— |
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— |
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— |
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( |
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— |
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( |
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Other comprehensive income |
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— |
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— |
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— |
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— |
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— |
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— |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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— |
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— |
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Exercise of stock options |
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— |
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— |
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— |
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( |
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— |
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— |
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— |
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Vesting of restricted stock units |
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( |
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— |
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( |
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— |
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— |
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( |
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Balance, April 29, 2023 |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
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$ |
( |
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Net |
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Treasury |
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Common |
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Additional |
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Treasury |
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Retained |
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Accumulated |
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Total |
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(In millions) |
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Balance, January 29, 2022 |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
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$ |
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Net (loss) |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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— |
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( |
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Other comprehensive income |
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— |
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— |
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— |
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— |
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— |
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— |
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Dividends – $ |
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— |
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— |
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— |
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— |
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— |
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( |
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— |
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( |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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— |
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— |
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Exercise of stock options |
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— |
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— |
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— |
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— |
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— |
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Vesting of restricted stock units |
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( |
) |
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— |
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( |
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— |
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— |
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( |
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Balance, April 30, 2022 |
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$ |
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$ |
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$ |
( |
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$ |
( |
) |
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$ |
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$ |
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See notes to unaudited consolidated financial statements.
5
JOANN Inc.
Notes to Consolidated Financial Statements
(Unaudited)
Note 1—Significant Accounting Policies
Nature of Operations
Basis of Presentation
The accompanying Consolidated Financial Statements and these notes are unaudited and have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. The Consolidated Financial Statements reflect all normal, recurring adjustments which management believes are necessary to present fairly the Company’s financial condition, results of operations and cash flows for all periods presented. The Consolidated Financial Statements, however, do not include all information necessary for a complete presentation of financial condition, results of operations and cash flows in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The accompanying Consolidated Financial Statements and these notes should be read in conjunction with the Company’s Annual Report on Form 10-K for the fiscal year ended January 28, 2023.
Consolidation
The Consolidated Financial Statements include the accounts of JOANN Inc. (the “Holding Company”), Needle Holdings LLC (“Needle Holdings”) and Jo-Ann Stores, LLC and its wholly-owned subsidiaries (collectively, “JOANN”). All of the entities referenced in the prior sentence hereinafter will be referred to collectively as the “Company” and are all controlled by affiliates of LGP. All intercompany accounts and transactions have been eliminated upon consolidation.
The Holding Company has no operating activities and is limited to the issuance of shares of common stock and stock-based awards, the repurchase of common shares, the issuance and repurchase of debt, the receipt and payment of dividends or distributions and the payment of interest expense. The authorized, issued and outstanding common shares and treasury shares shown on the Consolidated Balance Sheets are of the Holding Company. Likewise, Needle Holdings has no operating activities and is limited to the issuance of initial shares of common stock and stock-based awards and the payment of dividends or distributions.
Fiscal Periods
The Company’s fiscal year ends on the Saturday closest to January 31 and refers to the year in which the period ends (e.g., fiscal 2023 refers to the fiscal year ending January 28, 2023). Fiscal years consist of 52 weeks, unless noted otherwise. Fiscal 2024 consists of 53 weeks and ends February 3, 2024. The fiscal quarters ended April 29, 2023 and April 30, 2022 were both comprised of 13 weeks.
Seasonality
Typical of most retail companies, the Company’s business is seasonal, with the majority of revenues and operating profits generated in the second half of the fiscal year. Accordingly, earnings or losses for a particular interim period are not necessarily indicative of full-year results.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Since actual results may differ from those estimates, the Company revises its estimates and assumptions as new information becomes available.
6
Recently Issued Accounting Guidance
There are no recently issued accounting pronouncements that the Company has not yet adopted which would have a material impact on the Consolidated Financial Statements.
Related Party Transactions
Note 2—Financing
Long-term debt consisted of the following:
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April 29, |
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April 30, |
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January 28, |
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(In millions) |
|
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ABL Facility |
|
$ |
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