8-K

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) May 19, 2003

Commission File No. 1-6695

JO-ANN STORES, INC.

(Exact name of Registrant as specified in its charter)

Ohio	34-0720629
(State or other jurisdiction of incorporation or organization)	(I.R.S. 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)

TABLE OF CONTENTS

	ITEM 5. OTHER EVENTS
	ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
	ITEM 9. REGULATION FD DISCLOSURE
SIGNATURES
EXHIBIT INDEX
Exhibit 99.1 Press Release
Exhibit 99.2 Earnings Release

ITEM 5. OTHER EVENTS

     On May 19, 2003, Jo-Ann Stores, Inc. announced a reclassification proposal with respect to its common share structure. A copy of this press release is attached hereto as Exhibit 99.1.

ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.

(c) Exhibits

99.1	Jo-Ann Stores, Inc. Press Release dated May 19, 2003
99.2	Jo-Ann Stores, Inc. Earnings Release dated May 19, 2003 (furnished pursuant to Item 12 of Form 8-K, under Item 9 of this report).

ITEM 9. REGULATION FD DISCLOSURE

     The information included in this section is being furnished pursuant to Item 12. “Results of Operations and Financial Condition” and is included under this Item 9 in accordance with SEC Release No. 33-8216.

     On May 19, 2003, Jo-Ann Stores, Inc. announced its earnings for the first quarter ended May 3, 2003 and provided an earnings outlook for the second quarter ending August 2, 2003 and the fiscal year ending January 31, 2004. A copy of this press release is attached hereto as Exhibit 99.2.

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 thereunto duly authorized.

	JO-ANN STORES, INC. (Registrant)
Date:  May 19, 2003	By: /s/ Brian P. Carney
	Name: Brian P. Carney
	Title:   Executive Vice President             and Chief Financial Officer

EXHIBIT INDEX

Exhibit Number	Description
99.1	Press Release of Jo-Ann Stores, Inc., dated May 19, 2003.
99.2	Earnings Release of Jo-Ann Stores, Inc., dated May 19, 2003.

