Jo-Ann Stores, Inc. (Form: 8-K)

Investor Contact:
Brad Cohen
Integrated Corporate Relations, Inc.
330/463-6865
http://www.joann.com

Public Relations Contact:
Lisa Greb
Director, Public Relations
Jo-Ann Stores, Inc.
330/463-3442

HUDSON, OH – November 28, 2007 — Jo-Ann Stores, Inc. (NYSE: JAS) today announced financial results for its fiscal 2008 third quarter ended November 3, 2007. Net earnings for the quarter were $8.0 million, or $0.32 per diluted share, compared with net earnings of $0.1 million, or $0.00 per share in fiscal 2007.

Net sales for the third quarter increased 4.0% to $480.2 million from $461.9 million in the prior year. Same-store sales increased 2.4% versus a decrease of 5.4% for the same period last year.

Large-format stores net sales for the quarter increased 7.9% to $247.0 million from $229.0 million last year. Same-store sales for large-format stores increased 2.4%, versus a decrease of 7.6% for the same period last year. Small-format stores net sales of $233.2 million were flat compared to last year. Same-store sales performance for small-format stores increased 2.4% versus a decrease of 3.5% for the same period last year.

“I am pleased with our ongoing improvement as we deliver on our strategic plan and capitalize on competitive dynamics in the fabric industry. Despite a weakening economy, during the third quarter we drove same-store sales growth, margin expansion and a strong earnings per share increase,” said Darrell Webb, chairman, president, and chief executive officer. “We are making progress on our initiatives to improve the customer shopping experience and enhance our marketing and merchandising. As we continue to execute our plan, including the implementation of a more disciplined approach to new store site selection and store remodels, we will be able to deliver sustainable sales and earnings growth over the long term.”

Net sales for the nine-month period ended November 3, 2007 were $1.30 billion versus $1.25 billion in the prior year. Same-store sales increased 3.5% for the nine-month period versus a 5.8% decrease for the same period last year.

Large-format stores net sales for the nine-month period increased 10.6% to $661.3 million from $597.9 million last year. Same-store sales for large-format stores increased 4.6%, versus an 8.4% decrease in the prior year. Small-format stores net sales for the nine-month period decreased 3.1% to $631.6 million from $651.9 million last year. Same-store sales performance for small-format stores increased 2.6% versus a 3.7% decrease in the prior year.

Gross margins for the third quarter increased 60 basis points to 48.0% from 47.4%, largely due to the timing of plan-o-gram resets and clearance markdowns taken in the second quarter this year versus the third and fourth quarter last year.

Selling, general and administrative expenses for the quarter increased to $199.1 million from $198.5 million last year. Selling, general and administrative expenses improved by 150 basis points to 41.5% of net sales from 43.0% of net sales, in the prior year’s third quarter.

Operating profit for the third quarter was $16.7 million, versus $5.0 million for the prior year’s third quarter.

During the third quarter of fiscal 2008, the Company opened one large-format store and closed five small-format stores. Year-to-date, the Company has opened six large-format stores and closed 22 small-format stores. For the balance of the year, the Company expects to close ten small-format stores and one large-format store. Next fiscal year, the Company expects to open approximately 12-15 new stores.

During the third quarter of fiscal 2008, the Company remodeled three stores and has now remodeled all 26 stores it planned during the year. Next fiscal year, the Company expects to remodel approximately 30 stores.

The Company is updating its full year earnings per share guidance range for fiscal 2008. Based upon management’s operating assumptions, the implementation of Jo-Ann Stores’ strategic growth plans, the increased uncertainty in consumer spending and current market conditions, the Company expects year-over-year improvement in business performance in fiscal 2008. The key considerations for understanding the Company’s full year outlook for fiscal 2008 include:

•

Selling, general and administrative expenses improving as a percentage of net sales;

•

Earnings per diluted share in the range of $0.55 to $0.65 from the previously communicated range of $0.60 to $0.70.

Investors will have the opportunity to listen to the third quarter earnings conference call at 4:30 p.m. ET today. The call can be accessed via the Internet through Streetevents at http://www.streetevents.com and on our website at http://www.joann.com (go to the bottom of our home page and click on “Investor Relations,” then click on the Conference Call icon). To listen to the live call, please go to the website at least ten minutes before the call begins to register, and 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. 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 # 22067162.

Jo-Ann Stores, Inc. (http://www.joann.com), the leading national fabric and craft retailer with locations in 47 states, operates 195 large-format stores and 590 small-format stores.

