UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
      Form 10-K
  ANNUAL REPORT PURSUANT TO
    SECTION 13 OR 15(d) OF THE
 SECURITIES EXCHANGE ACT OF
    1934
  For the fiscal year-ended January 30, 2010
  Commission File
    No. 1-6695
      JO-ANN STORES, INC.
 (Exact name of Registrant as
    specified in its charter)
  Ohio(State or other jurisdiction
    of
    incorporation or organization)

34-0720629(I.R.S. Employer Identification
    No.)5555 Darrow Road, Hudson, Ohio(Address of principal executive
    offices)

44236(Zip Code)    (330) 656-2600
  Securities registered pursuant to Section 12(b) of the
    Act:
  Title of Each Class

Name of Each Exchange on Which RegisteredCommon Shares, Without Par Value
    Common Share Purchase Rights

New York Stock Exchange
    New York Stock Exchange       o þ
  o þ
  þ o
  Regulation S-T o o
  Regulation S-K Form 10-K Form 10-K. o
    Large accelerated filer o

Accelerated filer þ

Non-accelerated filero
    (Do not check if a smaller reporting company)

Smaller reporting company o   Rule 12b-2 o þ




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##### 





PART I
    Item 1.
    Business  Jo-Ann Fabric and Craft Jo-Ann
      and/or
       1




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##### 



Business
    Strategy
    
    Improve the customer shopping experience.  We
    are committed to improving the customer shopping experience by
    removing excess inventory and clutter from our stores, raising
    expectations for store cleanliness, improving our in-stock
    availability of basic merchandise and improving our customer
    service.
    Enhance our marketing and merchandising
    offers.  We will drive sales growth by enhancing
    our marketing and merchandising offers. Marketing enhancements
    include changes in the appearance, content and distribution of
    our advertising. We will continue to consider new vendor
    programs. We will continue to improve our plan-o-gram processes
    in order to offer compelling and fresh product assortments that
    inspire customers. We will continue to make tighter buys on
    fashion and seasonal items for faster turns and improved margins.
    Refine our store development programs.  We will
    continue to refine our new store programs in order to generate
    better performance from new stores. In addition, we will
    continue to refine our remodel programs in order to generate
    better performance from our small-format stores and older
    large-format stores.    
    Implementation of technology.  
    During fiscal 2009, we completed the implementation of a new
    point-of-sale
    and store systems SAP Retail package, including new human
    resources and workforce management applications. The new package
    has provided additional functionality for managing markdowns,
    the ability to offer new promotional capabilities to enhance
    margins and payroll efficiencies.
    During fiscal 2010, we completed an implementation of the JDA
    Demand & Fulfillment system, enhancing our merchandise
    management portfolio of merchandise planning, space planning and
    product replenishment.  
    Continued integration of our Joann.com Internet business.  Fiscal 2009 represented our first full year of
    operations for Joann.com. During fiscal 2010, we improved and
    enhanced the integration of our Internet business. We expect
    that full integration of our Internet business will achieve
    stronger synergies with our retail stores and provide an
    additional outlet for marketing opportunities.
    Store remodel and optimization
    programs.  During fiscal 2009, we re-merchandised
    approximately 200 of our small-format stores, over and above
    those we had scheduled for remodels during that year. Our store
    remodel and optimization programs continued to generate
    incremental sales. During fiscal 2010, we re-merchandised
    approximately 180 additional small-format stores. Our core
    sewing and craft business delivered positive same-store sales,
    even as the economy was deteriorating during fiscal 2009 and
    into fiscal 2010.    
    Accelerate new store growth and remodel
    projects.  During fiscal 2010, we opened 20 stores
    and remodeled 30 stores. We will increase our new store openings
    to at least 30 during fiscal 2011. We then expect to increase
    the number of new store openings by at least 10 stores per year
    over each of the following four years, for a compounded annual
    growth rate for retail square footage of about 2.5 percent
    over the five-year period between fiscal 2011 and 2015. We also
    plan to increase remodel activity in a similar fashion. We will
    complete at least 40 remodels during fiscal 2011, plus an
    incremental 10 projects per year over the following four years.
    This new store and remodel program will result in 2




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##### 



95 percent of our store portfolio as either new or
    remodeled within the past 10 years by the time we complete
    fiscal 2015.  
    Drive same-store sales.  We intend to achieve
    this priority by:  
    Rolling out several dynamic new product assortments and
    merchandising programs;
    Enhancing in-store presentations;


    Providing new branded quilt fabrics;
    Regionalizing fabric assortments;
    Performing strategic targeted marketing programs; and
    Focusing on in-store education and demonstrations.  
    Margin expansion.  We continue to believe
    margin expansion provides a significant opportunity to improve
    financial results. During fiscal 2010, we achieved margin
    expansion primarily due to the following:  
    Increased the percentage of products that we source directly
    from Asia;
    Product cost deflation on products sourced from Asia;
    Decreased freight expense as a result of lower oil prices,
    reducing our cost of sourcing products both globally and
    domestically;
    Purchased significantly less fashion and seasonal merchandise in
    fiscal 2010, reducing our exposure to promotional and clearance
    markdowns; and
    Benefited from a full-year impact of the new store systems that
    we rolled-out during fiscal 2009.    
    Enhance management training.  We have developed
    a new management training program and will continue to expand
    the program to enhance the skills of our store management teams.
    We will implement a new performance management system that
    provides on-line access to performance reviews, compensation
    management and succession planning. In addition, we will
    introduce a mystery shopper program to provide independent
    feedback on store conditions and service, so we can react
    quickly to address areas of opportunity.
    Enhance technology.  Projects for fiscal 2011
    will focus on rationalizing hardware infrastructure to reduce
    information technology operating costs. We will update our
    distribution center hardware and further enhance our
    point-of-sale
    and labor management applications.  Product
    Selection
    Fiscal Year-EndedJanuary 30,


January 31,


February 2,2010


2009


2008Principal product lines:Sewing


52
%


51
%


50
%Non-sewing


48
%


49
%


50
%Total


100
%


100
%


100
%  3




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##### 



Sewing
    
    fashion and sportswear fabrics, used primarily in the
    construction of garments for the customer seeking a unique,
    fashion forward look;
    special occasion fabrics used to construct evening wear, bridal
    and special occasion outfits;
    craft fabrics used primarily in the construction of quilts,
    craft and seasonal projects for the home;
    juvenile designs for the construction of garments, as well as
    blankets and décor accessories;
    fleece fabrics in both prints and solids used for the
    construction of sportswear, blankets and craft projects for the
    home;
    home decorating fabrics and accessories used in home related
    projects such as window treatments, furniture and bed coverings
    (in addition to the in-store assortment, we offer a special
    order capability for additional designs);
    a wide array of notions, which represent items incidental to
    sewing-related projects  including cutting
    implements, threads, zippers, trims, tapes, pins, elastics,
    buttons and ribbons, as well as the patterns necessary for most
    sewing projects; and
    sewing-related accessories including lighting, organizers and
    sewing machines. Our high volume stores offer a wider selection
    of sewing machines through leased departments with third parties.  Non-sewing
    
    yarn and accessories, as well as needlecraft kits and supplies;
    paper crafting components, such as albums, papers, stickers,
    stamps and books used in the popular home based activities of
    scrapbooking and card making;
    craft materials, including items used for stenciling, jewelry
    making, decorative painting, wall décor, food crafting and
    kids crafting;
    fine art materials, including items such as pastels, water
    colors, oil paints, acrylics, easels, brushes, paper and canvas;
    a comprehensive assortment of books and magazines to provide
    inspiration for our customer;
    framed art, photo albums and ready-made frames and full service
    in-store custom framing departments;
    floral products, including artificial flowers, dried flowers and
    artificial plants, sold separately or in ready-made floral
    arrangements and a broad selection of accessories essential for
    floral arranging and wreath making; and
    home décor accessories including baskets, candles and
    accent collections designed to complement our home décor
    fashions.   4




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##### 



Marketing
    e-mail
      e-commerce
  e-commerce e-commerce
    Purchasing
   5




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##### 



and/or
  Logistics
      Store
    Operations
  Site Selection.
  Costs of Opening Stores.
  Store Management.
   6




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Small-


Large-







Small-


Large-format


format


Total




format


format


TotalAlabama


1



1



2


Nebraska


4







4Alaska


4



2



6


Nevada


2



3



5Arizona


3



10



13


New Hampshire


8







8Arkansas


1







1


New Jersey


11



1



12California


59



22



81


New Mexico


6







6Colorado


8



6



14


New York


27



9



36Connecticut


5



5



10


North Carolina


6



1



7Delaware


2



1



3


North Dakota


4







4Florida


28



21



49


Ohio


34



18



52Georgia


6



6



12


Oklahoma


4







4Idaho


7



1



8


Oregon


20



4



24Illinois


21



12



33


Pennsylvania


30



12



42Indiana


18



8



26


Rhode Island






1



1Iowa


10







10


South Carolina


2







2Kansas


6



2



8


South Dakota


1







1Kentucky


3



1



4


Tennessee






5



5Louisiana


4







4


Texas


22



14



36Maine


4



1



5


Utah


6



4



10Maryland


11



5



16


Vermont


4







4Massachusetts


22



1



23


Virginia


19



4



23Michigan


20



21



41


Washington


17



11



28Minnesota


14



6



20


West Virginia


5







5Mississippi


1







1


Wisconsin


14



5



19Missouri


8



3



11


Total


518



228



746Montana


6



1



7     Total
    Stores
  TotalFiscal







In Operation at


Expanded


Square FootageYear

Opened


Closed


Year-End


or Downsized


at Year-End2006


44



(57
)


838







16,1982007


26



(63
)


801







16,2152008


6



(33
)


774



1



15,9322009


21



(31
)


764



1



16,0022010


20



(38
)


746



1



15,943    7




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##### 



Information
    Technology
  point-of-sale point-of-sale
  look-up,
  e-commerce
  Status of Product
    or Line of Business
    Trademarks
  ® ® ® ® ® ® ® ®
  Seasonal
    Business
   8




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##### 



Customer
    Base
    Backlog of
    Orders
    Regulation
    Competitive
    Conditions
      
    purchasing power;
    brand recognition as the number one resource for fabric-related
    categories;
    ability to support efficient nationwide distribution; and
    the financial resources to execute our strategy going forward.  Research and
    Development
    Environmental
    Disclosure
   9




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##### 



Employees
      Foreign
    Operations and Export Sales
    Other Available
    Information
  Form 10-K, Form 10-Q, Form 8-K
  Form 10-K
  Item 1A.
    Risk
    Factors     10




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##### 



General economic factors may adversely affect our
    business, revenue and profitability
      Natural disasters and geo-political events could
    adversely affect our business operations and financial
    performance
  e-commerce
  We may not be able to achieve the expected benefits
    from the implementation of marketing initiatives
     11




