##### Table of Contents



United States
Securities and Exchange Commission
 WASHINGTON, D.C. 20549
 
 Form 10-Q
 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Quarterly Period Ended October 30, 2010
 Commission File No. 1-6695
 
 Jo-Ann
Stores, Inc.
  Ohio
(State or other jurisdiction of
    
    34-0720629
(I.R.S. Employer Identification No.)incorporation or organization)5555 Darrow Road, Hudson, Ohio
(Address of principal executive offices)
    
    44236
(Zip Code)
 (330) 656-2600
 þ o
 o  o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 Yes oNo þ




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##### 



Jo-Ann Stores, Inc.
Form 10-Q Index
For the Quarter Ended October 30, 2010
 Page NumbersPart I. Financial InformationItem 1. Financial StatementsConsolidated Balance Sheets  October 30, 2010 (Unaudited),
October 31, 2009 (Unaudited) and January 30, 2010
    
    
    1Unaudited Consolidated Statements of Operations for the Thirteen
and Thirty-Nine Weeks Ended October 30, 2010 and October 31, 2009
    
    
    2Unaudited Consolidated Statements of Cash Flows for the
Thirty-Nine Weeks Ended October 30, 2010 and October 31, 2009
    
    
    3Notes to Unaudited Consolidated Financial Statements
    
    
    4Item 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    
    8Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    20Item 4. Controls and Procedures
    
    
    20Part II. Other InformationItem 1. Legal Proceedings
    
    
    21Item 1A. Risk Factors
    
    
    21Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    21Item 3. Defaults Upon Senior Securities
    
    
    21Item 4. Reserved
    
    
    21Item 5. Other Information
    
    
    21Item 6. Exhibits
    
    
    22Signatures
    
    
    23Exhibit 31.1Exhibit 31.2Exhibit 32.1




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1.
    
    Financial Statements
 Jo-Ann Stores, Inc.
 
 Consolidated Balance Sheets
 (Unaudited)October 30,
    
    
    October 31,
    
    
    January 30,2010
    
    
    2009
    
    
    2010(Dollars in millions, except share and per share data)AssetsCurrent assets:Cash and cash equivalents
    
    $
    112.4
    
    
    $
    97.7
    
    
    $
    217.1Inventories
    
    
    504.3
    
    
    
    485.4
    
    
    
    416.8Deferred income taxes
    
    
    21.4
    
    
    
    21.1
    
    
    
    22.3Prepaid expenses and other current assets
    
    
    35.5
    
    
    
    28.1
    
    
    
    29.9Total current assets
    
    
    673.6
    
    
    
    632.3
    
    
    
    686.1Property, equipment and leasehold improvements, net
    
    
    296.2
    
    
    
    297.7
    
    
    
    293.7Goodwill
    
    
    11.6
    
    
    
    11.6
    
    
    
    11.6Other assets
    
    
    8.0
    
    
    
    8.3
    
    
    
    9.0Total assets
    
    $
    989.4
    
    
    $
    949.9
    
    
    $
    1,000.4Liabilities and Shareholders EquityCurrent liabilities:Accounts payable
    
    $
    204.1
    
    
    $
    171.3
    
    
    $
    151.1Accrued expenses
    
    
    96.5
    
    
    
    104.4
    
    
    
    128.6Senior subordinated notes  short term
    
    
    
    
    
    
    
    
    
    
    47.5Total current liabilities
    
    
    300.6
    
    
    
    275.7
    
    
    
    327.2Long-term debt
    
    
    
    
    
    
    47.5
    
    
    
    Long-term deferred income taxes
    
    
    8.6
    
    
    
    
    
    
    
    2.2Lease obligations and other long-term liabilities
    
    
    108.9
    
    
    
    107.2
    
    
    
    105.4Commitments and contingencies (Note 5)Shareholders equity:Preferred stock, no par value, 5,000,000 shares authorized, none issued
    
    
    
    
    
    
    
    
    