This press release contains forward-looking statements that are subject to certain risks and uncertainties. Our actual results, performance or achievements may differ materially 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, failure to manage new store growth and the store transition strategy, the availability of merchandise, changes in the competitive pricing for products, the impact of competitors’ store openings and closings, longer-term unseasonable weather or widespread severe weather, our ability to effectively manage our distribution network, our ability to recruit and retain highly qualified personnel, our ability to sell-through our inventory at acceptable prices, energy costs, increases in transportation costs, our indebtedness and limits on obtaining additional financing, failure to maintain the security of our electronic and other confidential information, failure to comply with various laws and regulations, consumer confidence and debt levels, and 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.


	Thirteen Weeks Ended				Thirty -Nine Weeks Ended
	November 3,		October 28,		November 3,			October 28,
	2007		2006		2007			2006
(Dollars in millions, except per share data)
Net sales	$	480.2	$	461.9	$	1,292.9		$	1,249.8
Cost of sales		249.7		242.8		684.4			660.4

Gross margin		230.5		219.1		608.5			589.4
Selling, general and administrative expenses		199.1		198.5		572.7			575.1
Store pre-opening and closing costs		1.5		3.0		6.6			11.1
Depreciation and amortization		13.2		12.6		38.6			36.5

Operating profit (loss)		16.7		5.0		(9.4	)		(33.3	)
Interest expense, net		3.9		4.9		9.3			12.3

Income (loss) before income taxes and cumulative effect of accounting change		12.8		0.1		(18.7	)		(45.6	)
Income tax provision (benefit)		4.8		—		(6.6	)		(16.9	)

Income (loss) before cumulative effect of accounting change		8.0		0.1		(12.1	)		(28.7	)
Cumulative effect of accounting change, net of tax		—		—		—			1.0

Net income (loss)	$	8.0	$	0.1	$	(12.1	)	$	(27.7	)

Income (loss) per common share – basic:
Income (loss) before cumulative effect of accounting change	$	0.33	$	—	$	(0.50	)	$	(1.22	)
Net income (loss)		0.33		—		(0.50	)		(1.18	)
Income (loss) per common share – diluted:
Income (loss) before cumulative effect of accounting change	$	0.32	$	—	$	(0.50	)	$	(1.22	)
Net income (loss)		0.32		—		(0.50	)		(1.18	)
Weighted average shares outstanding (in thousands):
Basic		24,407		23,548		24,247			23,442

Diluted		25,011		23,986		24,247			23,442

OTHER INFORMATION
Number of stores open at period end:
Small-format stores						590			643
Large-format stores						195			172

						785			815

Square footage at period end (000’s):
Small-format stores						8,655			9,559
Large-format stores						7,453			6,813

						16,108			16,372

Average square footage per store:
Small-format stores						14,669			14,866

Large-format stores						38,221			39,610


	(Unaudited)
	November 3,		October 28,		February 3,
	2007		2006		2007
(Dollars in millions)
Assets
Current assets:
Cash and cash equivalents	$	29.4	$	20.9	$	18.4
Inventories		570.9		535.8		453.4
Deferred income taxes		29.4		38.0		41.6
Prepaid expenses and other current assets		24.3		25.5		30.4

Total current assets		654.0		620.2		543.8
Property, equipment and leasehold improvements, net		301.9		313.7		311.8
Other assets		9.9		9.8		10.7

Total assets	$	965.8	$	943.7	$	866.3

Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	186.4	$	186.2	$	147.5
Accrued expenses		67.6		69.3		84.4

Total current liabilities		254.0		255.5		231.9
Long-term debt		202.0		200.3		125.3
Deferred income taxes		16.2		23.2		14.2
Lease obligations and other long-term liabilities		82.7		84.8		85.1
Shareholders’ equity		410.9		379.9		409.8

Total liabilities and shareholders’ equity	$	965.8	$	943.7	$	866.3


Ohio	001-06695	34-0720629
_____________________ (State or other jurisdiction	_____________ (Commission	______________ (I.R.S. Employer
of incorporation)	File Number)	Identification No.)

5555 Darrow Rd., Hudson, Ohio		44236
_________________________________ (Address of principal executive offices)		___________ (Zip Code)


	Jo-Ann Stores, Inc.

November 28, 2007	By:	/s/ James Kerr

		Name: James Kerr
		Title: Executive Vice President and Chief Financial Officer


Exhibit No.		Description

99.1		Press Release of Jo-Ann Stores, Inc., dated November 28, 2007.


Date of Report (Date of Earliest Event Reported):		November 28, 2007


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