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##### 



Failure to timely respond to changes in consumer trends
    could negatively impact our business
    Competition could negatively impact our results
      Risks associated with our suppliers could adversely
    affect our operations and financial performance
  agreed-upon
   12




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##### 



Our dependence on foreign suppliers subjects us to
    possible delays in receipt of merchandise and to the risks
    involved in foreign operations
      Our business depends on shopping center
    traffic
    The seasonality of our sales may negatively impact our
    operating results
    Disruption to the transportation system or increases in
    transportation costs may negatively impact our operating
    results
    The failure to attract and retain qualified employees
    could limit our growth and negatively impact our
    operations
   13




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##### 



Failure to manage inventory effectively could
    negatively impact our operations
      The loss of, or disruption in, or our inability to
    efficiently operate our distribution network could have a
    negative impact on our business
      Disruptions to our information systems, or our failure
    to adequately support, maintain and upgrade these systems, could
    negatively impact our operations and financial
    results.
     14




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##### 



Financing needs could restrict our operations
    Failure to comply with the restrictions placed on us by
    our lenders could have a material adverse effect on our
    business
    Failure to adequately maintain the security of our
    electronic and other confidential information could materially
    adversely affect our financial condition and results of
    operations
  e-commerce
  and/or
 15




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##### 



Failure to comply with various regulations, or
    increased litigation, may result in damage to our
    business
      We may not be able to successfully implement our store
    growth strategy
    Changes in accounting standards
    Effective tax rate
    Inadequacy of our insurance coverage could have a
    material adverse effect on our company
   16




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##### 



Cash and cash equivalents held at financial
    institutions exceed federally insured limits
    Our stock price is subject to significant
    volatility
    Events harming our companys reputation could have
    a material adverse effect on our business prospects, financial
    results and stock price
    Other Factors
    Item 1B.
    Unresolved Staff
    Comments    Item 2.
    Properties    80-acre 105-acre
   17




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##### 



Number ofFiscal Year Lease Terms Expire

Store LeasesMonth-to-month


182011


652012


572013


592014


252015


28Thereafter


516Total


768   Item 3.
    Legal
    Proceedings    Item 4.
    Reserved  Executive
    Officers of the Registrant
  Regulation S-K.
    Name

Age

PositionDarrell Webb


52


Chairman of the Board, President and Chief Executive Officer;
    effective as of January 31, 2010, Chairman of the Board and
    Chief Executive OfficerTravis Smith


37


Chief Operating Officer; effective as of January 31, 2010,
    President and Chief Operating OfficerKenneth Haverkost


53


Executive Vice President, Store OperationsJames Kerr


47


Executive Vice President, Chief Financial Officer   Darrell Webb
  Travis Smith
  Kenneth Haverkost
  James Kerr
 18




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##### 



PART II
  Item 5.
    Market for
    Registrants Common Equity, Related Stockholder Matters and
    Issuer Purchases of Equity Securities      Common SharesHigh


LowQuarter Ended Fiscal 2010:January 30, 2010

$
38.14


$
25.44October 31, 2009


31.32



22.50August 1, 2009


23.97



18.25May 2, 2009


19.07



10.79Quarter Ended Fiscal 2009:January 31, 2009

$
19.60


$
10.31November 1, 2008


27.00



14.20August 2, 2008


24.95



18.25May 3, 2008


19.91



12.22       Purchases of Equity Securities by Jo-Ann Stores, Inc.Total Number of


Maximum Number ofShares Purchased as


Shares that May YetAverage


Part of Publicly


Be Purchased UnderTotal Number of


Price Paid


Announced Plans or


the Plans orShares Purchased


per Share


Programs


ProgramsNovember 1   28, 2009


1,466


$
32.93



1,209,582



940,418November 29, 2009   January 2, 2010


4,365


$
32.33



1,213,947



936,053January 3   30, 2010










1,213,947



936,053Total


5,831


$
32.48



1,213,947



936,053    19




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##### 



STOCK PERFORMANCE
    GRAPH
  Form 10-K.
     A.C. Moore Arts & Crafts

   Mens Warehouse   Big 5 Sporting Goods

   Pep Boys  Manny, Moe &
    Jack   Borders Group

   PetSmart   Brown Shoe

   Pier 1 Imports   Cabelas

   Stage Stores   Charming Shoppes

   Ulta Salon Cosmetics & Fragrances   Collective Brands (formerly Payless
    Shoesource)

   Williams-Sonoma   Dicks Sporting Goods

   Zale   DSW   
 20




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##### 



Item 6.
    Selected Financial Data
  Managements Discussion and
    Analysis of Financial Condition and Results of Operations,
  Fiscal Year-Ended
    (a)January 30,


January 31,


February 2,


February 3,


January 28,2010


2009


2008


2007


2006(Dollars in millions, except per share data)Operating Results:Net sales

$
1,990.7


$
1,901.1


$
1,878.8


$
1,850.6


$
1,882.8Total net sales percentage increase (decrease)


4.7
%


1.2
%


1.5
%


(1.7
)%


3.9
%Same-store sales percentage increase (decrease)
    (b)


3.1
%


0.5
%


3.5
%


(5.9
)%


(0.8
)%Gross margin


975.7



882.5



872.4



859.8



859.2Selling, general and administrative expenses


793.6



775.3



774.8



790.5



774.0Store pre-opening and closing costs


11.7



12.3



8.4



11.1



23.4Depreciation and amortization


56.3



54.2



51.8



49.2



42.2Goodwill impairment


















27.1Operating profit (loss)


114.1



40.7



37.4



9.0



(7.5
)Operating profit (loss) as a percent of net sales


5.7
%


2.1
%


2.0
%


0.5
%


(0.4
)%Gain on purchase of senior subordinated notes
    (c)


(1.3
)


(4.2
)










Interest expense


6.3



9.4



12.5



15.6



12.8Income (loss) before cumulative effect of accounting change


66.6



21.9



15.4



(2.9
)


(23.0
)Cumulative effect of change in accounting principle, net of tax
    (d)














1.0



Net income (loss)

$
66.6


$
21.9


$
15.4


$
(1.9
)

$
(23.0
)Net income (loss) as a percent of net sales


3.3
%


1.2
%


0.8
%


(0.1
)%


(1.2
)%Per Share Data:Income (loss) per common share  diluted:Income (loss) before cumulative effect of accounting change

$
2.51


$
0.86


$
0.62


$
(0.12
)

$
(1.01
)Cumulative effect of change in accounting principle














0.04



Net income (loss)  diluted

$
2.51


$
0.86


$
0.62


$
(0.08
)

$
(1.01
)Weighted average shares outstanding  diluted
    (000s)


26,535



25,483



24,950



23,519



22,716Financial Position:Cash and cash equivalents

$
217.1


$
80.6


$
25.4


$
18.4


$
17.9Inventories


416.8



429.4



472.2



453.4



514.7Inventory turnover


2.4
x


2.3
x


2.2
x


2.0
x


2.1
xCurrent assets


686.1



563.8



547.8



543.8



605.8Property, equipment and leasehold improvements, net


293.7



314.8



297.5



311.8



331.7Total assets


1,000.4



899.7



869.4



866.3



946.8Current liabilities
    (e)


327.2



248.0



228.7



225.5



242.6  21




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##### 



Item 6.
    Selected
    Financial Data (Continued)  Fiscal Year-Ended
    (a)January 30,


January 31,


February 2,


February 3,


January 28,2010


2009


2008


2007


2006(Dollars in millions, except per share data)Long-term debt






66.0



100.0



125.3



203.7Shareholders equity


565.6



477.7



440.0



409.8



399.4Debt to total capitalization


7.7
%


12.1
%


18.5
%


23.4
%


33.8
%Debt to total capitalization, net of cash and cash equivalents


(42.8
)%


(3.2
)%


14.5
%


20.7
%


31.7
%Per Share Data:Book value
    (f)

$
21.57


$
18.95


$
17.97


$
17.18


$
17.09Shares outstanding, net of treasury shares (000s)


26,216



25,204



24,485



23,857



23,375Other Financial Information:Capital expenditures:Cash

$
29.2


$
63.6


$
28.6


$
44.6


$
118.9Cash  landlord reimbursement
    (g)


10.5



11.1



9.1



13.5



23.9Total capital expenditures

$
39.7


$
74.7


$
37.7


$
58.1


$
142.8Store Count:Small-format stores


518



554



578



615



676Large-format stores


228



210



196



186



162Total


746



764



774



801



838Store Square Footage (000s)
    (h)Small-format stores


7,619



8,141



8,477



9,034



9,810Large-format stores


8,324



7,861



7,455



7,181



6,388Total


15,943



16,002



15,932



16,215



16,198     (a)
    
    All years include 52 weeks
    except for the fiscal year-ended February 3, 2007, which
    includes 53 weeks.(b)
    
    Same-store sales are defined as
    net sales from stores that have been open one year or more. Net
    sales are included in the same-store sales calculation on the
    first day of the first month following the one-year anniversary
    of a stores opening. In conjunction with the expansion or
    relocation of a store, the net sales results from that store is
    excluded from the same-store sales calculation until the first
    day of the first month following the one-year anniversary of
    that stores expansion or relocation. Further, in a 53-week
    year, net sales of the first 52 weeks are compared to the
    comparable 52 weeks of the prior period.(c)
    
    Gain on purchase of senior
    subordinated notes includes the gain, net of related write-off
    of applicable deferred financing costs, on the purchase of the
    companys senior subordinated notes. See
    Note 6  Financing, contained in the notes to
    consolidated financial statements.(d)
    
    Effective January 29, 2006,
    the company changed its measurement of stock-based compensation
    using the fair value method of accounting, resulting in a
    cumulative after-tax adjustment related to estimated forfeitures.(e)
    
    On March 1, 2010, the company
    redeemed all outstanding principal amount of its
    7.5 percent senior subordinated notes of approximately
    $47.5 million at par early, which was announced on
    January 5, 2010. As such, the company has classified the
    senior subordinated notes as short-term as of January 30,
    2010.(f)
    
    Book value is calculated by
    dividing shareholders equity by shares outstanding, net of
    treasury shares.(g)
    
    Capital expenditures reimbursed by
    the landlord represent the cost of assets acquired through the
    utilization of landlord lease incentives.(h)
    
    Total store square footage
    includes selling floor space and inventory storage areas. 22