    
    Common stock, stated value $0.05 per share; 150,000,000 authorized;
issued 31,064,964; 29,665,217 and 29,989,966 shares, respectively
    
    
    1.6
    
    
    
    1.5
    
    
    
    1.5Additional paid-in capital
    
    
    261.9
    
    
    
    225.5
    
    
    
    234.7Retained earnings
    
    
    429.7
    
    
    
    339.9
    
    
    
    377.0693.2
    
    
    
    566.9
    
    
    
    613.2Treasury stock, at cost; 5,502,903; 3,768,059 and 3,773,890 shares, respectively
    
    
    (121.9
    )
    
    
    (47.4
    )
    
    
    (47.6
    )Total shareholders equity
    
    
    571.3
    
    
    
    519.5
    
    
    
    565.6Total liabilities and shareholders equity
    
    $
    989.4
    
    
    $
    949.9
    
    
    $
    1,000.4
   1




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##### Table of Contents



Jo-Ann Stores, Inc.
 
 Consolidated Statements of Operations
 (Unaudited)
 Thirteen Weeks Ended
    
    
    Thirty-Nine Weeks EndedOctober 30,
    
    
    October 31,
    
    
    October 30,
    
    
    October 31,2010
    
    
    2009
    
    
    2010
    
    
    2009(Dollars in millions, except share and per share data)Net sales
    
    $
    535.3
    
    
    $
    509.1
    
    
    $
    1,454.9
    
    
    $
    1,388.5Cost of sales (exclusive of depreciation and
amortization shown separately below)
    
    
    259.1
    
    
    
    249.3
    
    
    
    714.6
    
    
    
    699.2Gross margin
    
    
    276.2
    
    
    
    259.8
    
    
    
    740.3
    
    
    
    689.3Selling, general and administrative expenses
    
    
    209.4
    
    
    
    202.0
    
    
    
    599.3
    
    
    
    585.7Store pre-opening and closing costs
    
    
    3.6
    
    
    
    2.2
    
    
    
    8.4
    
    
    
    8.6Depreciation and amortization
    
    
    14.5
    
    
    
    14.1
    
    
    
    43.2
    
    
    
    42.0Operating profit
    
    
    48.7
    
    
    
    41.5
    
    
    
    89.4
    
    
    
    53.0Gain on purchase of senior subordinated notes
    
    
    
    
    
    
    (0.1
    )
    
    
    
    
    
    
    (1.3
    )Interest expense, net
    
    
    0.6
    
    
    
    1.6
    
    
    
    2.0
    
    
    
    4.7Income before income taxes
    
    
    48.1
    
    
    
    40.0
    
    
    
    87.4
    
    
    
    49.6Income tax provision
    
    
    19.0
    
    
    
    15.9
    
    
    
    34.7
    
    
    
    20.1Net income
    
    $
    29.1
    
    
    $
    24.1
    
    
    $
    52.7
    
    
    $
    29.5Net income per common share  basic
    
    $
    1.12
    
    
    $
    0.94
    
    
    $
    2.02
    
    
    $
    1.16Net income per common share  diluted
    
    $
    1.09
    
    
    $
    0.90
    
    
    $
    1.95
    
    
    $
    1.12Weighted average shares outstanding (in thousands):Basic
    
    
    25,888
    
    
    
    25,737
    
    
    
    26,146
    
    
    
    25,518Diluted
    
    
    26,706
    
    
    
    26,751
    
    
    
    27,070
    
    
    
    26,301
   2




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Jo-Ann Stores, Inc.
 
