Jo-Ann Stores Inc. took the opportunity of its year-end earnings call with analysts to shed some light on its e-commerce operation.
For starters, the company, which typically doesn’t break out quarterly e-commerce sales, says the web accounted for about 2% -- $11.7 million -- of total sales of $585.9 million in the fourth quarter.
The retailer, No. 208 in the Internet Retailer Top 500 Guide, also told analysts that given the higher shipping costs associated with operating its e-commerce site, it doesn’t see the gross margin of items sold online matching the gross margin on merchandise sold in its network of 196 large format and 578 small format stores. “We think we can improve the gross margin that we generate today on the Internet business,” says Jo-Ann chief financial officer James Kerr. “Based on the structure of that industry where you also have the shipping costs, I don’t anticipate that we will ever have the Internet business match the retail store gross margins.”
Jo-Ann, which spent about $23 million in October to acquire all of the outstanding shares of IdeaForest.com Inc., the previous operator of JoAnn.com, also says a high priority going forward will be doing a better job of multi-channel integration. “We will continue integrating the Joann.com Internet business to achieve better synergy with our retail stores,” Jo-Ann CEO Darrell Webb told analysts.
In 2006, JoAnn.com generated online sales of $31.4 million. The company has yet to break out web sales for 2007.