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##### 



Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  Form 10-K.
  Overview
      
    Net sales.  We closely monitor our net sales,
    including net sales from stores open one year or more
    (same-store sales), by our two store formats,
    small-format stores and large-format stores. Net sales in the
    aggregate and by store type are compared to previous periods to
    measure our overall sales growth, and same-store sales are
    compared to previous periods to determine whether existing
    stores are growing their sales volume. We also closely monitor
    average ticket value, both in total and by store format. Average
    ticket represents total sales divided by the total number of
    customer transactions. Customer transactions are impacted by the
    number of customers that shop in our stores. These indicators
    help to measure the effectiveness of our product assortments,
    promotions and service.
    Gross margin.  Our management uses gross margin
    to evaluate merchandising, marketing and operating effectiveness
    for the company. Merchandise selection and other future
    decisions such as pricing and promotional activity are, in part,
    based on gross margin performance.
    Selling, general and administrative expense as a percent of
    sales.  We monitor the leveraging of selling,
    general and administrative expense in relation to our sales in
    order to measure our effectiveness in managing expenses.
    Inventory.  We closely monitor our inventory
    investment, which is our single largest invested asset, and our
    inventory turnover rate. Due to the large investment in
    inventory, changes in inventory levels can have a significant
    impact on our liquidity. Also, inventory turnover is an
    indicator of how effectively we manage our inventory levels in
    relation to our sales.
    Debt to total capitalization and excess credit
    availability.  We monitor our debt balances and
    leverage as a percent of total capitalization. We also monitor
    current and projected excess availability, as defined under our
    senior bank credit facility, in order to ensure that adequate
    flexibility is available to execute our operating and strategic
    plans.    
    Net sales increased 4.7 percent to $1.991 billion.
    Same-store sales increased 3.1 percent versus a
    0.5 percent same-store sales increase for the prior year.
    The increase in same-store sales primarily was driven by a
    3.8 percent increase in customer transactions, our store
    remodel and optimization programs, more effective marketing and
    the benefit of competitive withdrawals in the sewing business.
    Our gross margin rate, as a percentage of net sales, increased
    260 basis points from 46.4 percent to
    49.0 percent, primarily due to direct sourcing, product
    cost deflation on imports and new systems capabilities. 23




---



##### 




    Our selling, general and administrative expenses
    (SG&A), as a percentage of net sales, excluding
    those expenses separately identified in the statement of
    operations, decreased 90 basis points from
    40.8 percent during fiscal 2009 to 39.9 percent during
    fiscal 2010. The decrease is primarily due to expense leverage
    from the increase in sales as well as the result of our
    continued efforts to control expenses.
    Inventory decreased by $12.6 million in fiscal 2010. Our
    inventory turnover improved from 2.3 turns for fiscal 2009 to
    2.4 turns for fiscal 2010. The improvement is the result of our
    inventory initiatives to reduce seasonal and fashion
    merchandise, which have a higher promotional and clearance risk
    than our basic inventory categories.
    Our debt to total capitalization ratio improved 440 basis
    points from 12.1 percent for fiscal 2009 to
    7.7 percent for fiscal 2010. During the year, we purchased
    $18.5 million of our senior subordinated notes. As of
    fiscal 2010 year end, we had approximately
    $242.5 million of excess availability under our senior bank
    credit facility.  Executive
    Overview of Fiscal 2010
  Qtr 1

Qtr 2

Qtr 3

Qtr 4

Total(dollars in millions)Net sales

$
460.0


$
419.4


$
509.1


$
602.2


$
1,990.7Same-store sales percent change


1.0
%


1.8
%


4.3
%


4.4
%


3.1
%Gross margin

$
222.9


$
206.6


$
259.8


$
286.4


$
975.7Gross margin percent


48.5
%


49.3
%


51.0
%


47.6
%


49.0
%Gross margin basis point change from prior year


210



170



200



410



260Selling, general and administrative expenses

$
190.4


$
193.3


$
202.0


$
207.9


$
793.6SG&A percent to sales


41.4
%


46.1
%


39.7
%


34.5
%


39.9
%SG&A basis point decrease from prior year






140



190



40



90Net income (loss)

$
8.6


$
(3.2
)

$
24.1


$
37.1


$
66.6Net income (loss) percent to sales


1.9
%


(0.8
)%


4.7
%


6.2
%


3.3
%Net income (loss) basis point change from prior year


120



210



260



260



210     
    Revitalizing our store portfolio;
    Expanding gross margin rates;
    Capitalizing on the competitive market changes; and
    Leveraging our new systems.      
    More direct sourcing of products from Asia;
    Lower transportation expenses;
    Product cost deflation on imported merchandise; and
    Improvements in markdown controls from our new POS system
    enhancements. 24




---



##### 




    Revitalize our store portfolio;
    Enhance our marketing and merchandising programs; and
    Improve our customer shopping experience.    
    Accelerate our new store growth and remodel activity;
    Roll out several dynamic new product assortments and
    merchandising programs;
    Expand our management training program to enhance the skills of
    our store management teams; and
    Introduce a mystery shopper program to provide independent
    feedback on store conditions and service, so we can react
    quickly to address areas of opportunity.          Recent
    Developments and Business Update
   25




---



##### 




    Same-store sales increase of approximately 2.5% to 3.5% for the
    year;
    Gross margin rate improvement of 20 to 50 basis points for
    the year;
    Selling, general and administrative expenses, as a percentage of
    net sales, improvement of 20 to 50 basis points for the
    year;
    Capital expenditures, net of landlord allowances, for the full
    year of approximately $50 million;
    Earnings per diluted share in the range of $2.75 to $2.90 for
    the year;
    Free cash flow in the range of $75 to $80 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);
    Weighted-average diluted share count of approximately
    27.7 million shares for the year.        Results of
    Operations
    Fiscal Year-EndedJan 30, 2010


Jan 31, 2009


Feb 2, 2008Net sales


100.0
%


100.0
%


100.0
%Gross margin


49.0
%


46.4
%


46.4
%Selling, general and administrative expenses


39.9
%


40.8
%


41.2
%Store pre-opening and closing costs


0.6
%


0.6
%


0.4
%Depreciation and amortization


2.8
%


2.9
%


2.8
%Operating profit


5.7
%


2.1
%


2.0
%  26




---



##### 



Comparison of the
    52 Weeks Ended January 30, 2010, January 31, 2009 and
    February 2, 2008
  Net sales. year-over-year
  Consolidated Net
    Sales:
  Percentage


PercentageChange


Change(Dollars in millions)

FY10


FY09


FY08


FY10 vs. FY09


FY09 vs. FY08Consolidated net sales


$1,990.7



$1,901.1



$1,878.8



4.7
%


1.2
%Increase from prior year


$89.6



$22.3Same-store sales percentage change


3.1
%


0.5
%


3.5
%   Fiscal
    2010:
        Fiscal
    2009:
     27




---



##### 



Sales by
    Segment:
  Percentage


PercentageChange


Change(Dollars in millions)

FY10


FY09


FY08


FY10 vs. FY09


FY09 vs. FY08Large-format storesNet sales


$1,072.9



$997.7



$989.4



7.5
%


0.8
%Increase from prior year


$75.2



$8.3Same-store sales percentage change


1.4
%


(1.0
)%


3.9
%Small-format storesNet sales


$879.9



$867.7



$877.5



1.4
%


(1.1
)%Increase (decrease) from prior year


$12.2



$(9.8
)Same-store sales percentage change


5.1
%


2.1
%


3.0
%OtherNet sales


$37.9



$35.7



$11.9



6.2
%


200.0
%Increase from prior year


$2.2



$23.8   Fiscal
    2010:
               28




---



##### 



Fiscal
    2009:
                Gross
    Margin:
  Percentage


PercentageChange


Change(Dollars in millions)

FY10


FY09


FY08


FY10 vs. FY09


FY09 vs. FY08Gross margin


$975.7



$882.5



$872.4



10.6
%


1.2
%Increase from prior year


$93.2



$10.1Percentage of consolidated net sales


49.0
%


46.4
%


46.4
%


260 bps



     year-over-year.
  Selling, general and administrative
    expenses.
 29




---



##### 



Selling, general
    and administrative expenses:
  Percentage


PercentageChange


Change(Dollars in millions)

FY10


FY09


FY08


FY10 vs. FY09


FY09 vs. FY08SG&A


$793.6



$775.3



$774.8



2.4
%


0.1
%Increase from prior year


$18.3



$0.5Percentage of consolidated net sales


39.9
%


40.8
%


41.2
%


(90 bps
)


(40 bps
)           Store pre-opening and closing
    costs.
 30




---



##### 



Store pre-opening
    and closing costs:
  Percentage


PercentageChange


Change(Dollars in millions)

FY10


FY09


FY08


FY10 vs. FY09


FY09 vs. FY08Store pre-opening and closing costs

$
11.7


$
12.3


$
8.4



(4.9
)%


46.4
%(Decrease) increase from prior year

$
(0.6
)

$
3.9Percentage of consolidated net sales


0.6
%


0.6
%


0.4
%






20 bpsStore pre-opening costs

$
5.5


$
7.8


$
3.1



(29.5
)%


151.6
%(Decrease) increase from prior year

$
(2.3
)

$
4.7Stores opened


20



21



6Store closing costs

$
6.2


$
4.5


$
5.3



37.8
%


(15.1
)%Increase (decrease) from prior year

$
1.7


$
(0.8
)Stores closed


38



31



33       Depreciation and amortization.
    Operating
    profit:
  Percentage


PercentageChange


Change(Dollars in millions)

FY10


FY09


FY08


FY10 vs. FY09


FY09 vs. FY08Operating profit

$
114.1


$
40.7


$
37.4



180.3
%


8.8
%Increase from prior year

$
73.4


$
3.3Percentage of consolidated net sales


5.7
%


2.1
%


2.0
%


360 bps



10 bps      31




---



##### 



Operating profit
    (loss) by Segment:
  Percentage


PercentageChange


Change(dollars in millions)

FY10


FY09


FY08


FY10 vs. FY09


FY09 vs. FY08Large-format storesOperating profit

$
119.6


$
69.1


$
67.2



73.1
%


2.8
%Increase from prior year

$
50.5


$
1.9Small-format storesOperating profit

$
128.4


$
95.9


$
96.4



33.9
%


(0.5
)%Increase (decrease) from prior year

$
32.5


$
(0.5
)OtherOperating loss

$
(133.9
)

$
(124.3
)

$
(126.2
)


(7.7
)%


1.5
%(Increase) decrease from prior year

$
(9.6
)

$
1.9   Fiscal
    2010:
        Fiscal
    2009:
    Gain on purchase of senior subordinated
    notes.
  Interest expense.
  Income taxes.
 32




---



##### 



Store Closing
    Charges
  Store pre-opening and closing
    costs
    Stock-Based
    Compensation
          Liquidity and
    Capital Resources
   33




---



##### 



2010


2009


2008(In millions)Net cash provided by operating activities

$
184.0


$
157.9


$
73.6Net cash used for investing activities


(42.8
)


(77.8
)


(49.4
)Net cash used for financing activities


(4.7
)


(24.9
)


(17.2
)Net increase in cash and cash equivalents

$
136.5


$
55.2


$
7.0Ending cash and cash equivalents

$
217.1


$
80.6


$
25.4   Net Cash Provided
    By Operating Activities
  year-over-year
    Capital Expenditures
        Net Cash Used For
    Investing Activities
   34




