##### 





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 February 2, 2008
  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-K Form 10-K Form 10-K. þ
  12b-2
  Large accelerated
    filer o

Accelerated
    filer þ

Non-accelerated
    filer o

Smaller reporting
    company o(Do not check if a smaller reporting company)   Rule 12b-2 o þ




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##### 





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




---



##### 



Recent
    Developments and Business Update
    
    Improve the customer shopping experience;
    Enhance our marketing and merchandising offers; and
    Refine our new store and remodel programs.        
    We achieved same-store sales growth of 3.5 percent versus a
    same-store sales decrease of 5.9 percent last year;
    We gained expense leverage in SG&A, as the percentage of
    net sales decreased 150 basis points from last
    year; and
    Earnings per share for the year improved to $0.62 per diluted
    share, compared with a loss of $0.08 per diluted share in the
    prior year.          
    The rollout of our new point of sale and store system package;
    The rollout of our new human resource and workforce management
    applications;
    Continued integration of our newly acquired Joann.com Internet
    business, to achieve better synergy with our retail
    stores; and
    Continued efforts to update stores by remerchandising dozens of
    our small-format stores, over and above those we have scheduled
    for remodel. 2




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##### 



Product
    Selection
    Fiscal Year-EndedFebruary 2,


February 3,


January 28,2008


2007


2006Principal product lines:Sewing


50
%


50
%


56
%Non-sewing


50
%


50
%


44
%Total


100
%


100
%


100
%   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
    from whom we receive sublease income.  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, and kids crafting;
    fine art materials, including items such as pastels, water
    colors, oil paints, acrylics, easels, brushes, paper and canvas; 3




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##### 




    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.        Marketing
           4




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##### 



Purchasing
  one-third
  Logistics
      Store
    Operations
  Site Selection.
  Costs of Opening Stores.
  Store Management.
   5




---



##### 



Small-


Large-







Small-


Large-format


format


Total




format


format


TotalAlabama


1







1


Nebraska


4







4Alaska


4



2



6


Nevada


3



2



5Arizona


6



10



16


New Hampshire


8







8Arkansas


1







1


New Jersey


12



1



13California


67



20



87


New Mexico


6







6Colorado


9



5



14


New York


30



9



39Connecticut


6



4



10


North Carolina


5



1



6Delaware


2



1



3


North Dakota


4







4Florida


32



18



50


Ohio


38



18



56Georgia


6



5



11


Oklahoma


4







4Idaho


9







9


Oregon


20



4



24Illinois


24



11



35


Pennsylvania


34



9



43Indiana


20



6



26


Rhode Island






1



1Iowa


10







10


South Carolina


2







2Kansas


6



2



8


South Dakota


1







1Kentucky


3







3


Tennessee






4



4Louisiana


4







4


Texas


28



10



38Maine


4



1



5


Utah


6



4



10Maryland


14



4



18


Vermont


4







4Massachusetts


22



1



23


Virginia


21







21Michigan


27



21



48


Washington


21



10



31Minnesota


14



6



20


West Virginia


5







5Missouri


10



2



12


Wisconsin


14



4



18Montana


7







7


Total


578



196



774     Total
    Stores
  TotalIn Operation at


Expanded


Square FootageFiscal Year

Opened


Closed


Year-End


or Relocated


at Year-End2004


19



(46
)


892







15,3772005


31



(72
)


851



2



15,4532006


44



(57
)


838



2



16,1982007


26



(63
)


801



1



16,2152008


6



(33
)


774



1



15,932    6




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##### 



Information
    Technology
  look-up,
      Status of Product
    or Line of Business
    Trademarks
  ® TM ® ® Jo-Ann ® ® ®
  Seasonal
    Business
   7




---



##### 



Customer
    Base
    Backlog of
    Orders
    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
    Employees
   8




---



##### 



Foreign
    Operations and Export Sales
    Other Available
    Information
  Form 10-K, Form 10-Q, Form 8-K
  Form 10-K
  Item 1A.
    Risk
    Factors    Economic
    Risks
  Changes in economic conditions could have a material
    adverse effect on our business, revenue and profitability
   9