 Consolidated Statements of Cash Flows
 (Unaudited)
 Thirty-Nine Weeks EndedOctober 30,
    
    
    October 31,2010
    
    
    2009(Dollars in millions)Net cash flows provided by operating activities:Net income
    
    $
    52.7
    
    
    $
    29.5Adjustments to reconcile net income to net cash provided
by operating activities:Depreciation and amortization
    
    
    43.2
    
    
    
    42.0Deferred income taxes
    
    
    7.3
    
    
    
    (0.8
    )Stock-based compensation expense
    
    
    6.6
    
    
    
    6.5Amortization of deferred financing costs
    
    
    0.5
    
    
    
    0.5Loss on disposal of fixed assets
    
    
    1.1
    
    
    
    1.1Gain on purchase of senior subordinated notes
    
    
    
    
    
    
    (1.3
    )Gross excess tax deficit on stock-based compensation
    
    
    
    
    
    
    (0.6
    )Changes in operating assets and liabilities:Increase in inventories
    
    
    (87.5
    )
    
    
    (56.0
    )(Increase) decrease in prepaid expenses and other current assets
    
    
    (5.6
    )
    
    
    3.6Increase in accounts payable
    
    
    53.0
    
    
    
    26.2(Decrease) increase in accrued expenses
    
    
    (32.1
    )
    
    
    1.5Increase (decrease) in lease obligations, net
    
    
    2.0
    
    
    
    (1.4
    )Increase in other long-term liabilities
    
    
    1.5
    
    
    
    2.4Other, net
    
    
    0.4
    
    
    
    0.6Net cash provided by operating activities
    
    
    43.1
    
    
    
    53.8Cash flows used for investing activities:Capital expenditures
    
    
    (46.7
    )
    
    
    (26.1
    )Cash used for investing activities
    
    
    (46.7
    )
    
    
    (26.1
    )Net cash flows used for financing activities:Purchase of senior subordinated notes
    
    
    (47.5
    )
    
    
    (17.0
    )Proceeds from stock-based compensation plans
    
    
    12.8
    
    
    
    7.2Purchase of Jo-Ann Stores, Inc. common stock
    
    
    (74.3
    )
    
    
    (1.6
    )Gross excess tax benefit on stock-based compensation
    
    
    7.9
    
    
    
    0.8Net cash used for financing activities
    
    
    (101.1
    )
    
    
    (10.6
    )Net (decrease) increase in cash and cash equivalents
    
    
    (104.7
    )
    
    
    17.1Cash and cash equivalents at beginning of period
    
    
    217.1
    
    
    
    80.6Cash and cash equivalents at end of period
    
    $
    112.4
    
    
    $
    97.7Supplemental disclosures of cash flow information:Cash paid during the period for:Interest
    
    $
    2.9
    
    
    $
    5.5Income taxes, net of refunds
    
    
    38.2
    
    
    
    18.3
   3




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Notes to Consolidated Financial Statements (Unaudited)
 Jo-Ann Stores, Inc
 Note 1  Basis of Presentation
          4




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Note 2  Earnings Per Share
   Thirteen Weeks Ended
    
    
    Thirty-Nine Weeks EndedOctober 30,
    
    
    October 31,
    
    
    October 30,
    
    
    October 31,2010
    
    
    2009
    
    
    2010
    
    
    2009Weighted average shares outstanding:Basic common shares
    
    
    25,888
    
    
    
    25,737
    
    
    
    26,146
    
    
    
    25,518Incremental shares from assumed
exercise of stock options
    
    
    328
    
    
    
    414
    
    
    
    384
    
    
    
    260Incremental restricted shares
    
    
    490
    
    
    
    600
    
    
    
    540
    
    
    
    523Diluted common shares
    
    
    26,706
    
    
    
    26,751
    
    
    
    27,070
    
    
    
    26,301
   Note 3  Shareholders Equity
 Common
    
    
    Additional
    
    
    
    
    
    
    
    
    
    
    TotalCommon
    
    
    Treasury
    
    
    Stock Stated
    
    
    Paid-In
    
    
    Treasury
    
    
    Retained
    
    
    ShareholdersShares
    
    
    Shares
    
    
    Value
    
    
    Capital
    
    
    Stock
    
    
    Earnings
    
    
    Equity(Shares in thousands)
    
    
    (Dollars in millions)Balance, January 30, 2010
    
    
    26,216
    
    
    
    3,774
    
    
    $
    1.5
    
    
    $
    234.7
    
    
    $
    (47.6
    )
    