EX-99.1 3 l01109aexv99w1.txt EXHIBIT 99.1 PRESS RELEASE EXHIBIT 99.1 NEWS RELEASE FOR IMMEDIATE RELEASE CONTACT: Brian Carney Investor Relations: Executive Vice President, CFO Don Tomoff Jo-Ann Stores, Inc. Vice President, Finance 330/656-2600 Jo-Ann Stores, Inc. http://www.joann.com 330/463-6815 JO-ANN STORES, INC. ANNOUNCES SHARE RECLASSIFICATION PROPOSAL - - S-4 REGISTRATION STATEMENT FILED IN CONNECTION WITH RECLASSIFICATION PROPOSAL TO CONVERT COMPANY'S DUAL-CLASS EQUITY STRUCTURE TO A SINGLE VOTING CLASS OF STOCK - - TWO NON-INDEPENDENT BOARD MEMBERS TO BE APPOINTED TO EMERITUS STATUS, UPON COMPLETION OF SEARCH FOR TWO INDEPENDENT BOARD MEMBERS - - SEARCH UNDERWAY FOR TWO INDEPENDENT BOARD MEMBERS - - ADOPTS SFAS NO. 123 AND INITIATES THE EXPENSING OF STOCK OPTIONS HUDSON, OH, May 19, 2003 -- Jo-Ann Stores, Inc. (NYSE: JAS.A and JAS.B) announced that it has filed a Form S-4 Registration Statement with the Securities and Exchange Commission today to register securities to be issued in connection with a proposed reclassification of its two classes of common shares into one voting class. The proposal must be approved by a majority of the shares outstanding of both the Company's Class A and Class B shares. Shares of the Company's Class B shares, which currently do not have voting rights other than as required by law, will be amended to have one vote per share and will be redesignated as the Company's "Common Shares". Each of the Class A shares, which currently have one vote per share, will be reclassified into 1.15 Common Shares, resulting in the issuance of approximately 1.6 million additional shares that will increase the Company's total shares outstanding by approximately 8.0%. The Company expects to hold a special meeting of shareholders on or about August 13, 2003 to vote on the proposal. The Corporate Governance Committee of the Company's Board of Directors has retained Lehman Brothers to serve as its advisor in connection with this proposal. The Company expects to realize a number of benefits from the proposed reclassification, including: - increasing the trading volume and liquidity of its shares - simplifying its equity capital structure - broadening the appeal of its shares to a larger base of investors - more closely aligning the voting rights of the Company's shareholders with their economic interests As part of the proposal, the Company will also seek to amend and strengthen various shareholder protection measures included in its code of regulations. The Rosskamm and Zimmerman founding families, including Betty Rosskamm, Alan Rosskamm, Alma Zimmerman and their decendents, have indicated that they support the combination even though they will not receive any such consideration. Currently, the founding families beneficially own approximately 25.1% of the Company's outstanding Class A shares and 21.6% of the Company's outstanding Class B shares. Upon completion of the reclassification, the founding families will own approximately 23.6% of the outstanding newly designated Common Shares. Thus, their voting power will decrease from approximately 25.1% to approximately 23.6%. After the elimination of the dual class structure, members of the founding families will not be able to sell any shares without further diluting their voting power. Jo-Ann Stores also announced that it has initiated a search for two independent Board candidates and will appoint two of its current Board members, Betty Rosskamm and Alma Zimmerman, members since 1967, to Emeritus status. Under Emeritus status, neither Ms. Rosskamm nor Ms. Zimmerman will serve on any of the committees of the Board, nor will either of them vote on any matters that come before the Board for approval. The appointment of Ms. Rosskamm and Ms. Zimmerman to Emeritus status will be effective upon the final selection and approval of the two new Board candidates. After filling the two open Board positions, at least six of the Company's eight voting Board members will be comprised of independent Board members, as defined under the current proposals of the New York Stock Exchange. Finally, effective with the first quarter of fiscal 2004, the Company adopted the fair-value based method of recording stock option expense under SFAS No. 123, "Accounting for Stock-Based Compensation". Previously, the Company did not recognize compensation expense for stock option grants in its income statement, but provided pro forma disclosure in its notes to financial statements. Alan Rosskamm, Chairman or the Board and CEO stated, "The proposals we announced today help to strengthen Jo-Ann's corporate governance and simplify our capital structure, making our shares a more attractive investment. After a very thorough review, analysis and discussion by the Corporate Governance Committee of the Board of Directors of the Company, along with its advisor, it was determined that the proposed reclassification plan was in the best interest of all shareholders and the Company." Conference Call on the Web Investors will have the opportunity to listen to the Company's first quarter earnings conference call at 4:30 p.m. ET today. The Company will also discuss the share reclassification and corporate initiatives it is undertaking. The call can be accessed via the Internet through Streetevents at http://www.streetevents.com and on our Web site at http://www.joann.com (go to the top of our home page and click on "About Jo-Ann Stores," click on "Our Company" click on "Investor Relations," then click on the Conference Call icon). To listen to the live call, please go to the Web site at least 10 minutes before the call begins to register, download and install any necessary audio software. For those who cannot listen to the live broadcast, a replay will be available shortly after the call and will be archived until Monday, May 26th. The replay may be accessed at http://www.joann.com and at http://www.streetevents.com or by phone at 800-642-1687, conference ID #9828057. Jo-Ann Stores, Inc. (http://www.joann.com), the leading national fabric and craft retailer with locations in 48 states, operates 840 traditional stores and 77 superstores. This press release contains forward-looking statements that are subject to certain risks and uncertainties. Our actual results, performance or achievements may materially differ from those expressed or implied in the forward-looking statements. Risks and uncertainties that could cause or contribute to such material differences include, but are not limited to, general economic conditions, changes in customer demand, changes in trends in the fabric and craft industry, seasonality, the availability of merchandise, changes in the competitive pricing for products, and the impact of our and our competitors store openings and closings, fuel and energy costs, changes in tariff and freight rates, consumer debt levels, other capital market and geo-political conditions. Other important factors that may cause actual results to differ materially from those expressed in the forward-looking statements are discussed in the Company's Securities and Exchange Commission filings. EX-99.2 4 l01109aexv99w2.txt EXHIBIT 99.2 EARNINGS RELEASE EXHIBIT 99.2 EARNINGS RELEASE FOR IMMEDIATE RELEASE CONTACT: Brian Carney Investor Relations: Executive Vice President, CFO Don Tomoff Jo-Ann Stores, Inc. Vice President, Finance 330/656-2600 Jo-Ann Stores, Inc. http://www.joann.com 330/463-6815 JO-ANN STORES ANNOUNCES FINANCIAL RESULTS FOR THE FIRST QUARTER OF FISCAL 2004 - FIRST QUARTER EARNINGS OF $0.20 PER SHARE - ADOPTS SFAS NO. 123 AND INITIATES THE EXPENSING OF STOCK OPTIONS - COMPLETES DEBT REPURCHASES OF $46 MILLION HUDSON, OH, May 19, 2003 -- Jo-Ann Stores, Inc. (NYSE: JAS.A and JAS.B) today announced financial results for its fiscal 2004 first quarter. Net income for the quarter totaled $4.1 million, or $0.20 per diluted share, compared with net income of $8.7 million, or $0.43 per diluted share in fiscal 2003. First quarter financial results include a non-cash pre-tax charge for stock based compensation expense of $1.2 million as a result of the adoption of Statement of Financial Accounting Standards ("SFAS") No. 123 and a $3.4 million pre-tax charge related to the early redemption of $46 million in long-term debt, as described further below. Excluding the stock based compensation expense and the charge associated with the redemption of the notes, first quarter diluted earnings per share were within the Company's prior guidance for the quarter. Net sales for the first quarter increased 0.6% to $374.8 million from $372.4 million in the prior year. Same-store sales increased 2.6% compared to a 13.5% same-store sales increase for the same period in the prior year. Review of Operating Results Operating profit for the first quarter was $11.6 million, compared with an operating profit of $20.4 million for the prior year's first quarter. Operating profit in the current quarter includes the $4.6 million in charges highlighted above, as well as $1.2 million in incremental store pre-opening and closing costs. Gross margins for the quarter decreased as a percentage of sales to 48.2% from 48.5% in the first quarter of last year. Lower selling margins, due to more promotional and clearance activity, were partially offset by improvements in store shrink rates. Selling, general and administrative expenses, excluding other expenses separately identified in the statement of operations, totaled $153.1 million for the quarter, or 40.8% of sales versus $150.3 million or 40.4% of sales last year. Store payroll and distribution expenses, as a percentage of sales, increased slightly in the current quarter versus the prior year, with normal inflationary increases in these areas outpacing the overall sales growth rate. Alan Rosskamm, Chairman of the Board and CEO commented, "We are pleased that we achieved positive sales comparisons in the first quarter of this year versus our strongest same-store sales quarter in the prior year. Despite a relatively lackluster quarter for retailers, and our more aggressive promotional and clearance activities, we were able to deliver operating results within our earnings guidance range." In the first quarter, the Company opened three superstores and one traditional store, converted two large traditional stores to the new superstore format and closed six traditional stores. Debt Repurchases During the first quarter the Company repurchased approximately $46 million of its 10-3/8% senior subordinated notes ("Notes"), leaving $77.0 million of the Notes outstanding. In connection with these repurchases, the Company recorded a pre-tax charge of $3.4 million in the first quarter to recognize the premium paid and to write-off the related deferred finance charges. These repurchases will result in annual interest savings, based on current LIBOR rates, estimated to be $3.7 million pre-tax. Interest savings in the second through fourth quarters of fiscal year 2004 are estimated to be $2.7 million pre-tax. SFAS No. 123 - Accounting for Stock-Based Compensation Effective this quarter, the Company adopted the fair-value based method of recording stock options under SFAS No. 123, "Accounting for Stock-Based Compensation". The Company had historically applied APB Opinion No. 25, "Accounting for Stock Issued to Employees," for its stock option plans. Under APB Opinion No. 25, the Company did not recognize compensation expense for stock option grants in its income statement, but provided pro forma disclosure in its notes to financial statements. The Company adopted SFAS No. 123 under the modified-prospective method allowed under the transition provisions provided for in SFAS No. 148. The non-cash charge for expensing the cost of stock options was $1.2 million in the first quarter. The Company expects the non-cash charge for the balance of the fiscal year related to expensing of stock options to be approximately $4.0 million. Fiscal 2004 Outlook The Company is updating its previously stated earnings guidance of $2.45-$2.50 per share due to the adoption of SFAS No. 123, the repurchase of the Notes, and the reclassification proposal for dual class shares, which was announced separately today. The Company now expects fiscal 2004 earnings per share to be in the range of $2.00 to $2.10 due to the following adjustments: - Estimated pre-tax interest savings of $2.7 million for the remainder of the year from the debt repurchases completed in the first quarter. - Pre-tax charges of $3.4 million recorded in the first quarter to recognize the premium paid for the Notes and the write-off related to deferred finance charges. - Non-cash pre-tax charges of $4.0 million for the remainder of the fiscal year relating to stock based compensation expense. In the first quarter, the Company recorded pre-tax expense of $1.2 million. - Approximately $1.2 million in pre-tax costs related to the reclassification proposal announced separately today. - Approximately 8% additional diluted shares outstanding assuming the reclassification proposal for dual class shares announced today is approved by shareholders in August. The reclassification proposal will increase diluted shares outstanding by an estimated 1.6 million shares, to approximately 22.3 million diluted shares for fiscal year 2004. For the second quarter, historically the Company's weakest quarter of the year, the Company expects to lose between $0.15 to $0.20 per diluted share. The second quarter performance is expected to be impacted by $1.4 million of stock based compensation expense, approximately $1.2 million in costs related to the reclassification proposal for dual class shares, and approximately $1.5 million in incremental store pre-opening costs. In the second quarter, the Company plans to open an additional eight stores, all but one of which are superstores. Mr. Rosskamm concluded, "While we have indicated in the past that we expected fiscal 2004 to be a year of transition, the first half of the year is proving to be more challenging than anticipated. While our outlook remains cautious for the second quarter, we remain more optimistic regarding the second half of fiscal 2004. We believe our plans will allow us to improve overall margins as we anniversary less challenging same-store sales and gross margin comparisons in the second half of the year and leverage many of the initiatives we are now putting in place." Conference Call on the Web Investors will have the opportunity to listen to the first quarter earnings conference call at 4:30 p.m. ET today. The Company will also discuss the share reclassification and corporate initiatives it is undertaking. The call can be accessed via the Internet through Streetevents at http://www.streetevents.com and on our Web site at http://www.joann.com (go to the top of our home page and click on "About Jo-Ann Stores," click on "Our Company" click on "Investor Relations," then click on the Conference Call icon). To listen to the live call, please go to the Web site at least 10 minutes before the call begins to register, download and install any necessary audio software. For those who cannot listen to the live broadcast, a replay will be available shortly after the call and will be archived until Monday, May 26th. The replay may be accessed at http://www.joann.com and at http://www.streetevents.com or by phone at 800-642-1687, conference ID #9828057. Jo-Ann Stores, Inc. (http://www.joann.com), the leading national fabric and craft retailer with locations in 48 states, operates 840 traditional stores and 77 superstores. This press release contains forward-looking statements that are subject to certain risks and uncertainties. Our actual results, performance or achievements may materially differ from those expressed or implied in the forward-looking statements. Risks and uncertainties that could cause or contribute to such material differences include, but are not limited to, general economic conditions, changes in customer demand, changes in trends in the fabric and craft industry, seasonality, the availability of merchandise, changes in the competitive pricing for products, and the impact of our and our competitors store openings and closings, fuel and energy costs, changes in tariff and freight rates, consumer debt levels, other capital market and geo-political conditions.. Other important factors that may cause actual results to differ materially from those expressed in the forward-looking statements are discussed in the Company's Securities and Exchange Commission filings. (tables to follow) JO-ANN STORES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED) THIRTEEN WEEKS ENDED -------------------------- MAY 3, MAY 4, 2003 2002 ---- ---- (Dollars in millions, except per share data) Net sales $ 374.8 $ 372.4 Cost of sales 194.3 191.6 ---------- ---------- Gross margin 180.5 180.8 Selling, general and administrative expenses 153.1 150.3 Store pre-opening and closing costs 2.1 0.9 Depreciation and amortization 9.1 9.2 Stock based compensation expense 1.2 -- Debt repurchase expenses 3.4 -- ---------- ---------- Operating profit 11.6 20.4 Interest expense 5.0 6.4 ---------- ---------- Income before income taxes 6.6 14.0 Income tax provision 2.5 5.3 ---------- ---------- Net income $ 4.1 $ 8.7 ========== ========== Net income per common share - basic $ 0.21 $ 0.46 ---------- ---------- Net income per common share - diluted $ 0.20 $ 0.43 ---------- ---------- Average shares and equivalents outstanding (millions) Basic 19.7 18.7 ========== ========== Diluted 20.1 20.0 ========== ========== TOHER INFORMATION Number of stores open at period end: Traditional stores 840 881 Superstores 77 70 ---------- ---------- 917 951 ---------- ---------- Square footage at period end (000's): Traditional stores 12,105 12,523 Superstores 3,321 3,181 ---------- ---------- 15,426 15,704 ========== ========== Average square footage per store: Traditional stores 14,400 14,200 ========== ========== Superstores 43,100 45,400 ========== ==========