---



##### 



If customer interest in fabric and craft products
    declines, our revenues may decline
    Changes in interest rates could adversely impact
    profitability
    External
    Business Risks
  Competition could negatively impact our operations
      Our suppliers may encounter business issues and not meet
    our needs
  agreed-upon
 10




---



##### 



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 and our
    ability to identify suitable store locations
    The seasonality of our sales may negatively impact our
    operating results
    Disruption to the transportation system, including
    increases in transportation costs due to transportation industry
    challenges and rising fuel costs may negatively impact our
    operating results
   11




---



##### 



Our business could be negatively impacted by changes in
    the labor market and our cost of doing business could increase
    as a result of changes in federal, state or local
    regulations
      Operational
    Business Risks
  The loss of key executives and failure to attract
    qualified management could limit our growth and negatively
    impact our operations
    Failure to manage inventory effectively could negatively
    impact our operations
      Failure to adequately maintain our perpetual inventory and
    automated replenishment systems could negatively impact our
    operations
   12




---



##### 



Inability to provide new and improved product selection
    could negatively impact our operations
      Failure to grow sales may impact operations
    Our failure to manage our new store growth could have a
    negative impact on our operations
    Store specific
    risks
  
    our ability to expand in existing markets and penetrate new
    markets;
    the availability of desirable locations and the negotiation of
    acceptable leases for these sites;
    the availability of management resources in a particular area;
    the timely construction, fixturing, merchandising and hiring and
    training of store personnel;
    the closure of unsuccessful stores may result in the retention
    of liability for expensive leases;  General
    risks
  
    our ability to generate sufficient cash flow from operations;
    the availability of working capital;
    our ability to obtain financing;
    the expansion of our logistics systems to support new stores; 13




---



##### 




    the maintenance or upgrade of our information processing systems
    and the integration of those systems at new stores;
    a significant portion of our managements time and energy
    may be consumed with issues unrelated to advancing our core
    business strategy, which could result in a deterioration of our
    operating results;
    our suppliers may be unable to meet the increased demand of
    additional stores in a timely manner; and
    general economic conditions and specific retail economic
    conditions.    The loss of, or disruption in, or our inability to
    efficiently operate our distribution network could have a
    negative impact on our business
      The efficient operation of our business is dependent on
    our information systems. Our failure to maintain and upgrade our
    management information systems, including the successful and
    timely completion of significant pending projects, could
    negatively impact our operation.
       14




---



##### 



Financing needs could restrict our operations
    
    make it more difficult for us to satisfy our other obligations;
    reduce the availability of our cash flow from operations to fund
    working capital, capital expenditures, acquisitions and other
    general corporate requirements because we will have to dedicate
    a significant portion of our cash flow from operations to
    payments of our indebtedness;
    limit our ability to borrow funds to pay for future working
    capital, capital expenditures, acquisitions and other general
    corporate requirements;
    limit our flexibility in planning for, or reacting to, changes
    in our business and the industry in which we operate;
    place us at a disadvantage compared to our competitors that may
    have less debt; and
    make us more vulnerable to negative changes in economic and
    industry conditions.      We may not be able to finance future needs or adapt our
    business plan to changes because of restrictions placed on us by
    our senior bank credit facility and indenture
      We could incur more debt
   15




---



##### 



Failure to adequately maintain the security of our
    electronic and other confidential information could materially
    adversely affect our financial condition and results of
    operations
    and/or
  Failure to comply with various regulations may result in
    damage to our business
      Other Factors
    Item 1B.
    Unresolved Staff
    Comments    Item 2.
    Properties    80-acre
 16