---



##### 



Capital
    Expenditures
    2011Outlook


2010


2009


2008(In millions)Cash

$
50.0


$
29.2


$
63.6


$
28.6Cash  landlord-reimbursed


14.0



10.5



11.1



9.1Total

$
64.0


$
39.7


$
74.7


$
37.7           Net Cash Used For
    Financing Activities
       35




---



##### 



Common Share
    Repurchases
    Sources of
    Liquidity
          Secured Bank Credit Facility. sub-limit
 36




---



##### 



Senior Subordinated Notes.
          Off-Balance Sheet
    Transactions
   37




---



##### 



Contractual
    Obligation and Commitments
    Payments Due by Period
    (1)Less than








AfterTotal


1 year


1-3 years


4-5 years


5 years(In millions)7.5 percent senior subordinated
    notes(1)

$
47.5


$
47.5


$



$



$
7.5 percent senior subordinated notes accrued
    interest(2)


1.8



1.8











Standby letters of credit


18.4



18.4











Purchase
    commitments(3)


16.0



2.9



9.7



3.4



Royalty
    commitments(4)


1.2



1.1



0.1







Agent fee
    commitments(5)


6.8



6.8











Operating leases


827.0



151.9



264.6



196.8



213.7Uncertain tax
    positions(6)


















Promissory
    notes(7)


2.4



2.4











Amended Credit Facility


















Total Contractual Cash Obligations

$
921.1


$
232.8


$
274.4


$
200.2


$
213.7     (1)

    
    On March 1, 2010, we elected to redeem all outstanding
    principal amount of our 7.5 percent senior subordinated
    notes of approximately $47.5 million at 100 percent of
    the principal amount early, which was announced on
    January 5, 2010. As such, we classified the senior
    subordinated notes as short-term as of January 30, 2010.(2)

    
    Interest is included as a contractual obligation on the
    7.5 percent Notes only. The calculation of interest on the
    Amended Credit Facility is dependent on the average borrowings
    during the year and a variable interest rate. See
    Liquidity and Capital Resources  Sources of
    Liquidityfor further discussion of the Amended Credit
    Facility.(3)

    
    Purchase commitments include legally binding contracts such as
    firm commitments for significant inventory purchases. Purchase
    orders that are not binding agreements are excluded from the
    table.(4)

    
    Royalty commitments include guaranteed minimum royalty payments
    to various designers for use of their name and product line and
    is based off a guaranteed minimum sales figure per year.(5)

    
    Agent fee commissions include minimum commission fees for
    sourcing import purchases.(6)

    
    We have approximately $7.0 million in uncertain tax
    positions. However, we are unable to make a reasonably reliable
    estimate of the period of cash settlement with the respective
    taxing authorities and, therefore, have not included this amount
    in the contractual obligations table. See Note 5 to the
    consolidated financial statements.(7)

    
    Represents delayed payments in relation to the Joann.com
    acquisition.  Seasonality and
    Inflation
   38




---



##### 



Fiscal 2010



Fiscal 2009Qtr 1


Qtr 2


Qtr 3


Qtr 4



Qtr 1


Qtr 2


Qtr 3


Qtr 4(In millions)Net sales

$
460.0


$
419.4


$
509.1


$
602.2



$
446.1


$
403.0


$
480.1


$
571.9Same-store sales percentage change


1.0
%


1.8
%


4.3
%


4.4
%



4.5
%


3.3
%


(1.5
)%


(2.9
)%Gross margin

$
222.9


$
206.6


$
259.8


$
286.4



$
206.8


$
191.8


$
235.3


$
248.6Gross margin percent to sales


48.5
%


49.3
%


51.0
%


47.6
%



46.4
%


47.6
%


49.0
%


43.5
%Operating profit (loss)

$
14.9


$
(3.4
)

$
41.5


$
61.1



$
7.4


$
(16.5
)

$
17.3


$
32.5Operating profit (loss) percent to sales


3.2
%


(0.8
)%


8.2
%


10.1
%



1.7
%


(4.1
)%


3.6
%


5.7
%Net income (loss)

$
8.6


$
(3.2
)

$
24.1


$
37.1



$
3.0


$
(11.7
)

$
10.2


$
20.4Inventories


406.6



460.1



485.4



416.8




426.9



472.6



522.3



429.4Debt


50.5



50.5



47.5



47.5




100.0



100.0



112.7



66.0     Critical
    Accounting Policies and Estimates
  and/or
  Inventory
    Valuation
         39




---



##### 



Valuation of
    Long-Lived Assets and Goodwill
    and/or
    Income
    Taxes
   40




---



##### 



Stock-Based
    Compensation
  end-of-year
          Non-GAAP Financial
    Measures
     41




---



##### 



Fiscal Year Ended2010


2009


2008Dollars in millionsNet cash provided by operating activities (GAAP measure)

$
184.0


$
157.9


$
73.6Less operating activities not included in our definition of free
    cash flow:Deferred income taxes


0.3



(6.8
)


(0.7
)Amortization of deferred financing costs


(0.8
)


(0.8
)


(0.9
)Loss on disposal and impairment of fixed assets


(4.4
)


(2.9
)


(1.6
)Gain on purchase of senior subordinated notes


1.3



4.2



Increase/(decrease) in lease obligations, net


0.5



(9.1
)


3.6Increase/(decrease) in other long-term liabilities


0.3



3.6



(12.8
)Other, net


(0.1
)


(3.4
)


0.8Adjusted net cash provided by operating activities


181.1



142.7



62.0Less:Total capital expenditures


(39.7
)


(74.7
)


(37.7
)Landlord reimbursed capital expenditures


10.5



11.1



9.1Capital expenditures, net of landlord allowances


(29.2
)


(63.6
)


(28.6
)Free cash flow (a non-GAAP measure)

$
151.9


$
79.1


$
33.4   Recent Accounting
    Pronouncements
    
    a requirement that disclosures regarding fair value of financial
    instruments be disclosed on an interim as well as on an annual
    basis; and
    additional guidance regarding (1) estimating the fair value
    of an asset or liability when the volume and level of activity
    for the asset or liability have significantly declined and
    (2) identifying transactions that are not orderly, as well
    as requiring disclosures in interim periods of the inputs and
    valuation techniques used to measure fair value.    Cautionary
    Statement Concerning Forward-Looking Statements
   42




---



##### 



Item 7A. Quantitative
    and Qualitative Disclosures About Market Risk
       43




---



##### 



Item 8.
    Financial
    Statements and Supplementary Data  Jo-Ann Stores,
    Inc.
  Index to
    Consolidated Financial Statements
  
  PageReport of Independent Registered Public
    Accounting Firm


45Consolidated Balance Sheets as of
    January 30, 2010 and January 31, 2009


46Consolidated Statements of Operations for each of
    the three fiscal years in the period ended January 30,
    2010


47Consolidated Statements of Cash Flows for each of
    the three fiscal years in the period ended January 30,
    2010


48Consolidated Statements of Shareholders
    Equity for each of the three fiscal years in the period ended
    January 30, 2010


49Notes to Consolidated Financial Statements


50   44




---



##### 



Report of
    Independent Registered Public Accounting Firm              
    45




---



##### 



Jo-Ann Stores,
    Inc.
  Consolidated Balance Sheets
  January 30,


January 31,2010


2009(Dollars in millions, except share and per share data)AssetsCurrent assets:Cash and cash equivalents

$
217.1


$
80.6Inventories


416.8



429.4Deferred income taxes


22.3



22.1Prepaid expenses and other current assets


29.9



31.7Total current assets


686.1



563.8Property, equipment and leasehold improvements, net


293.7



314.8Goodwill, net


11.6



11.6Other assets


9.0



9.5Total assets

$
1,000.4


$
899.7Liabilities and Shareholders EquityCurrent liabilities:Accounts payable

$
151.1


$
145.1Accrued expenses


128.6



102.9Senior subordinated notes  short term (Note 6)


47.5



Total current liabilities


327.2



248.0Long-term debt






66.0Long-term deferred income taxes


2.2



1.8Lease obligations and other long-term liabilities


105.4



106.2Commitments and contingencies (Note 10)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 29,989,966 and 28,872,085, respectively


1.5



1.4Additional paid-in capital


234.7



211.7Retained earnings


377.0



310.4613.2



523.5Treasury stock, at cost, 3,773,890 shares and
    3,667,677 shares, respectively


(47.6
)


(45.8
)Total shareholders equity


565.6



477.7Total liabilities and shareholders equity

$
1,000.4


$
899.7   See notes to consolidated financial statements
 46




---



##### 



Jo-Ann Stores,
    Inc.
  Consolidated Statements of
    Operations
  Fiscal Year-EndedJanuary 30,


January 31,


February 2,2010


2009


2008(Dollars in millions,except earnings per share data)Net sales

$
1,990.7


$
1,901.1


$
1,878.8Cost of sales (exclusive of depreciation and amortization shown
    separately below)


1,015.0



1,018.6



1,006.4Gross margin


975.7



882.5



872.4Selling, general and administrative expenses


793.6



775.3



774.8Store pre-opening and closing costs


11.7



12.3



8.4Depreciation and amortization


56.3



54.2



51.8Operating profit


114.1



40.7



37.4Gain on purchase of senior subordinated notes


(1.3
)


(4.2
)


Interest expense, net


6.3



9.4



12.5Income before income taxes


109.1



35.5



24.9Income tax provision


42.5



13.6



9.5Net income

$
66.6


$
21.9


$
15.4Net income per common share  basic

$
2.60


$
0.88


$
0.63Net income per common share  diluted

$
2.51


$
0.86


$
0.62   See notes to consolidated financial statements
 47




---



##### 



Jo-Ann Stores,
    Inc.
  Consolidated Statements of Cash
    Flows
  Fiscal Year-EndedJanuary 30,


January 31,


February 2,2010


2009


2008(Dollars in millions)Net cash flows from operating activities:Net income

$
66.6


$
21.9


$
15.4Adjustments to reconcile net income to net cash provided by
    operating activities:Depreciation and amortization


56.3



54.2



51.8Deferred income taxes


(0.3
)


6.8



0.7Stock-based compensation expense


9.0



9.4



8.3Amortization of deferred financing costs


0.8



0.8



0.9Loss on disposal and impairment of fixed assets


4.4



2.9



1.6Gain on purchase of senior subordinated notes


(1.3
)


(4.2
)


Changes in operating assets and liabilities:Decrease (increase) in inventories


12.6



42.8



(18.8
)Decrease (increase) in prepaid expenses and other current assets


1.8



(7.9
)


6.6Increase (decrease) in accounts payable


6.0



15.7



(4.2
)Increase in accrued expenses


28.8



6.6



2.9(Decrease) increase in lease obligations, net


(0.5
)


9.1



(3.6
)(Decrease) increase in other long-term liabilities


(0.3
)