- more - JO-ANN STORES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED) ------------------- MAY 3, MAY 4, FEBRUARY 1, 2003 2002 2003 ---- ---- ---- (Dollars in millions) ASSETS Current assets: Cash and temporary cash investments $ 26.0 $ 19.8 $ 63.2 Inventories 369.1 400.1 363.1 Other current assets 45.1 47.9 45.4 -------- -------- -------- Total current assets 440.2 467.8 471.7 Property, equipment and leasehold improvements, net 183.5 203.9 190.3 Goodwill, net 26.5 26.5 26.5 Other assets 15.1 18.2 16.0 -------- -------- -------- Total assets $ 665.3 $ 716.4 $ 704.5 ======== ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 136.0 $ 142.4 $ 129.9 Other current liabilities 59.9 75.4 75.9 -------- -------- -------- Total current liabilities 195.9 217.8 205.8 Long-term debt 124.9 223.5 162.9 Other liabilities 46.8 32.0 46.4 Shareholders' equity 297.7 243.1 289.4 -------- -------- -------- Total liabilities and shareholders' equity $ 665.3 $ 716.4 $ 704.5 ======== ======== ========

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EX-99.1

                                                                    EXHIBIT 99.1

NEWS RELEASE

FOR IMMEDIATE RELEASE

CONTACT:  Brian Carney                            Investor Relations:
          Executive Vice President, CFO           Don Tomoff
         Jo-Ann Stores, Inc.                      Vice President, Finance
          330/656-2600                            Jo-Ann Stores, Inc.
          http://www.joann.com                    330/463-6815