---



##### 



105-acre
      Number ofFiscal Year Lease Terms Expire

Store LeasesMonth-to-month


242009


442010


322011


502012


382013


55Thereafter


541Total


784   Item 3.
    Legal
    Proceedings    Item 4.
    Submission of
    Matters to a Vote of Security Holders   17




---



##### 



Executive
    Officers of the Registrant
  Regulation S-K.
    Name

Age

PositionDarrell Webb


50


Chairman of the Board, President and Chief Executive OfficerKenneth Haverkost


51


Executive Vice President, Store OperationsJames Kerr


45


Executive Vice President, Chief Financial OfficerTravis Smith


35


Executive Vice President, Merchandising and Marketing   Darrell Webb
  Kenneth Haverkost
  James Kerr
  Travis Smith
  PART II
  Item 5.
    Market for
    Registrants Common Equity, Related Stockholder Matters and
    Issuer Purchases of Equity Securities      Common SharesHigh


LowQuarter Ended Fiscal 2008:February 2, 2008

$
21.00


$
9.03November 3, 2007


26.53



17.30August 4, 2007


34.75



23.33May 5, 2007


31.30



21.22Quarter Ended Fiscal 2007:February 3, 2007

$
26.14


$
17.37October 28, 2006


18.31



13.51July 29, 2006


16.80



12.09April 29, 2006


14.19



11.24  18




---



##### 



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


Maximum Number ofShares Purchased as


Shares that May YetTotal Number


Average


Part of Publicly


Be Purchased Underof Shares


Price Paid


Announced Plans or


the Plans orPurchased


per Share


Programs


ProgramsNovember 4  December 1, 2007


618


$
16.64



1,026,881



1,123,119December 2  January 5, 2008










1,026,881



1,123,119January 6  February 2, 2008


48


$
11.88



1,026,929



1,123,071Total


666


$
16.30



1,026,929



1,123,071     STOCK PERFORMANCE
    GRAPH
  five-year
  
    (1)
    
    Prior to the share reclassification on November 5, 2003,
    the return is based on the Class B common shares 19




---



##### 



Item 6.
    Selected
    Financial Data  Managements Discussion and
    Analysis of Financial Condition and Results of Operations,
  Fiscal Year-Ended
    (a)February 2,


February 3,


January 28,


January 29,


January 31,2008


2007


2006


2005


2004(Dollars in millions, except per share data)Operating Results:Net sales

$
1,878.8


$
1,850.6


$
1,882.8


$
1,812.4


$
1,734.1Total net sales percentage increase (decrease)


1.5
%


(1.7
)%


3.9
%


4.5
%


3.1
%Same-store sales percentage increase
    (decrease) (b)


3.5
%


(5.9
)%


(0.8
)%


3.2
%


3.6
%Gross margin


872.4



859.8



859.2



862.1



810.6Selling, general and administrative expenses


774.8



790.5



774.0



708.5



671.2Store pre-opening and closing costs


8.4



11.1



23.4



18.5



13.3Depreciation and amortization


51.8



49.2



42.2



43.0



39.0Debt repurchase and share reclassification
    expenses
    (d)














4.2



5.5Goodwill impairment










27.1







Operating profit (loss)


37.4



9.0



(7.5
)


87.9



81.6Operating profit (loss) as a percent of net sales


2.0
%


0.5
%


(0.4
)%


4.8
%


4.7
%Interest expense


12.5



15.6



12.8



13.7



16.5Income (loss) before cumulative effect of accounting change


15.4



(2.9
)


(23.0
)


46.2



40.1Cumulative effect of change in accounting principle, net of tax
    (c)






1.0











Net income (loss)

$
15.4


$
(1.9
)

$
(23.0
)

$
46.2


$
40.1Net income (loss) as a percent of net sales


0.8
%


(0.1
)%


(1.2
)%


2.5
%


2.3
%Per Share
    Data (e):Income (loss) per common share  diluted:Income (loss) before cumulative effect of accounting change

$
0.62


$
(0.12
)

$
(1.01
)

$
2.02


$
1.82Cumulative effect of change in accounting principle






0.04











Net income (loss)  diluted

$
0.62


$
(0.08
)

$
(1.01
)

$
2.02


$
1.82Weighted average shares outstanding  diluted
    (000s)