    $
    377.0
    
    
    $
    565.6Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    52.7
    
    
    
    52.7Exercise of stock options
    
    
    604
    
    
    
    
    
    
    
    
    
    
    
    11.0
    
    
    
    
    
    
    
    
    
    
    
    11.0Excess tax benefits on
stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7.9
    
    
    
    
    
    
    
    
    
    
    
    7.9Stock-based compensation
    
    
    407
    
    
    
    
    
    
    
    0.1
    
    
    
    6.5
    
    
    
    
    
    
    
    
    
    
    
    6.6Purchase of common stock
    
    
    (1,729
    )
    
    
    1,729
    
    
    
    
    
    
    
    
    
    
    
    (74.3
    )
    
    
    
    
    
    
    (74.3
    )Associate Stock Ownership Plan
    
    
    64
    
    
    
    
    
    
    
    
    
    
    
    1.8
    
    
    
    
    
    
    
    
    
    
    
    1.8Year-to-date activity
    
    
    (654
    )
    
    
    1,729
    
    
    
    0.1
    
    
    
    27.2
    
    
    
    (74.3
    )
    
    
    52.7
    
    
    
    5.7Balance, October 30, 2010
    
    
    25,562
    
    
    
    5,503
    
    
    $
    1.6
    
    
    $
    261.9
    
    
    $
    (121.9
    )
    
    $
    429.7
    
    
    $
    571.3
  5




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##### Table of Contents



Note 4  Financing
   Note 5  Commitments and Contingencies
  Note 6  Segment Reporting
     6




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##### Table of Contents



Large-format
    
    
    Small-format(Dollars in millions)
    
    Stores
    
    
    Stores
    
    
    Other
    
    
    ConsolidatedThirteen Weeks Ended October 30, 2010Net sales
    
    $
    283.4
    
    
    $
    242.3
    
    
    $
    9.6
    
    
    $
    535.3Store pre-opening and closing costs
    
    
    0.8
    
    
    
    2.8
    
    
    
    
    
    
    
    3.6Depreciation and amortization
    
    
    7.4
    
    
    
    3.3
    
    
    
    3.8
    
    
    
    14.5Operating profit (loss)
    
    
    41.6
    
    
    
    38.7
    
    
    
    (31.6
    )
    
    
    48.7Capital expenditures
    
    
    3.5
    
    
    
    9.1
    
    
    
    1.3
    
    
    
    13.9Thirteen Weeks Ended October 31, 2009Net sales
    
    $
    273.4
    
    
    $
    227.1
    
    
    $
    8.6
    
    
    $
    509.1Store pre-opening and closing costs
    
    
    0.9
    
    
    
    1.3
    
    
    
    
    
    
    
    2.2Depreciation and amortization
    
    
    7.9
    
    
    
    2.7
    
    
    
    3.5
    
    
    
    14.1Operating profit (loss)
    
    
    37.3
    
    
    
    40.4
    
    
    
    (36.2
    )
    
    
    41.5Capital expenditures
    
    
    2.8
    
    
    
    5.0
    
    
    
    1.6
    
    
    
    9.4Thirty-Nine Weeks Ended October 30,
2010Net sales
    
    $
    779.5
    
    
    $
    646.8
    
    
    $
    28.6
    
    
    $
    1,454.9Store pre-opening and closing costs
    
    
    2.3
    
    
    
    6.1
    
    
    
    
    
    
    
    8.4Depreciation and amortization
    
    
    22.4
    
    
    
    9.1
    
    
    
    11.7
    
    
    
    43.2Operating profit (loss)
    
    
    91.5
    
    
    
    92.4
    
    
    
    (94.5
    )
    
    
    89.4Capital expenditures
    
    
    8.6
    
    
    
    25.4
    
    
    
    12.7
    
    
    
    46.7Property, equipment and leasehold
improvements, net
    
    
    135.6
    
    
    
    69.6
    
    
    
    91.0
    
    
    