         JO-ANN STORES, INC. ANNOUNCES SHARE RECLASSIFICATION PROPOSAL

- -     S-4 REGISTRATION STATEMENT FILED IN CONNECTION WITH RECLASSIFICATION
      PROPOSAL TO CONVERT COMPANY'S DUAL-CLASS EQUITY STRUCTURE TO A SINGLE
      VOTING CLASS OF STOCK

- -     TWO NON-INDEPENDENT BOARD MEMBERS TO BE APPOINTED TO EMERITUS STATUS, UPON
      COMPLETION OF SEARCH FOR TWO INDEPENDENT BOARD MEMBERS

- -     SEARCH UNDERWAY FOR TWO INDEPENDENT BOARD MEMBERS

- -     ADOPTS SFAS NO. 123 AND INITIATES THE EXPENSING OF STOCK OPTIONS

HUDSON, OH, May 19, 2003 -- Jo-Ann Stores, Inc. (NYSE: JAS.A and JAS.B)
announced that it has filed a Form S-4 Registration Statement with the
Securities and Exchange Commission today to register securities to be issued in
connection with a proposed reclassification of its two classes of common shares
into one voting class. The proposal must be approved by a majority of the shares
outstanding of both the Company's Class A and Class B shares.

Shares of the Company's Class B shares, which currently do not have voting
rights other than as required by law, will be amended to have one vote per share
and will be redesignated as the Company's "Common Shares". Each of the Class A
shares, which currently have one vote per share, will be reclassified into 1.15
Common Shares, resulting in the issuance of approximately 1.6 million additional
shares that will increase the Company's total shares outstanding by
approximately 8.0%.

The Company expects to hold a special meeting of shareholders on or about August
13, 2003 to vote on the proposal. The Corporate Governance Committee of the
Company's Board of Directors has retained Lehman Brothers to serve as its
advisor in connection with this proposal.

The Company expects to realize a number of benefits from the proposed
reclassification, including:

      -     increasing the trading volume and liquidity of its shares

      -     simplifying its equity capital structure

      -     broadening the appeal of its shares to a larger base of investors

      -     more closely aligning the voting rights of the Company's
            shareholders with their economic interests

As part of the proposal, the Company will also seek to amend and strengthen
various shareholder protection measures included in its code of regulations.

The Rosskamm and Zimmerman founding families, including Betty Rosskamm, Alan
Rosskamm, Alma Zimmerman and their decendents, have indicated that they support
the combination even though they will not receive any such consideration.
Currently, the founding families beneficially own

approximately 25.1% of the Company's outstanding Class A shares and 21.6% of the
Company's outstanding Class B shares. Upon completion of the reclassification,
the founding families will own approximately 23.6% of the outstanding newly
designated Common Shares. Thus, their voting power will decrease from
approximately 25.1% to approximately 23.6%. After the elimination of the dual
class structure, members of the founding families will not be able to sell any
shares without further diluting their voting power.

Jo-Ann Stores also announced that it has initiated a search for two independent
Board candidates and will appoint two of its current Board members, Betty
Rosskamm and Alma Zimmerman, members since 1967, to Emeritus status. Under
Emeritus status, neither Ms. Rosskamm nor Ms. Zimmerman will serve on any of the
committees of the Board, nor will either of them vote on any matters that come
before the Board for approval. The appointment of Ms. Rosskamm and Ms. Zimmerman
to Emeritus status will be effective upon the final selection and approval of
the two new Board candidates.

After filling the two open Board positions, at least six of the Company's eight
voting Board members will be comprised of independent Board members, as defined
under the current proposals of the New York Stock Exchange.

Finally, effective with the first quarter of fiscal 2004, the Company adopted
the fair-value based method of recording stock option expense under SFAS No.
123, "Accounting for Stock-Based Compensation". Previously, the Company did not
recognize compensation expense for stock option grants in its income statement,
but provided pro forma disclosure in its notes to financial statements.

