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Bear of the Day: JOANN (JOAN)
JOANN Inc. was a pandemic winner but sales have slowed on the reopen. This Zacks Rank #5 (Strong Sell) is expected to see sales decline 12% this year.
JOANN is the leader in sewing and fabrics, and also is a fast growing player in arts and crafts. It operates 855 stores across 49 states and an e-commerce business.
A Miss in the Second Quarter
On Sep 2, JOANN reported its fiscal second quarter 2022 results and missed on the Zacks Consensus Estimate by 7 cents.
Earnings were a loss of $0.20 compared to the Zacks Consensus of a loss of $0.13.
Net sales fell by 29.8% to $496.9 million year-over-year as last year the company saw a surge of sales with people staying home during the pandemic.
Comparable sales also fell 29.9% but on a 2-year stack, total comparable sales rose 8.1%.
It's omni-channel net sales were up 115% to $53.5 million, on a two year basis and now represent about 11% of total second quarter sales versus about 5% pre-pandemic.
Analysts Cut Estimates
Like every retailer, JOANN is experiencing supply chain challenges as it heads into its two busiest seasons, fall and the winter holidays.
The analysts have gotten more cautious in the last month.
4 estimates have been cut for Fiscal 2022 and Fiscal 2023 in the last 30 days.
The Zacks Consensus Estimate for Fiscal 2022 has fallen to $2.09 from $2.84 in the last month.
Fiscal 2023 has also fallen to $2.16 from $3.03 during that time. That is just earnings growth of 3.5%.
Shareholder Friendly
On Sep 13, JOANN announced its board had authorized a share repurchase up to an aggregate of $20 million through Mar 9, 2022.
The company also pays a dividend, currently yielding 3.6%.
Shares are Dirt Cheap
JOANN only went public in March. The second quarter was its full quarter as a public company.
Shares have taken a tumble in the last month, falling 11%.
Image Source: Zacks Investment Research
They are dirt cheap on a P/E basis, with a forward P/E of 5.7.
However, with the uncertainty around the earnings going forward, it might be best for investors to wait on the sidelines.