    296.2Thirty-Nine Weeks Ended October 31,
2009Net sales
    
    $
    750.9
    
    
    $
    612.0
    
    
    $
    25.6
    
    
    $
    1,388.5Store pre-opening and closing costs
    
    
    3.2
    
    
    
    5.4
    
    
    
    
    
    
    
    8.6Depreciation and amortization
    
    
    23.9
    
    
    
    7.8
    
    
    
    10.3
    
    
    
    42.0Operating profit (loss)
    
    
    73.5
    
    
    
    83.2
    
    
    
    (103.7
    )
    
    
    53.0Capital expenditures
    
    
    7.6
    
    
    
    10.7
    
    
    
    7.8
    
    
    
    26.1Property, equipment and leasehold
improvements, net
    
    
    156.7
    
    
    
    51.5
    
    
    
    89.5
    
    
    
    297.7
  7




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  General Overview
    Executive Overview
  
    
    same-store sales growth of 4.1 percent;
 
    
    gross margin expansion of 60 basis points; and
 
    
    selling, general and administrative expense (SG&A) improvement of approximately 60
basis points.
     8




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Recent Developments and Business Update
 Outlook for Fiscal 2011
    9




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##### Table of Contents




    
    Same-store sales increase of 3.5% to 4.0% for the year versus the previously announced
range of 3.0% to 4.0%;
 
    
    Gross margin rate improvement of 90 to 100 basis points for the year versus the
previously announced range of 70 to 90 basis points;
 
    
    SG&A, as a percentage of net sales, improvement of 60 to 70 basis points for the year
versus the previously announced range of 50 to 70 basis points;
 
    
    Capital expenditures, net of landlord allowances, of approximately $54 million for the
full year;
 
    
    Earnings per diluted share of $3.35 to $3.45 for the year versus the previously
announced range of $3.20 to $3.35;
 
    
    Free cash flow of $85 to $88 million for the year (free cash flow defined as net income
plus depreciation and amortization, stock-based compensation expense and changes in working
capital, less capital expenditures, net of landlord allowances) versus the previously
announced range of $83 to $88 million; and
 
    
    Weighted-average diluted share count of approximately 26.9 million shares for the year
versus the previously announced weighted-average diluted share count of approximately 27.2
million shares.
 Results of Operations
  Percentage of Net SalesThirteen Weeks Ended
    
    
    Thirty-Nine Weeks EndedOctober 30,
    
    
    October 31,
    
    
    October 30,
    
    
    October 31,2010
    
    
    2009
    
    
    2010
    
    
    2009Net sales
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Gross margin
    
    
    51.6
    %
    
    
    51.0
    %
    
    
    50.9
    %
    
    
    49.6
    %Selling, general and administrative
expenses
    
    
    39.1
    %
    
    
    39.7
    %
    
    
    41.2
    %
    
    
    42.2
    %Store pre-opening and closing costs
    
    
    0.7
    %
    
    
    0.4
    %
    
    
    0.6
    %
    
    
    0.6
    %Depreciation and amortization
    
    
    2.7
    %
    
    
    2.7
    %
    
    
    3.0
    %
    
    
    3.0
    %Operating profit
    
    
    9.1
    %
    
    
    8.2
    %
    
    
    6.1
    %
    
    
    3.8
    %
 Net Sales .
 Consolidated Net Sales
 Thirteen Weeks Ended
    
    
    
    
    
    
    Thirty-Nine Weeks EndedOctober 30,
    
    
    October 31,
    
    
    Percentage
    
    
    October 30,
    
    
    October 31,
    
    
    Percentage(Dollars in millions)
    
    2010
    
    
    2009
    
    
    Change
    
    
    2010
    
    
    2009
    
    
    ChangeConsolidated net sales
    
    $
    535.3
    
    
    $
    509.1
    
    
    
    5.1
    %
    
    $
    1,454.9
    
    
    $
    1,388.5
    
    
    
    4.8
    %Increase from prior year
    
    $
    26.2
    
    
    