Alan Rosskamm, Chairman or the Board and CEO stated, "The proposals we announced
today help to strengthen Jo-Ann's corporate governance and simplify our capital
structure, making our shares a more attractive investment. After a very thorough
review, analysis and discussion by the Corporate Governance Committee of the
Board of Directors of the Company, along with its advisor, it was determined
that the proposed reclassification plan was in the best interest of all
shareholders and the Company."

Conference Call on the Web

Investors will have the opportunity to listen to the Company's first quarter
earnings conference call at 4:30 p.m. ET today. The Company will also discuss
the share reclassification and corporate initiatives it is undertaking. The call
can be accessed via the Internet through Streetevents at
http://www.streetevents.com and on our Web site at http://www.joann.com (go to
the top of our home page and click on "About Jo-Ann Stores," click on "Our
Company" click on "Investor Relations," then click on the Conference Call icon).
To listen to the live call, please go to the Web site at least 10 minutes before
the call begins to register, download and install any necessary audio software.
For those who cannot listen to the live broadcast, a replay will be available
shortly after the call and will be archived until Monday, May 26th. The replay
may be accessed at http://www.joann.com and at http://www.streetevents.com or by
phone at 800-642-1687, conference ID #9828057.

Jo-Ann Stores, Inc. (http://www.joann.com), the leading national fabric and
craft retailer with locations in 48 states, operates 840 traditional stores and
77 superstores.

This press release contains forward-looking statements that are subject to
certain risks and uncertainties. Our actual results, performance or achievements
may materially differ from those expressed or implied in the forward-looking
statements. Risks and uncertainties that could cause or contribute to such
material differences include, but are not limited to, general economic
conditions, changes in customer demand, changes in trends in the fabric and
craft industry, seasonality, the availability of merchandise, changes in the
competitive pricing for products, and the impact of our and our competitors
store openings and closings, fuel and energy costs, changes in tariff and
freight rates, consumer debt levels, other capital market and geo-political
conditions. Other important factors that may cause actual results to differ
materially from those expressed in the forward-looking statements are discussed
in the Company's Securities and Exchange Commission filings.

EX-99.2

                                                                    EXHIBIT 99.2

EARNINGS RELEASE

FOR IMMEDIATE RELEASE

CONTACT:   Brian Carney                               Investor Relations:
           Executive Vice President, CFO              Don Tomoff
           Jo-Ann Stores, Inc.                        Vice President, Finance
           330/656-2600                               Jo-Ann Stores, Inc.
           http://www.joann.com                       330/463-6815


               JO-ANN STORES ANNOUNCES FINANCIAL RESULTS FOR THE
                          FIRST QUARTER OF FISCAL 2004

      -     FIRST QUARTER EARNINGS OF $0.20 PER SHARE

      -     ADOPTS SFAS NO. 123 AND INITIATES THE EXPENSING OF STOCK OPTIONS

      -     COMPLETES DEBT REPURCHASES OF $46 MILLION

HUDSON, OH, May 19, 2003 -- Jo-Ann Stores, Inc. (NYSE: JAS.A and JAS.B) today
announced financial results for its fiscal 2004 first quarter. Net income for
the quarter totaled $4.1 million, or $0.20 per diluted share, compared with net
income of $8.7 million, or $0.43 per diluted share in fiscal 2003.

First quarter financial results include a non-cash pre-tax charge for stock
based compensation expense of $1.2 million as a result of the adoption of
Statement of Financial Accounting Standards ("SFAS") No. 123 and a $3.4 million
pre-tax charge related to the early redemption of $46 million in long-term debt,
as described further below. Excluding the stock based compensation expense and
the charge associated with the redemption of the notes, first quarter diluted
earnings per share were within the Company's prior guidance for the quarter.

Net sales for the first quarter increased 0.6% to $374.8 million from $372.4
million in the prior year. Same-store sales increased 2.6% compared to a 13.5%
same-store sales increase for the same period in the prior year.

Review of Operating Results

Operating profit for the first quarter was $11.6 million, compared with an
operating profit of $20.4 million for the prior year's first quarter. Operating
profit in the current quarter includes the $4.6 million in charges highlighted
above, as well as $1.2 million in incremental store pre-opening and closing
costs.

Gross margins for the quarter decreased as a percentage of sales to 48.2% from
48.5% in the first quarter of last year. Lower selling margins, due to more
promotional and clearance activity, were partially offset by improvements in
store shrink rates.

Selling, general and administrative expenses, excluding other expenses
separately identified in the statement of operations, totaled $153.1 million for
the quarter, or 40.8% of sales versus $150.3 million or 40.4% of sales last
year. Store payroll and distribution expenses, as a percentage of sales,
increased slightly in the current quarter versus the prior year, with normal
inflationary increases in these areas outpacing the overall sales growth rate.