(3.6
)


12.8Other, net


0.1



3.4



(0.8
)Net cash provided by operating activities


184.0



157.9



73.6Net cash used for investing activities:Capital expenditures


(39.7
)


(74.7
)


(37.7
)Payment for acquisition, net of cash acquired


(3.1
)


(3.1
)


(11.7
)Net cash used for investing activities


(42.8
)


(77.8
)


(49.4
)Net cash flows used for financing activities:Purchase of senior subordinated notes


(17.0
)


(29.5
)


Net change in revolving credit facility










(25.3
)Proceeds from stock-based compensation plans


13.5



6.0



7.8Other, net


(1.2
)


(1.4
)


0.3Net cash used for financing activities


(4.7
)


(24.9
)


(17.2
)Net increase in cash and cash equivalents


136.5



55.2



7.0Cash and cash equivalents at beginning of year


80.6



25.4



18.4Cash and cash equivalents at end of year

$
217.1


$
80.6


$
25.4Supplemental disclosures of cash flow information:Cash paid during the year for:Interest

$
5.9


$
9.4


$
11.6Income taxes, net of refunds


30.7



2.3



(7.2
)   See notes to consolidated financial statements
 48




---



##### 



Jo-Ann Stores,
    Inc.
  Consolidated Statements of Shareholders
    Equity
  CommonNet






Stock


Additional








TotalCommon


Treasury



Stated


Paid-In


Treasury


Retained


ShareholdersShares


Shares



Value


Capital


Stock


Earnings


Equity(Shares in thousands)









(Dollars in millions)Balance, February 3, 2007


23,857



3,543



$
1.4


$
176.9


$
(43.2
)

$
274.7


$
409.8Change in accounting principle for uncertainty in income taxes























(1.6
)


(1.6
)Adjusted balance, February 3, 2007


23,857



3,543




1.4



176.9



(43.2
)


273.1



408.2Net income























15.4



15.4Total comprehensive income



























15.4Exercise of stock options


350



(16
)







5.6



0.1







5.7Tax benefit on equity compensation















1.7











1.7Stock-based compensation


203












8.3











8.3Purchase of common stock


(60
)


60












(1.4
)






(1.4
)Issuance of common stock  Associate Stock Ownership
    Plan


135












2.1











2.1Balance, February 2, 2008


24,485



3,587




1.4



194.6



(44.5
)


288.5



440.0Net income























21.9



21.9Total comprehensive income



























21.9Exercise of stock options


406












4.1











4.1Tax benefit on equity compensation















1.7











1.7Stock-based compensation


248












9.4











9.4Purchase of common stock


(81
)


81












(1.3
)






(1.3
)Issuance of common stock  Associate Stock Ownership
    Plan


146












1.9











1.9Balance, January 31, 2009


25,204



3,668




1.4



211.7



(45.8
)


310.4



477.7Net income























66.6



66.6Total comprehensive income



























66.6Exercise of stock options


635












11.8











11.8Tax benefit on equity compensation















0.6











0.6Stock-based compensation


360








0.1



8.9











9.0Purchase of common stock


(106
)


106












(1.8
)






(1.8
)Issuance of common stock  Associate Stock Ownership
    Plan


123












1.7











1.7Balance, January 30, 2010


26,216



3,774



$
1.5


$
234.7


$
(47.6
)

$
377.0


$
565.6   See notes to consolidated financial statements
 49




---



##### 



Jo-Ann Stores,
    Inc.



Notes to
    Consolidated Financial Statements  Note 1 
    Significant
    Accounting Policies  Nature of
    Operations
        Basis of
    Presentation
    Use of
    Estimates
    Fiscal
    Year
    Cash and Cash
    Equivalents
    Inventories
     50




---



##### 



Jo-Ann Stores,
    Inc.
  Notes to
    Consolidated Financial Statements (Continued)
   Note 1 
    Significant
    Accounting Policies (Continued)        Property,
    Equipment and Leasehold Improvements
      Fiscal Year2010


2009(Dollars in millions)Land and buildings

$
71.1


$
70.3Furniture, fixtures and equipment


523.7



503.6Leasehold improvements


169.8



158.3Construction in progress


11.3



22.5775.9



754.7Less accumulated depreciation and amortization


(482.2
)


(439.9
)Property, equipment and leasehold improvements, net

$
293.7


$
314.8   Software
    Development
   51




---



##### 



Jo-Ann Stores,
    Inc.
  Notes to
    Consolidated Financial Statements (Continued)
   Note 1 
    Significant
    Accounting Policies (Continued)  Goodwill
        Impairment of
    Long-Lived Assets
      52




---



##### 



Jo-Ann Stores,
    Inc.
  Notes to
    Consolidated Financial Statements (Continued)
   Note 1 
    Significant
    Accounting Policies (Continued)  Fiscal Year-Ended2010


2009


2008(Dollars in millions)SegmentLarge-format stores

$
2.3


$
1.9


$
0.4Small-format stores


0.1



0.1



0.2Total

$
2.4


$
2.0


$
0.6   Store Pre-Opening
    and Closing Costs
      Fiscal Year-Ended2010


2009


2008(Dollars in millions)Store pre-opening costs

$
5.5


$
7.8


$
3.1Store closing costs


6.2



4.5



5.3$
11.7


$
12.3


$
8.4   Accrued
    Expenses
   53




---



##### 



Jo-Ann Stores,
    Inc.
  Notes to
    Consolidated Financial Statements (Continued)
   Note 1 
    Significant
    Accounting Policies (Continued)    Fiscal Year2010


2009(Dollars in millions)Accrued taxes

$
28.0


$
18.2Accrued compensation


35.8



21.3Workers compensation and general liability insurance


9.3



10.4Capital expenditures payable


6.4



10.2Occupancy and rent-related liabilities


16.7



16.6Customer gift cards


13.2



12.2Other


19.2



14.0Total accrued expenses

$
128.6


$
102.9   Lease obligations
    and other long-term liabilities
    Fiscal Year2010


2009(Dollars in millions)Workers compensation and general liability insurance

$
15.2


$
14.7Occupancy and rent-related liabilities


75.7



76.2Other


14.5



15.3Total lease obligations and other long-term liabilities

$
105.4


$
106.2     Fiscal Year-Ended

Liability(Dollars in millions)2011

$
9.32012


4.92013


3.62014


2.32015


1.8Thereafter


2.6Total workers compensation and general liability insurance

$
24.5   Financial
    Instruments
   54




---



##### 



Jo-Ann Stores,
    Inc.
  Notes to
    Consolidated Financial Statements (Continued)
   Note 1 
    Significant
    Accounting Policies (Continued)      Fair Value
    Measurements
                 55




---



##### 



Jo-Ann Stores,
    Inc.
  Notes to
    Consolidated Financial Statements (Continued)
   Note 1 
    Significant
    Accounting Policies (Continued)    Income
    Taxes
      Revenue
    Recognition
       56




---



##### 



Jo-Ann Stores,
    Inc.
  Notes to
    Consolidated Financial Statements (Continued)
   Note 1 
    Significant
    Accounting Policies (Continued)  Cost of
    Sales
      Operating
    Leases
      Advertising
    Costs
    Earnings Per
    Share
   57




---



##### 



Jo-Ann Stores,
    Inc.
  Notes to
    Consolidated Financial Statements (Continued)
   Note 1 
    Significant
    Accounting Policies (Continued)    Fiscal Year-Ended2010


2009


2008(Dollars in millions, except per share data)Net income

$
66.6


$
21.9


$
15.4Weighted average shares outstanding (shares in thousands):Basic


25,655



24,886



24,296Incremental shares from assumed exercise of stock options


318



200



324Incremental restricted shares


562



397



330Diluted


26,535



25,483



24,950Net income per common share  basic

$
2.60


$
0.88


$
0.63Net income per common share  diluted

$
2.51


$
0.86


$
0.62     Stock-Based
    Compensation
        Fiscal Year-Ended2010


2009


2008(Dollars in millions)Stock option compensation
    expense(a)

$
2.5


$
4.3


$
2.9Restricted stock award amortization


6.5



5.1



5.4Cash-settled Stock Value Bonus Plan


1.9







$
10.9


$
9.4


$
8.3     (a)
    
    Included within stock option compensation expense is expense
    related to the employee stock purchase plan (the Associate Stock
    Ownership Plan or ASOP). The associated expense is
    not significant.   58




---



##### 



Jo-Ann Stores,
    Inc.
  Notes to
    Consolidated Financial Statements (Continued)
   Note 1 
    Significant
    Accounting Policies (Continued)      Fiscal Year-Ended2010

2009

2008Weighted average fair value of options granted

$5.27

$4.87

$7.99Expected volatility of underlying stock

.550 to .605

.437 to .459

.388 to .417Risk-free interest rates

1.4% to 1.6%

2.1% to 3.2%

3.3% to 4.9%Expected life

2.2 to 5.2 years

2.2 to 5.2 years

2.2 to 5.2 yearsExpected life  Associate Stock Ownership Plan

6 months

6 months

6 months     Recent Accounting
    Pronouncements
        
    a requirement that disclosures regarding fair value of financial
    instruments be disclosed on an interim as well as on an annual
    basis;
    additional guidance regarding (1) estimating the fair value
    of an asset or liability when the volume and level of activity
    for the asset or liability have significantly declined and
    (2) identifying transactions that are not orderly, as well
    as requiring disclosures in interim periods of the
    inputs and valuation techniques used to measure fair value.   59




---



##### 



Jo-Ann Stores,
    Inc.
  Notes to
    Consolidated Financial Statements (Continued)
   Note 1 
    Significant
    Accounting Policies (Continued)        Note 2 
    Goodwill      Note 3 
    Acquisition   60




---



##### 



Jo-Ann Stores,
    Inc.
  Notes to
    Consolidated Financial Statements (Continued)
   Note 3 
    Acquisition
    (Continued)    Note 4 
    Store
    Closings    Fiscal Year-Ended2010


2009


2008(Dollars in millions)Store Closing Charges:Non-cancelable lease obligations

$
1.5


$
0.2


$
1.3Asset-related charges


1.5



0.7



0.9Other store closing costs


3.2



3.6



3.1Total

$
6.2


$
4.5


$
5.3         Note 5 
    Income
    Taxes       61




---



##### 



Jo-Ann Stores,
    Inc.
  Notes to
    Consolidated Financial Statements (Continued)
   Note 5 
    Income Taxes
    (Continued)    Fiscal Year2010


2009


2008(Dollars in millions)Balance at beginning of fiscal year

$
8.0


$
7.8


$
7.6Increases related to prior year tax positions






0.2



Decreases related to prior year tax positions






(0.2
)


Increases related to current year tax positions


0.4



1.0



1.0Settlements


(0.9
)






Lapse of statute of limitations


(0.5
)


(0.8
)