    
    
    
    
    
    
    
    $
    66.4Same-store sales
percentage change
    
    
    4.1
    %
    
    
    4.3
    %
    
    
    
    
    
    
    4.2
    %
    
    
    2.5
    %
  10




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Comparison of the Thirteen Weeks Ended October 30, 2010 to October 31, 2009
    Comparison of the Thirty-Nine Weeks Ended October 30, 2010 to October 31, 2009
     11




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Sales by Segment:
 Thirteen Weeks Ended
    
    
    
    
    
    
    Thirty-Nine Weeks EndedOctober 30,
    
    
    October 31,
    
    
    Percentage
    
    
    October 30,
    
    
    October 31,
    
    
    Percentage(Dollars in millions)
    
    2010
    
    
    2009
    
    
    Change
    
    
    2010
    
    
    2009
    
    
    ChangeLarge-format storesNet sales
    
    $
    283.4
    
    
    $
    273.4
    
    
    
    3.7
    %
    
    $
    779.5
    
    
    $
    750.9
    
    
    
    3.8
    %Increase from prior year
    
    $
    10.0
    
    
    
    
    
    
    
    
    
    
    $
    28.6Same-store sales
percentage change
    
    
    2.5
    %
    
    
    2.3
    %
    
    
    
    
    
    
    2.5
    %
    
    
    0.7
    %Small-format storesNet sales
    
    $
    242.3
    
    
    $
    227.1
    
    
    
    6.7
    %
    
    $
    646.8
    
    
    $
    612.0
    
    
    
    5.7
    %Increase from prior year
    
    $
    15.2
    
    
    
    
    
    
    
    
    
    
    $
    34.8Same-store sales
percentage change
    
    
    6.0
    %
    
    
    6.7
    %
    
    
    
    
    
    
    6.4
    %
    
    
    4.7
    %OtherNet sales
    
    $
    9.6
    
    
    $
    8.6
    
    
    
    11.6
    %
    
    $
    28.6
    
    
    $
    25.6
    
    
    
    11.7
    %Increase from prior year
    
    $
    1.0
    
    
    
    
    
    
    
    
    
    
    $
    3.0
 Comparison of the Thirteen Weeks Ended October 30, 2010 to October 31, 2009
       12




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Comparison of the Thirty-Nine Weeks Ended October 30, 2010 to October 31, 2009
      Gross Margin.
 Gross Margin:
 Thirteen Weeks Ended
    
    
    
    
    
    
    Thirty-Nine Weeks EndedOctober 30,
    
    
    October 31,
    
    
    Percentage
    
    
    October 30,
    
    
    October 31,
    
    
    Percentage(Dollars in millions)
    
    2010
    
    
    2009
    
    
    Change
    
    
    2010
    
    
    2009
    
    
    ChangeGross margin
    
    $
    276.2
    
    
    $
    259.8
    
    
    
    6.3
    %
    
    $
    740.3
    
    
    $
    689.3
    
    
    
    7.4
    %Increase from prior year
    
    $
    16.4
    
    
    
    
    
    
    
    
    
    
    $
    51.0Percentage of
consolidated net sales
    
    
    51.6
    %
    
    
    51.0
    %
    
    
    
    
    
    
    50.9
    %
    
    
    49.6
    %
    13




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##### Table of Contents



Selling, general and administrative expenses.
 Selling, General and Administrative Expenses:
 Thirteen Weeks Ended
    
    
    
    
    
    
    Thirty-Nine Weeks EndedOctober 30,
    
    
    October 31,
    
    
    Percentage
    
    
    October 30,
    
    
    October 31,
    
    
    Percentage(Dollars in millions)
    
    2010
    
    
    2009
    
    
    Change
    
    
    2010
    
    
    2009
    
    
    ChangeSelling, general and
administrative expenses
    
    $
    209.4
    
    
    $
    202.0
    
    
    
    3.7
    %
    
    $
    599.3
    
    
    $
    585.7
    
    
    