Alan Rosskamm, Chairman of the Board and CEO commented, "We are pleased that we
achieved positive sales comparisons in the first quarter of this year versus our
strongest same-store sales quarter in the prior year. Despite a relatively
lackluster quarter for retailers, and our more aggressive promotional and
clearance activities, we were able to deliver operating results within our
earnings guidance range."

In the first quarter, the Company opened three superstores and one traditional
store, converted two large traditional stores to the new superstore format and
closed six traditional stores.

Debt Repurchases

During the first quarter the Company repurchased approximately $46 million of
its 10-3/8% senior subordinated notes ("Notes"), leaving $77.0 million of the
Notes outstanding. In connection with these repurchases, the Company recorded a
pre-tax charge of $3.4 million in the first quarter to recognize the premium
paid and to write-off the related deferred finance charges. These repurchases
will result in annual interest savings, based on current LIBOR rates, estimated
to be $3.7 million pre-tax. Interest savings in the second through fourth
quarters of fiscal year 2004 are estimated to be $2.7 million pre-tax.

SFAS No. 123 - Accounting for Stock-Based Compensation

Effective this quarter, the Company adopted the fair-value based method of
recording stock options under SFAS No. 123, "Accounting for Stock-Based
Compensation". The Company had historically applied APB Opinion No. 25,
"Accounting for Stock Issued to Employees," for its stock option plans. Under
APB Opinion No. 25, the Company did not recognize compensation expense for stock
option grants in its income statement, but provided pro forma disclosure in its
notes to financial statements. The Company adopted SFAS No. 123 under the
modified-prospective method allowed under the transition provisions provided for
in SFAS No. 148. The non-cash charge for expensing the cost of stock options was
$1.2 million in the first quarter. The Company expects the non-cash charge for
the balance of the fiscal year related to expensing of stock options to be
approximately $4.0 million.

Fiscal 2004 Outlook

The Company is updating its previously stated earnings guidance of $2.45-$2.50
per share due to the adoption of SFAS No. 123, the repurchase of the Notes, and
the reclassification proposal for dual class shares, which was announced
separately today. The Company now expects fiscal 2004 earnings per share to be
in the range of $2.00 to $2.10 due to the following adjustments:

      -     Estimated pre-tax interest savings of $2.7 million for the remainder
            of the year from the debt repurchases completed in the first
            quarter.

      -     Pre-tax charges of $3.4 million recorded in the first quarter to
            recognize the premium paid for the Notes and the write-off related
            to deferred finance charges.

      -     Non-cash pre-tax charges of $4.0 million for the remainder of the
            fiscal year relating to stock based compensation expense. In the
            first quarter, the Company recorded pre-tax expense of $1.2 million.

      -     Approximately $1.2 million in pre-tax costs related to the
            reclassification proposal announced separately today.

      -     Approximately 8% additional diluted shares outstanding assuming the
            reclassification proposal for dual class shares announced today is
            approved by shareholders in August. The reclassification proposal
            will increase diluted shares outstanding by an estimated 1.6 million
            shares, to approximately 22.3 million diluted shares for fiscal year
            2004.

For the second quarter, historically the Company's weakest quarter of the year,
the Company expects to lose between $0.15 to $0.20 per diluted share. The second
quarter performance is expected to be impacted by $1.4 million of stock based
compensation expense, approximately $1.2 million in costs related to the
reclassification proposal for dual class shares, and approximately $1.5 million
in incremental store pre-opening costs.

In the second quarter, the Company plans to open an additional eight stores, all
but one of which are superstores.

Mr. Rosskamm concluded, "While we have indicated in the past that we expected
fiscal 2004 to be a year of transition, the first half of the year is proving to
be more challenging than anticipated. While our outlook remains cautious for the
second quarter, we remain more optimistic regarding the second half of fiscal
2004. We believe our plans will allow us to improve overall margins as we
anniversary less challenging same-store sales and gross margin comparisons in
the second half of the year and leverage many of the initiatives we are now
putting in place."

Conference Call on the Web

Investors will have the opportunity to listen to the first quarter earnings
conference call at 4:30 p.m. ET today. The Company will also discuss the share
reclassification and corporate initiatives it is undertaking. The call can be
accessed via the Internet through Streetevents at http://www.streetevents.com
and on our Web site at http://www.joann.com (go to the top of our home page and
click on "About Jo-Ann Stores," click on "Our Company" click on "Investor
Relations," then click on the Conference Call icon). To listen to the live call,
please go to the Web site at least 10 minutes before the call begins to
register, download and install any necessary audio software. For those who
cannot listen to the live broadcast, a replay will be available shortly after
the call and will be archived until Monday, May 26th. The replay may be accessed
at http://www.joann.com and at http://www.streetevents.com or by phone at
800-642-1687, conference ID #9828057.