(0.8
)Balance at end of fiscal year

$
7.0


$
8.0


$
7.8     Fiscal Year-Ended2010


2009


2008(Dollars in millions)Current:Federal

$
36.0


$
5.6


$
7.3State and local


6.8



1.2



1.542.8



6.8



8.8Deferred


(0.3
)


6.8



0.7Income tax provision

$
42.5


$
13.6


$
9.5     Fiscal Year-Ended2010


2009


2008(Dollars in millions)Federal income tax at the statutory rate

$
38.2


$
12.4


$
8.7Effect of:State and local taxes


5.1



1.3



1.4Other, net


(0.8
)


(0.1
)


(0.6
)Income tax provision

$
42.5


$
13.6


$
9.5  62




---



##### 



Jo-Ann Stores,
    Inc.
  Notes to
    Consolidated Financial Statements (Continued)
   Note 5 
    Income Taxes
    (Continued)    Fiscal YearAsset/(Liability)2010


2009(Dollars in millions)CurrentDeferred tax assets:Inventory items

$
8.6


$
10.1Lease obligations


0.5



0.6Employee benefits


7.9



7.8Valuation allowances


(1.6
)


(1.4
)Other


6.9



5.0Net current deferred tax asset

$
22.3


$
22.1Non-currentDeferred tax assets:Lease obligations

$
33.7


$
33.6Employee benefits


8.0



8.3Federal net operating loss carryforwards


9.5



10.5State net operating loss carryforwards


1.9



2.9State credits


4.4



3.9Other


3.6



5.0Valuation allowances


(2.5
)


(2.5
)58.6



61.7Deferred tax liabilities:Depreciation


(60.2
)


(62.9
)Other


(0.6
)


(0.6
)(60.8
)


(63.5
)Net non-current deferred tax liability

$
(2.2
)

$
(1.8
)Total Deferred Taxes

$
20.1


$
20.3    63




---



##### 



Jo-Ann Stores,
    Inc.
  Notes to
    Consolidated Financial Statements (Continued)
   Note 6 
    Financing    Secured Credit
    Facility
  sub-limit
        Senior
    Subordinated Notes
   64




---



##### 



Jo-Ann Stores,
    Inc.
  Notes to
    Consolidated Financial Statements (Continued)
   Note 6 
    Financing
    (Continued)          Note 7 
    Capital
    Stock  Shareholders
    Rights Plan
    Right to Acquire
    Shares
    Note 8 
    Stock-Based
    Compensation      65




---



##### 



Jo-Ann Stores,
    Inc.
  Notes to
    Consolidated Financial Statements (Continued)
   Note 8 
    Stock-Based
    Compensation (Continued)  Plan

Overview2008 Incentive Compensation Plan (the 2008 Plan)

Approved by Shareholders on June 11, 2008. Allows for the grant
    of stock appreciation rights, stock awards, stock options, stock
    purchase rights and incentive compensation awards (payable in
    shares or cash) to employees and non-employee directors. It also
    allows the operation of a deferred stock program for
    non-employee directors. At January 30, 2010, 272,725 stock
    options, 714,781 restricted shares and 4,906 deferred stock
    units were outstanding under the 2008 Plan.2008 Associate Stock Ownership Plan

Approved by Shareholders on June 11, 2008. It allows the
    operation of an employee stock purchase program.1998 Incentive Compensation Plan (the 1998 Plan)

Previously used to grant stock appreciation rights, stock
    awards, stock options, stock purchase rights and incentive
    compensation awards (payable in shares or cash) to employees and
    non-employee directors. It also allowed the operation of an
    employee stock purchase program and a deferred stock program for
    non-employee directors. At January 30, 2010, 1,063,559 stock
    options, 406,120 restricted shares and 21,906 deferred stock
    units were outstanding under the 1998 Plan. This plan terminated
    on June 3, 2008. The termination of the plan does not affect
    awards that are currently outstanding under the plan.1996 Stock Option Plan for Non-Employee Directors (the
    Directors Stock Option Plan)

Previously used to award stock options to non-employee
    directors. The plan is no longer used to grant stock options.
    During fiscal 2010, the remaining 3,225 options were exercised,
    so there were no options outstanding under the Directors Stock
    Option Plan at January 30, 2010. The Directors Stock Option Plan
    was deregistered on September 21, 2009.     Stock
    Options
   66




---



##### 



Jo-Ann Stores,
    Inc.
  Notes to
    Consolidated Financial Statements (Continued)
   Note 8 
    Stock-Based
    Compensation (Continued)        Weighted-Average


Weighted-Average


AggregateNumber of


Exercise Price


Remaining


IntrinsicOptions


Per Option


Contractual Term


Value(a)Outstanding at January 31, 2009


1,744,845


$
18.57Granted


278,702



12.76Exercised


(634,694
)


18.46Cancelled


(52,569
)


16.99Outstanding at January 30, 2010


1,336,284


$
17.47



4.5 years


$
23,458,038Expected to vest


1,284,238


$
17.59



4.5 years


$
22,386,858Exercisable at January 30, 2010


396,975


$
21.77



3.2 years


$
5,258,528     (a)
    
    The intrinsic value of a stock option is the amount by which the
    fair value of the underlying stock exceeds the exercise price of
    the option.  Restricted Share
    Awards  Time-Based Awards
     67




---



##### 



Jo-Ann Stores,
    Inc.
  Notes to
    Consolidated Financial Statements (Continued)
   Note 8 
    Stock-Based
    Compensation (Continued)    Weighted-Number of


Average GrantShares


Date Fair ValueOutstanding at January 31, 2009


794,654


$
16.37Granted  time-based


553,291



14.06Granted  performance-based
    (a)


165,634



12.68Vested


(365,069
)


17.92Cancelled


(27,609
)


14.70Outstanding at January 30, 2010


1,120,901


$
14.22     a 
    
    represents performance-based awards that became time-restricted
    share awards upon the achievement of the performance criteria as
    of January 30, 2010.      Restricted
    Shares  Performance-Based Awards
       68




---



##### 



Jo-Ann Stores,
    Inc.
  Notes to
    Consolidated Financial Statements (Continued)
   Note 8 
    Stock-Based
    Compensation (Continued)      Stock Value Bonus
    Plan
      Shares Available
    to Grant
    Employee Stock
    Purchase Program
   69




---



##### 



Jo-Ann Stores,
    Inc.
  Notes to
    Consolidated Financial Statements (Continued)
   Note 8 
    Stock-Based
    Compensation (Continued)      Non-Employee
    Directors Deferred Stock Program
      Note 9 
    Savings Plan
    Retirement and Postretirement Benefits      Note 10 
    Commitments and
    Contingencies   70




---



##### 



Jo-Ann Stores,
    Inc.
  Notes to
    Consolidated Financial Statements (Continued)
   Note 10 
    Commitments and
    Contingencies (Continued)      Note 11 
    Leases        MinimumFiscal Year-Ended

Rentals(Dollars in millions)2011

$
151.92012


139.52013


125.12014


106.92015


89.9Thereafter


213.7$
827.0  71




---



##### 



Jo-Ann Stores,
    Inc.
  Notes to
    Consolidated Financial Statements (Continued)
   Note 11 
    Leases
    (Continued)    Fiscal Year-Ended

2010


2009


2008(Dollars in millions)Minimum rent expense

$
149.6


$
147.9


$
146.4Contingent rent expense


1.7



1.5



1.6Sublease rent expense


(8.7
)


(9.9
)


(9.6
)$
142.6


$
139.5


$
138.4   Note 12 
    Segment
    Reporting        72




---



##### 



Jo-Ann Stores,
    Inc.
  Notes to
    Consolidated Financial Statements (Continued)
   Note 12 
    Segment Reporting
    (Continued)  Large-format


Small-formatStores


Stores


Other


Consolidated(Dollars in millions)Fiscal 2010Net sales

$
1,072.9


$
879.9


$
37.9


$
1,990.7Store pre-opening and closing costs


3.7



8.0







11.7Depreciation and amortization


31.5



10.6



14.2



56.3Operating profit (loss)


119.6



128.4



(133.9
)


114.1Capital expenditures


10.9



17.6



11.2



39.7Property, equipment and leasehold improvements, net


148.1



53.5



92.1



293.7Fiscal 2009Net sales

$
997.7


$
867.7


$
35.7


$
1,901.1Store pre-opening and closing costs


5.9



6.4







12.3Depreciation and amortization


31.6



9.3



13.3



54.2Operating profit (loss)


69.1



95.9



(124.3
)


40.7Capital expenditures


35.5



13.2



26.0



74.7Property, equipment and leasehold improvements, net


162.7



49.5



102.6



314.8Fiscal 2008Net sales

$
989.4


$
877.5


$
11.9


$
1,878.8Store pre-opening and closing costs


2.7



5.7







8.4Depreciation and amortization


31.6



8.4



11.8



51.8Operating profit (loss)


67.2



96.4



(126.2
)


37.4Capital expenditures


11.5



15.1



11.1



37.7Property, equipment and leasehold improvements, net


168.6



35.1



93.8



297.5    Note 13 
    Quarterly
    Financial Information (Unaudited)    First


Second


Third


FourthFiscal 2010

Quarter


Quarter


Quarter


Quarter(Dollars in millions, except per share data)Net sales

$
460.0


$
419.4


$
509.1


$
602.2Gross margin


222.9



206.6



259.8



286.4Net income (loss)


8.6



(3.2
)


24.1



37.1Net income (loss) per common share:Basic

$
0.34


$
(0.13
)

$
0.94


$
1.42Diluted


0.33



(0.13
)


0.90



1.36   73




---



##### 



Jo-Ann Stores,
    Inc.
  Notes to
    Consolidated Financial Statements (Continued)
   Note 13 
    Quarterly
    Financial Information (Unaudited) (Continued)  First


Second


Third


FourthFiscal 2009

Quarter


Quarter


Quarter


Quarter(Dollars in millions, except per share data)Net sales

$
446.1


$
403.0


$
480.1


$
571.9Gross margin


206.8



191.8



235.5



248.6Net income (loss)


3.0



(11.7
)


10.2



20.4Net income (loss) per common share:Basic

$
0.12


$
(0.47
)

$
0.41


$
0.81Diluted


0.12



(0.47
)


0.40



0.79    Note 14 
    Consolidating
    Financial Statements   74




---



##### 



Jo-Ann Stores,
    Inc.
  Notes to
    Consolidated Financial Statements (Continued)
   Note 14 
    Consolidating
    Financial Statements (Continued)    January 30, 2010