    2.3
    %Increase from prior year
    
    $
    7.4
    
    
    
    
    
    
    
    
    
    
    $
    13.6Percentage of
consolidated net sales
    
    
    39.1
    %
    
    
    39.7
    %
    
    
    
    
    
    
    41.2
    %
    
    
    42.2
    %
     Store pre-opening and closing costs.
  14




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Store pre-opening and closing costs:
 Thirteen Weeks Ended
    
    
    
    
    
    
    Thirty-Nine Weeks EndedOctober 30,
    
    
    October 31,
    
    
    Percentage
    
    
    October 30,
    
    
    October 31,
    
    
    Percentage(Dollars in millions)
    
    2010
    
    
    2009
    
    
    Change
    
    
    2010
    
    
    2009
    
    
    ChangeStore pre-opening and
closing costs
    
    $
    3.6
    
    
    $
    2.2
    
    
    
    63.6
    %
    
    $
    8.4
    
    
    $
    8.6
    
    
    
    (2.3
    )%Increase (decrease)
from prior year
    
    $
    1.4
    
    
    
    
    
    
    
    
    
    
    $
    (0.2
    )Percentage of
consolidated net sales
    
    
    0.7
    %
    
    
    0.4
    %
    
    
    
    
    
    
    0.6
    %
    
    
    0.6
    %Store pre-opening costs
    
    $
    2.6
    
    
    $
    1.4
    
    
    
    85.7
    %
    
    $
    6.5
    
    
    $
    4.5
    
    
    
    44.4
    %Increase from prior year
    
    $
    1.2
    
    
    
    
    
    
    
    
    
    
    $
    2.0Stores opened
    
    
    10
    
    
    
    4
    
    
    
    
    
    
    
    24
    
    
    
    19Store closing costs
    
    $
    1.0
    
    
    $
    0.8
    
    
    
    25.0
    %
    
    $
    1.9
    
    
    $
    4.1
    
    
    
    (53.7
    )%Increase (decrease)
from prior year
    
    $
    0.2
    
    
    
    
    
    
    
    
    
    
    $
    (2.2
    )Stores closed
    
    
    6
    
    
    
    4
    
    
    
    
    
    
    
    14
    
    
    
    25
    Depreciation and amortization.
  Operating Profit:
 Thirteen Weeks Ended
    
    
    
    
    
    
    Thirty-Nine Weeks EndedOctober 30,
    
    
    October 31,
    
    
    Percentage
    
    
    October 30,
    
    
    October 31,
    
    
    Percentage(Dollars in millions)
    
    2010
    
    
    2009
    
    
    Change
    
    
    2010
    
    
    2009
    
    
    ChangeOperating profit
    
    $
    48.7
    
    
    $
    41.5
    
    
    
    17.3
    %
    
    $
    89.4
    
    
    $
    53.0
    
    
    
    68.7
    %Increase from prior year
    
    $
    7.2
    
    
    
    
    
    
    
    
    
    
    $
    36.4Percentage of
consolidated net sales
    
    
    9.1
    %
    
    
    8.2
    %
    
    
    
    
    
    
    6.1
    %
    
    
    3.8
    %
   15




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Operating Profit (Loss) by Segment:
 Thirteen Weeks Ended
    
    
    
    
    
    
    Thirty-Nine Weeks EndedOctober 30,
    
    
    October 31,
    
    
    Percentage
    
    
    October 30,
    
    
    October 31,
    
    
    Percentage(Dollars in millions)
    
    2010
    
    
    2009
    
    
    Change
    
    
    2010
    
    
    2009
    
    
    ChangeLarge-format storesOperating profit
    
    $
    41.6
    
    
    $
    37.3
    
    
    
    11.5
    %
    
    $
    91.5
    
    
    $
    73.5
    
    
    
    24.5
    %Increase from prior year
    
    $
    4.3
    
    
    
    
    
    
    
    
    
    
    $
    18.0Small-format storesOperating profit
    
    $
    38.7
    
    
    $
    40.4
    
    
    