Jo-Ann Stores, Inc. (http://www.joann.com), the leading national fabric and
craft retailer with locations in 48 states, operates 840 traditional stores and
77 superstores.

This press release contains forward-looking statements that are subject to
certain risks and uncertainties. Our actual results, performance or achievements
may materially differ from those expressed or implied in the forward-looking
statements. Risks and uncertainties that could cause or contribute to such
material differences include, but are not limited to, general economic
conditions, changes in customer demand, changes in trends in the fabric and
craft industry, seasonality, the availability of merchandise, changes in the
competitive pricing for products, and the impact of our and our competitors
store openings and closings, fuel and energy costs, changes in tariff and
freight rates, consumer debt levels, other capital market and geo-political
conditions.. Other important factors that may cause actual results to differ
materially from those expressed in the forward-looking statements are discussed
in the Company's Securities and Exchange Commission filings.

                               (tables to follow)

                               JO-ANN STORES, INC.

                      CONSOLIDATED STATEMENTS OF OPERATIONS



                                                                                    (UNAUDITED)
                                                                                THIRTEEN WEEKS ENDED
                                                                             --------------------------
                                                                                MAY 3,          MAY 4,
                                                                                2003            2002
                                                                                ----            ----
(Dollars in millions, except per share data)
                                                                                       
Net sales                                                                    $    374.8      $    372.4
Cost of sales                                                                     194.3           191.6
                                                                             ----------      ----------
    Gross margin                                                                  180.5           180.8

Selling, general and administrative expenses                                      153.1           150.3
Store pre-opening and closing costs                                                 2.1             0.9
Depreciation and amortization                                                       9.1             9.2
Stock based compensation expense                                                    1.2            --
Debt repurchase expenses                                                            3.4            --
                                                                             ----------      ----------
    Operating profit                                                               11.6            20.4
Interest expense                                                                    5.0             6.4
                                                                             ----------      ----------
    Income before income taxes                                                      6.6            14.0
Income tax provision                                                                2.5             5.3
                                                                             ----------      ----------
Net income                                                                   $      4.1      $      8.7
                                                                             ==========      ==========

Net income per common share - basic                                          $     0.21      $     0.46
                                                                             ----------      ----------
Net income per common share - diluted                                        $     0.20      $     0.43
                                                                             ----------      ----------
Average shares and equivalents outstanding (millions)
    Basic                                                                          19.7            18.7
                                                                             ==========      ==========
    Diluted                                                                        20.1            20.0
                                                                             ==========      ==========
TOHER INFORMATION

Number of stores open at period end:

    Traditional stores                                                              840             881
    Superstores                                                                      77              70
                                                                             ----------      ----------
                                                                                    917             951
                                                                             ----------      ----------
Square footage at period end (000's):

    Traditional stores                                                           12,105          12,523
    Superstores                                                                   3,321           3,181
                                                                             ----------      ----------
                                                                                 15,426          15,704
                                                                             ==========      ==========
Average square footage per store:

    Traditional stores                                                           14,400          14,200
                                                                             ==========      ==========
    Superstores                                                                  43,100          45,400
                                                                             ==========      ==========

                                    - more -

                               JO-ANN STORES, INC.

                      CONDENSED CONSOLIDATED BALANCE SHEETS



                                                            (UNAUDITED)
                                                        -------------------
                                                          MAY 3,     MAY 4,   FEBRUARY 1,
                                                          2003        2002      2003
                                                          ----        ----      ----
(Dollars in millions)
                                                                     
ASSETS
Current assets:
    Cash and temporary cash investments                 $   26.0   $   19.8   $   63.2
    Inventories                                            369.1      400.1      363.1
    Other current assets                                    45.1       47.9       45.4
                                                        --------   --------   --------
Total current assets                                       440.2      467.8      471.7

Property, equipment and leasehold improvements, net        183.5      203.9      190.3
Goodwill, net                                               26.5       26.5       26.5
Other assets                                                15.1       18.2       16.0
                                                        --------   --------   --------
Total assets                                            $  665.3   $  716.4   $  704.5
                                                        ========   ========   ========

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:

    Accounts payable                                    $  136.0   $  142.4   $  129.9
    Other current liabilities                               59.9       75.4       75.9
                                                        --------   --------   --------
Total current liabilities                                  195.9      217.8      205.8

Long-term debt                                             124.9      223.5      162.9
Other liabilities                                           46.8       32.0       46.4
Shareholders' equity                                       297.7      243.1      289.4
                                                        --------   --------   --------
Total liabilities and shareholders' equity              $  665.3   $  716.4   $  704.5
                                                        ========   ========   ========


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