January 31, 2009Consolidating




Guarantor











GuarantorBalance Sheets

Parent


Subsidiaries


Eliminations


Consolidated


Parent


Subsidiaries


Eliminations


Consolidated(Dollars in millions)AssetsCurrent assets:Cash and cash equivalents

$
217.1


$







$
217.1


$
55.0


$
25.6






$
80.6Inventories


416.8











416.8



206.5



222.9







429.4Deferred income taxes


20.1



2.2







22.3



14.8



7.3







22.1Prepaid expenses and other current assets


27.0



2.9







29.9



25.5



6.2







31.7Total current assets


681.0



5.1







686.1



301.8



262.0







563.8Property, equipment and leasehold improvements, net


281.8



11.9







293.7



165.5



149.3







314.8Goodwill, net






11.6







11.6



11.6











11.6Other assets


3.1



5.9







9.0



(3.9
)


13.4







9.5Investment in subsidiaries


41.5







(41.5
)






100.0







(100.0
)


Intercompany receivable






30.7



(30.7
)






307.7







(307.7
)


Total assets

$
1,007.4


$
65.2


$
(72.2
)

$
1,000.4


$
882.7


$
424.7


$
(407.7
)

$
899.7Liabilities and Shareholders EquityCurrent liabilities:Accounts payable

$
147.4


$
3.7






$
151.1


$
158.6


$
(13.5
)





$
145.1Accrued expenses


100.9



27.7







128.6



102.9











102.9Senior subordinated notes  short term


47.5











47.5















Total current liabilities


295.8



31.4







327.2



261.5



(13.5
)






248.0Long-term debt


















66.0











66.0Long-term deferred income taxes


14.7



(12.5
)






2.2



(4.8
)


6.6







1.8Lease obligations and other long-term liabilities


100.6



4.8







105.4



82.3



23.9







106.2Intercompany payable


30.7







(30.7
)










307.7



(307.7
)


Shareholders equity:Preferred stock






























Common stock


1.5











1.5



1.4











1.4Additional paid-in capital


234.7











234.7



211.7











211.7Retained earnings


377.0



41.5



(41.5
)


377.0



310.4



100.0



(100.0
)


310.4613.2



41.5



(41.5
)


613.2



523.5



100.0



(100.0
)


523.5Treasury stock, at cost


(47.6
)










(47.6
)


(45.8
)










(45.8
)Total shareholders equity


565.6



41.5



(41.5
)


565.6



477.7



100.0



(100.0
)


477.7Total liabilities and shareholders equity

$
1,007.4


$
65.2


$
(72.2
)

$
1,000.4


$
882.7


$
424.7


$
(407.7
)

$
899.7   75




---



##### 



Jo-Ann Stores,
    Inc.
  Notes to
    Consolidated Financial Statements (Continued)
   Note 14 
    Consolidating
    Financial Statements (Continued)  Fiscal Year-EndedJanuary 30, 2010


January 31, 2009Consolidating Statements




Guarantor











Guarantorof Operations

Parent


Subsidiaries


Eliminations


Consolidated


Parent


Subsidiaries


Eliminations


Consolidated(Dollars in millions)Net sales

$
1,628.9


$
580.1


$
(218.3
)

$
1,990.7


$
1,029.0


$
1,447.8


$
(575.7
)

$
1,901.1Cost of sales (exclusive of depreciation and amortization shown
    separately below)


846.9



386.4



(218.3
)


1,015.0



613.7



980.6



(575.7
)


1,018.6Gross margin


782.0



193.7







975.7



415.3



467.2







882.5Selling, general and administrative expenses


649.7



143.9







793.6



388.9



386.4







775.3Store pre-opening and closing costs


9.7



2.0







11.7



7.2



5.1







12.3Depreciation and amortization


41.3



15.0







56.3



28.3



25.9







54.2Operating profit (loss)


81.3



32.8







114.1



(9.1
)


49.8







40.7Gain on purchase of senior subordinated notes


(1.3
)










(1.3
)


(4.2
)










(4.2
)Interest expense, net


5.0



1.3







6.3



4.2



5.2







9.4Income (loss) before income taxes


77.6



31.5







109.1



(9.1
)


44.6







35.5Income tax provision (benefit)


31.4



11.1







42.5



(1.9
)


15.5







13.6Income (loss) before equity income


46.2



20.4







66.6



(7.2
)


29.1







21.9Equity income from subsidiaries


20.4







(20.4
)






29.1







(29.1
)


Net income

$
66.6


$
20.4


$
(20.4
)

$
66.6


$
21.9


$
29.1


$
(29.1
)

$
21.9   Fiscal Year-Ended February 2, 2008GuarantorConsolidating Statements of Operations

Parent


Subsidiaries


Eliminations


Consolidated(Dollars in millions)Net sales

$
1,024.6


$
1,405.2


$
(551.0
)

$
1,878.8Cost of sales (exclusive of depreciation and amortization shown
    separately below)


612.4



945.0



(551.0
)


1,006.4Gross margin


412.2



460.2







872.4Selling, general and administrative expenses


383.9



390.9







774.8Store pre-opening and closing costs


4.0



4.4







8.4Depreciation and amortization


25.8



26.0







51.8Operating (loss) profit


(1.5
)


38.9







37.4Interest expense, net


5.5



7.0







12.5(Loss) income before income taxes


(7.0
)


31.9







24.9Income tax (benefit) provision


(1.8
)


11.3







9.5(Loss) income before equity income


(5.2
)


20.6







15.4Equity income from subsidiaries


20.6







(20.6
)


Net income

$
15.4


$
20.6


$
(20.6
)

$
15.4   76




---



##### 



Jo-Ann Stores,
    Inc.
  Notes to
    Consolidated Financial Statements (Continued)
   Note 14 
    Consolidating
    Financial Statements (Continued)  Fiscal Year-EndedJanuary 30, 2010


January 31, 2009Consolidating Statements of




Guarantor











GuarantorCash Flows

Parent


Subsidiaries


Eliminations


Consolidated


Parent


Subsidiaries


Eliminations


Consolidated(Dollars in millions)Net cash provided by (used for) operating activities

$
203.1


$
(19.1
)

$



$
184.0


$
135.6


$
22.3


$



$
157.9Net cash flows used for investing activities:Capital expenditures


(33.2
)


(6.5
)






(39.7
)


(51.6
)


(23.1
)






(74.7
)Payment for acquisition, net of cash acquired


(3.1
)










(3.1
)


(3.1
)










(3.1
)Net cash used for investing activities


(36.3
)


(6.5
)






(42.8
)


(54.7
)


(23.1
)






(77.8
)Net cash flows used for financing activities:Purchase of senior subordinated notes


(17.0
)










(17.0
)


(29.5
)










(29.5
)Proceeds from stock-based compensation plans


13.5











13.5



6.0











6.0Other, net


(1.2
)










(1.2
)


(1.4
)










(1.4
)Net cash used for financing activities


(4.7
)










(4.7
)


(24.9
)










(24.9
)Net increase (decrease) in cash and cash equivalents


162.1



(25.6
)






136.5



56.0



(0.8
)






55.2Cash and cash equivalents at beginning of year


55.0



25.6







80.6



(1.0
)


26.4







25.4Cash and cash equivalents at end of year

$
217.1


$



$



$
217.1


$
55.0


$
25.6


$



$
80.6   Fiscal Year-Ended February 2, 2008GuarantorConsolidating Statements of Cash Flows

Parent


Subsidiaries


Eliminations


Consolidated(Dollars in millions)Net cash provided by operating activities

$
55.7


$
17.9


$



$
73.6Net cash flows used for investing activities:Capital expenditures


(19.0
)


(18.7
)






(37.7
)Payment for acquisition, net of cash acquired


(11.7
)










(11.7
)Net cash used for investing activities


(30.7
)


(18.7
)






(49.4
)Net cash flows used for financing activities:Net change in revolving credit facility


(25.3
)










(25.3
)Proceeds from stock-based compensation plans


7.8











7.8Other, net


0.3











0.3Net cash used for financing activities


(17.2
)










(17.2
)Net increase (decrease) in cash and cash equivalents


7.8



(0.8
)






7.0Cash and cash equivalents at beginning of year


(8.8
)


27.2







18.4Cash and cash equivalents at end of year

$
(1.0
)

$
26.4


$



$
25.4   77




---



##### 



Item 9. Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure
    Item 9A. Controls
    and Procedures
  Disclosure Controls and Procedures
  Form 10-K, Rule 13a-15(e) Form 10-K.
  Managements Annual Report on Internal Control over
    Financial Reporting Rule 13a-15(f)
      Changes in Internal Control Over Financial
    Reporting
 78




---



##### 



Report of
    Independent Registered Public Accounting Firm
                
    79




---



##### 



Item 9B.
    Other
    Information    PART III
  Item 10.
    Directors,
    Executive Officers and Corporate Governance      Form 10-K Regulation S-K. Regulation S-K
    Item 11.
    Executive
    Compensation    Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters    Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence  180-day
 80




---



##### 



Item 14.
    Principal
    Accountant Fees and Services   81




---



##### 



PART IV
  Item 15.
    Exhibits and
    Financial Statement Schedules    Financial Statements
  Form 10-K
  Financial Statement Schedules
    Exhibits
  Form 10-K Form 10-K.
 82




---



##### 



Index to
    Exhibits
  ExhibitNumber

Exhibit Description3
.1

Amended and Restated Articles of Incorporation of Jo-Ann Stores,
    Inc. (filed as Exhibit 3.1 to the companys
    Form 10-K
    filed with the Commission on April 17, 2008 and
    incorporated herein by reference)3
.2

Amended and Restated Code of Regulations (filed as
    Exhibit 3.2 to the companys
    Form 10-K
    filed with the Commission on April 17, 2008 and
    incorporated herein by reference)4
.1

Indenture between the company and Jo-Ann Stores Supply Chain
    Management, Inc., Team Jo-Ann, Inc., FCA of Ohio, Inc., and
    House of Fabrics, Inc., as guarantors, and National City Bank,
    as trustee, relating to the 7.50% Senior Subordinated Notes
    due 2012, including the form of note (filed as Exhibit 4.4
    to the companys
    Form 10-K
    filed with the Commission on April 15, 2004 and
    incorporated herein by reference)4
.2

Third Amended and Restated Rights Agreement, dated as of
    February 26, 2007, by and between
    Jo-Ann
    Stores, Inc. and National City Bank, as Rights Agent (filed as
    Exhibit 4.1 to the companys
    Form 8-A/A
    filed with the Commission on March 2, 2007 and incorporated
    herein by reference)10
.1

Jo-Ann Stores, Inc. Supplemental Retirement Benefit Plan, as
    amended (filed as Exhibit 10.3 to the companys
    Form 10-Q
    filed with the Commission on December 13, 2007 and
    incorporated herein by reference)*10
.2

Schedule to Jo-Ann Stores, Inc. Supplemental Retirement Benefit
    Plan, effective as of November 13, 2007 (filed as
    Exhibit 10.4 to the companys
    Form 10-Q
    filed with the Commission on December 13, 2007 and
    incorporated herein by reference)*10
.3