    (4.2
    )%
    
    $
    92.4
    
    
    $
    83.2
    
    
    
    11.1
    %(Decrease) increase
from prior year
    
    $
    (1.7
    )
    
    
    
    
    
    
    
    
    
    $
    9.2OtherOperating loss
    
    $
    (31.6
    )
    
    $
    (36.2
    )
    
    
    12.7
    %
    
    $
    (94.5
    )
    
    $
    (103.7
    )
    
    
    8.9
    %Decrease from prior year
    
    $
    4.6
    
    
    
    
    
    
    
    
    
    
    $
    9.2
 Comparison of the Thirteen Weeks Ended October 30, 2010 to October 31, 2009
    Comparison of the Thirty-Nine Weeks Ended October 30, 2010 to October 31, 2009
    Gain on purchase of senior subordinated notes.
   16




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##### Table of Contents



Interest expense.
   Income taxes .
 Liquidity and Capital Resources
   Dollars in millions
    
    2011
    
    
    2010Net cash provided by operating activities
    
    $
    43.1
    
    
    $
    53.8Cash used for investing activities
    
    
    (46.7
    )
    
    
    (26.1
    )Net cash used for financing activities
    
    
    (101.1
    )
    
    
    (10.6
    )Net (decrease) increase in cash and cash equivalents
    
    $
    (104.7
    )
    
    $
    17.1Ending cash and cash equivalents
    
    $
    112.4
    
    
    $
    97.7
  17




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##### Table of Contents



Net cash provided by operating activities
  Cash used for investing activities
  Thirty-Nine Weeks EndedOctober 30,
    
    
    October 31,Dollars in millions
    
    2010
    
    
    2009Cash
    
    $
    39.8
    
    
    $
    17.0Cash  landlord reimbursed
    
    
    6.9
    
    
    
    9.1Total
    
    $
    46.7
    
    
    $
    26.1
  Net cash used for financing activities
     18




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##### Table of Contents



Off-Balance Sheet Transactions
  Seasonality and Inflation
   Critical Accounting Policies
  Contractual Obligations
   19




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##### Table of Contents



Cautionary Statement Concerning Forward-Looking Statements
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
  
 Item 4. Controls and Procedures
     20




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##### Table of Contents



PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
 Purchases of Equity Securities by Jo-Ann Stores, Inc.
 Total Number of
    
    
    Maximum NumberShares Purchased
    
    
    of Shares that MayTotal Number
    
    
    Average
    
    
    as Part of Publicly
    
    
    Yet Be Purchasedof Shares
    
    
    Price Paid
    
    
    Announced Plans
    
    
    Under the Plans orPurchased
    
    
    per Share
    
    
    or Programs
    
    
    ProgramsAugust 2  28, 2010
    
    
    4,540
    
    
    $
    41.20
    
    
    
    2,034,935
    
    
    
    1,115,065August 29  October 2, 2010
    
    
    907,926
    
    
    $
    43.12
    
    
    
    2,942,861
    
    
    
    207,139October 3  30, 2010
    
    
    99
    
    
    $
    42.02
    
    
    
    2,942,960
    
    
    
    207,040Total
    
    
    912,565
    
    
    $
    43.11
    
    
    
    2,942,960
    
    
    
    207,040
   
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Reserved
 
 Item 5. Other Information
   21




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##### Table of Contents



Item 6. Exhibits
 Exhibits
 No.
    
    Exhibit Description31.1
    
    
    Section 302 Certification By Chief Executive Officer31.2
    
    
    Section 302 Certification By Chief Financial Officer32.1
    
    
    Section 906 Certification of Principal Executive Officer and
Principal Financial Officer
  22




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##### Table of Contents



SIGNATURES
  JO-ANN STORES, INC.DATE: December 7, 2010
    /s/ Darrell WebbDarrell Webb,Chief Executive Officer/s/ James KerrJames Kerr,Executive Vice President and Chief Financial Officer  23