24,950



23,519



22,716



22,887



22,003Financial Position:Cash and cash equivalents

$
25.4


$
18.4


$
17.9


$
79.6


$
17.4Inventories


472.2



453.4



514.7



439.7



404.6Inventory turnover


2.2
x


2.0
x


2.1
x


2.3
x


2.4
xCurrent assets


547.8



543.8



605.8



562.9



467.4Property, equipment and leasehold improvements, net


297.5



311.8



331.7



238.0



218.4Total assets


869.4



866.3



946.8



839.3



719.8Current liabilities


242.4



231.9



240.7



258.8



198.2Long-term debt


100.0



125.3



203.7



100.0



113.7Shareholders equity


440.0



409.8



399.4



408.9



340.8Long-term debt to total capitalization


18.5
%


23.4
%


33.8
%


19.7
%


25.0
%Long-term debt to total capitalization, net of cash


14.5
%


20.7
%


31.7
%


4.8
%


22.0
%  20




---



##### 



Item 6.
    Selected
    Financial Data (Continued)  Fiscal Year-Ended
    (a)February 2,


February 3,


January 28,


January 29,


January 31,2008


2007


2006


2005


2004(Dollars in millions, except per share data)Per Share Data
    (e):Book value
    (f)

$
17.97


$
17.18


$
17.09


$
18.10


$
15.61Shares outstanding, net of treasury shares (000s)


24,485



23,857



23,375



22,585



21,828Other Financial Information:Capital expenditures:Cash

$
28.6


$
44.6


$
118.9


$
58.2


$
52.2Cash  landlord reimbursement
    (g)


9.1



13.5



23.9



8.9



5.4Total capital expenditures

$
37.7


$
58.1


$
142.8


$
67.1


$
57.6Store Count:Small-format stores


578



615



676



733



801Large-format stores


196



186



162



118



91Total


774



801



838



851



892Store Square Footage (000s)
    (h)Small-format stores


8,477



9,034



9,810



10,608



11,492Large-format stores


7,455



7,181



6,388



4,845



3,885Total


15,932



16,215



16,198



15,453



15,377     (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 the Companys stores, the net sales results
    from these stores are excluded from the same-store sales
    calculation until the first day of the first month following the
    one-year anniversary of its 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)
    
    Effective January 29, 2006,
    the Company adopted Statement of Financial Accounting Standards
    (SFAS) No. 123 (revised 2004),
    Share-Based Payment,
    (SFAS No. 123R), which replaced
    SFAS No. 123, using the modified prospective method.
    SFAS No. 123R requires stock-based compensation to be
    measured using the fair value method of accounting. The adoption
    of the new standard resulted in a cumulative after-tax
    adjustment related to estimated forfeitures. See
    Managements Discussion and Analysis of Financial
    Condition and Results of Operations,
    Note 1  Significant Accounting
    Policies and Note 8  Stock-Based
    Compensation contained in the notes to the consolidated
    financial statements.(d)
    
    Debt repurchase and share
    reclassification expenses include expenses related to the early
    extinguishment of debt and costs associated with the
    reclassification of our former Class A and Class B
    common shares into a single class of common stock that was
    approved by shareholders on November 4, 2003. See
    Note 6  Financing contained in the
    notes to consolidated financial statements.(e)
    
    Shares outstanding, as well as
    average basic and diluted shares outstanding used to calculate
    earnings per share, reflect the impact of the increased shares
    outstanding as a result of the share reclassification that was
    approved by shareholders on November 4, 2003. Per share
    data reflects the impact of this share reclassification.(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. 21