Schedule to Jo-Ann Stores, Inc. Supplemental Retirement Benefit
    Plan, effective as of October 15, 2008 (filed as
    Exhibit 10.2 to the companys
    Form 8-K
    filed with the Commission on October 15, 2008 and
    incorporated herein by reference)*10
.4

Jo-Ann Stores, Inc. Compensation Clawback Policy (filed as
    Exhibit 10.1 to the companys
    Form 8-K
    filed with the Commission on January 6, 2010 and
    incorporated herein by reference)*10
.5

Form of Compensation Clawback Policy Acknowledgement and
    Agreement, dated December 31, 2009 (filed as
    Exhibit 10.2 to the companys
    Form 8-K
    filed with the Commission on January 6, 2010 and
    incorporated herein by reference)*10
.6

Jo-Ann Stores, Inc. (formerly Fabri-Centers of America, Inc.)
    1998 Incentive Compensation Plan, as amended, dated
    November 13, 2007 (filed as Exhibit 10.6 to the
    companys
    Form 10-Q
    filed with the Commission on December 13, 2007 and
    incorporated herein by reference)*10
.7

Agreement dated October 30, 2003 among Jo-Ann Stores, Inc.,
    Betty Rosskamm and Alma Zimmerman, a member of one of the
    companys original founding families and who is now
    deceased (Second Amended and Restated) (filed as
    Exhibit 10.10 to the companys
    Form 10-K
    filed with the Commission on April 15, 2004 and
    incorporated herein by reference)*10
.8

Amendment to the Second Amended and Restated Agreement dated
    February 22, 2007 among and between Jo-Ann Stores, Inc.,
    Betty Rosskamm, and Joan Wittenberg, Sandra Zucker and Larry
    Zimmerman (the successors to Alma Zimmerman, a member of one of
    the companys original founding families and who is now
    deceased) (filed as Exhibit 10.8 to the companys
    Form 10-K
    filed with the Commission on April 19, 2007 and
    incorporated herein by reference)*10
.9

Credit Agreement dated as of April 24, 2001 among the
    company, as borrower, Fleet National Bank, as Issuing Bank,
    Fleet Retail Finance Inc., as Administrative Agent and
    Collateral Agent, Congress Financial Corporation, as
    Documentation Agent, GMAC Commercial Credit, LLC, National City
    Commercial Finance, Inc. and The CIT Group/Business Credit,
    Inc., as Co-Agents, and Fleet Securities Inc., as Arranger and
    Syndication Agent (filed as Exhibit 10.9 to the
    companys
    Form 10-K
    filed with the Commission on April 19, 2007 and
    incorporated herein by reference)10
.10

First Amendment to Credit Agreement dated as of April 24,
    2001 (filed as Exhibit 10.10 to the companys
    Form 10-K
    filed with the Commission on April 19, 2007 and
    incorporated herein by reference) 83




---



##### 



ExhibitNumber

Exhibit Description10
.11

Second Amendment to Credit Agreement dated as of March 17,
    2003 (filed as Exhibit 10.13 to the companys
    Form 10-K
    filed with the Commission on April 15, 2004 and
    incorporated herein by reference)10
.12

Third Amendment to Credit Agreement dated as of
    February 18, 2004 (filed as Exhibit 10.14 to the
    companys
    Form 10-K
    filed with the Commission on April 15, 2004 and
    incorporated herein by reference)10
.13

Fourth Amendment to Credit Agreement dated April 16, 2004
    (filed as Exhibit 10.15 to the companys
    Form S-4
    filed with the Commission on May 24, 2004 and incorporated
    herein by reference)10
.14

Fifth Amendment to Credit Agreement dated February 23, 2006
    (filed as Exhibit 10.14 to the companys
    Form 10-K
    filed with the Commission on April 13, 2006 and
    incorporated herein by reference)10
.15

Sixth Amendment to Credit Agreement dated November 5, 2007
    (filed as Exhibit 10.1 to the companys
    Form 10-Q
    filed with the Commission on December 13, 2007 and
    incorporated herein by reference)10
.16

Jo-Ann Stores, Inc. Deferred Compensation Plan, as amended on
    January 30, 2008 (filed as Exhibit 10.16 to the
    companys
    Form 10-K
    filed with the Commission on April 17, 2008 and
    incorporated herein by reference)*10
.17

Form of Restricted Stock Award Agreement of the company (filed
    as Exhibit 10.1 to the companys
    Form 8-K
    filed with the Commission on November 23, 2005 and
    incorporated herein by reference)*10
.18

Form of Notice of Grant of Non-Qualified Stock Option (filed as
    Exhibit 10.2 to the companys
    Form 8-K
    filed with the Commission on November 23, 2005 and
    incorporated herein by reference)*10
.19

Letter Agreement entered into on June 29, 2006 between the
    company and Darrell Webb regarding Mr. Webbs
    employment with the company (filed as Exhibit 10.1 to the
    companys
    Form 10-Q
    filed with the Commission on September 7, 2006 and
    incorporated herein by reference)*10
.20

Amended Employment Agreement dated February 19, 2008
    between the company and Darrell Webb (filed as
    Exhibit 10.25 to the companys
    Form 10-K
    filed with the Commission on April 17, 2008 and
    incorporated herein by reference)*10
.21

Letter Agreement entered into on July 10, 2006 between the
    company and Travis Smith regarding Mr. Smiths
    employment with the company (filed as Exhibit 10.3 to the
    companys
    Form 10-Q
    filed with the Commission on September 7, 2006 and
    incorporated herein by reference)*10
.22

Amended Employment Agreement dated February 19, 2008
    between the company and Travis Smith (filed as
    Exhibit 10.27 to the companys
    Form 10-K
    filed with the Commission on April 17, 2008 and
    incorporated herein by reference)*10
.23

Letter Agreement entered into on July 27, 2006 between the
    company and James Kerr regarding Mr. Kerrs employment
    with the company (filed as Exhibit 10.5 to the
    companys
    Form 10-Q
    filed with the Commission on September 7, 2006 and
    incorporated herein by reference)*10
.24

Amended Employment Agreement dated February 19, 2008
    between the company and James Kerr (filed as Exhibit 10.29
    to the companys
    Form 10-K
    filed with the Commission on April 17, 2008 and
    incorporated herein by reference)*10
.25

Split Dollar Insurance Agreement dated July 27, 2006
    between the company and James Kerr (filed as Exhibit 10.7
    to the companys
    Form 10-Q
    filed with the Commission on September 7, 2006 and
    incorporated herein by reference)*10
.26

Lease Agreement dated October 19, 2006 between BPVisalia
    LLC, as Landlord, and Jo-Ann Stores Supply Chain Management,
    Inc., as Tenant (filed as Exhibit 10.1 to the
    companys
    Form 8-K
    filed with the Commission on October 25, 2006 and
    incorporated herein by reference)10
.27

Split Dollar Insurance Agreement dated August 14, 2007
    between the company and Darrell Webb (filed as Exhibit 10.1
    to the companys
    Form 8-K
    filed with the Commission on August 20, 2007 and
    incorporated herein by reference)*10
.28

Split Dollar Insurance Agreement dated August 14, 2007
    between the company and Travis Smith (filed as Exhibit 10.2
    to the companys
    Form 8-K
    filed with the Commission on August 20, 2007 and
    incorporated herein by reference)* 84




---



##### 



ExhibitNumber

Exhibit Description10
.29

Employment Agreement dated November 19, 2007 between the
    company and Kenneth Haverkost (filed as Exhibit 10.2 to the
    companys
    Form 10-Q
    filed with the Commission on December 13, 2007 and
    incorporated herein by reference)*10
.30

Form of Director Indemnification Agreements (filed as
    Exhibit 10.37 to the companys
    Form 10-K
    filed with the Commission on April 17, 2008 and
    incorporated herein by reference)10
.31

Amended and Restated Credit Agreement, dated as of
    September 5, 2008, among the company as Lead Borrower, the
    Lenders party thereto, Bank of America, N.A., as Issuing Bank,
    Administrative Agent and Collateral Agent, Wells Fargo Retail
    Finance, LLC, National City Business Credit, Inc. and U.S. Bank
    National Association, as Co-Documentation Agents, and Banc of
    America Securities LLC, as Sole Lead Arranger and Book Manager
    (filed as Exhibit 10.1 to the companys
    Form 10-Q
    filed with the Commission on December 11, 2008 and
    incorporated herein by reference)10
.32

Split Dollar Insurance Agreement dated October 15, 2008
    between the company and Kenneth Haverkost (filed as
    Exhibit 10.1 to the companys
    Form 8-K
    filed with the Commission on October 15, 2008 and
    incorporated herein by reference)*10
.33

Jo-Ann Stores, Inc. 2008 Incentive Compensation Plan (filed as
    Appendix A to the companys 2008 Proxy Statement filed
    with the Commission on April 28, 2008 and incorporated
    herein by reference)*10
.34

Jo-Ann Stores, Inc. 2008 Associate Stock Ownership Plan (filed
    as Appendix B to the companys 2008 Proxy Statement
    filed with the Commission on April 28, 2008 and
    incorporated herein by reference)*10
.35

Employment Agreement dated March 16, 2009 between the
    company and Darrell Webb (filed as Exhibit 10.1 to the
    companys
    Form 8-K
    filed with the Commission on March 18, 2009 and
    incorporated herein by reference)*10
.36

Letter Agreement dated April 5, 2010 between the company
    and Darrell Webb amending Mr. Webbs employment
    agreement dated March 16, 2009 (filed as Exhibit 10.1
    to the companys
    Form 8-K
    filed with the Commission on April 5, 2010 and incorporated
    herein by reference)*21


Subsidiaries of Jo-Ann Stores, Inc.23


Consent of Ernst & Young LLP, Independent Auditors24


Power of Attorney31
.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     *
    
    Indicates a management contract or compensatory plan or
    arrangement 85




---



##### 



SIGNATURES
    Jo-Ann Stores, Inc.
   By:
    /s/  Darrell
    Webb  Chief Executive Officer
    Signature

Title/s/  Darrell
    WebbDarrell
    Webb

Chairman of the Board, 
    Chief Executive Officer and Director 
    (Principal Executive Officer)/s/  James
    KerrJames
    Kerr

Executive Vice President and Chief Financial Officer 
    (Principal Financial and Accounting Officer)/s/  Scott
    Cowen*Scott
    Cowen

Director/s/  Joseph
    DePinto*Joseph
    DePinto

Director/s/  Ira
    Gumberg*Ira
    Gumberg

Director/s/  Patricia
    Morrison*Patricia
    Morrison

Director/s/  Frank
    Newman*Frank
    Newman

Director/s/  David
    Perdue*David
    Perdue

Director/s/  Beryl
    Raff*Beryl
    Raff

Director/s/  Alan
    Rosskamm*Alan
    Rosskamm

Director/s/  Tracey
    Travis*Tracey
    Travis

Director   Form 10-K
   By:
    /s/  James
    Kerr  Attorney-in-Fact
 86