---



##### 



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 are
    compared to measure our overall sales growth and same-store
    sales are compared to measure whether our existing stores
    continue to grow their sales volume. We also closely monitor per
    transaction average ticket value and customer transactions, both
    in total and by store format. These indicators help to measure
    our effectiveness in attracting customers into our stores and
    the effectiveness of our product assortment, promotions and
    service on sales. We also measure our sales per square foot
    performance in both of our store formats and compare them with
    our immediate competitors.
    Gross margins.  Our management uses gross
    margin to evaluate merchandising and operating effectiveness for
    the Company. Merchandise selection and future decisions are, in
    part, based on gross margin performance.
    Selling, general and administrative expense as a rate to
    sales.  We also compare selling, general and
    administrative expense to those of our competitors.
    Inventory turnover.  We closely monitor our
    inventory investment, which is our single largest invested asset.
    Debt to total capitalization.  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 plans.    
    Net sales increased 1.5 percent to $1.879 billion.
    Same-store sales increased 3.5 percent versus a
    5.9 percent same-store sales decrease for last year. The
    increase in same-store sales was primarily driven by higher
    average ticket due to new product assortments, better in-stocks,
    more effective marketing and the benefit of competitive
    withdrawals in the sewing business.
    Our gross margin rate, as a percentage of net sales, was
    consistent with the prior year. Our gross margins in our retail
    stores improved due to reduced clearance markdowns and improved
    effectiveness, but were essentially offset by the addition of
    sales from Joann.com, our Internet business, of which we now own
    100% and which has a lower gross margin rate than our stores.
    Our inventory turnover improved from 2.0 turns for fiscal 2007
    to 2.2 turns for fiscal 2008. 22




---



##### 




    Our debt to total capitalization ratio improved 490 basis
    points from 23.4 percent last year to 18.5 percent for
    fiscal 2008.
    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 150 basis points from
    42.7 percent last year to 41.2 percent this year. The
    decrease is primarily the result of our continued efforts to
    control expenses, as well as the impact of additional logistics
    costs incurred in the first quarter last year related to the
    opening of the Opelika, Alabama, distribution center, which did
    not recur in the current year. The additional sales from
    Joann.com, which has a lower expense structure than the retail
    stores, contributed to the improved leverage.
    Store pre-opening and closing costs decreased $2.7 million
    to $8.4 million in fiscal 2008, due to a lower amount of
    store activity year-over-year.
    Net income for the year was $15.4 million, or $0.62 income
    per diluted share, compared with a net loss of
    $1.9 million, or $0.08 loss per diluted share in fiscal
    2007.    Executive
    Overview of Fiscal 2008
  Qtr 1


Qtr 2


Qtr 3


Qtr 4


TotalNet sales

$
424.2


$
388.5


$
480.2


$
585.9


$
1,878.8Same-store sales percent change


1.8
%


7.0
%


2.4
%


3.3
%


3.5
%Gross margin

$
200.6


$
177.4


$
230.5


$
263.9


$
872.4Gross margin percent


47.3
%


45.7
%


48.0
%


45.0
%


46.4
%Gross margin basis point change from prior year


70



(170
)


60







(10
)Selling, general and administrative expenses

$
185.5


$
188.1


$
199.1


$
202.1


$
774.8SG&A percent to sales


43.7
%


48.4
%


41.5
%


34.5
%


41.2
%SG&A basis point change from prior year


(100
)


(310
)


(150
)


(140
)


(150
)Net (loss) income

$
(1.7
)

$
(18.4
)

$
8.0


$
27.5


$
15.4Net (loss) income percent to sales


(0.4
)%


(4.7
)%


1.7
%


4.7
%


0.8
%Net (loss) income basis point change from prior year


120



110



170



40



90     
    improve the customer shopping experience in our stores;
    enhance our marketing and merchandising offers; and
    refine our store development program.      
    We achieved same-store sales growth of 3.5 percent versus a
    same-store sales decrease of 5.9 percent last year;
    We gained expense leverage in SG&A as the percentage of net
    sales decreased 150 basis points from last year; and
    Earnings per share for the year improved to $0.62 per diluted
    share, compared with a loss of $0.08 per diluted share in the
    prior year. 23




---



##### 




    the decision to delay the disposition of Christmas seasonal
    carryover, in order to capture more clearance sales through
    February; and
    the receipt of certain spring seasonal import merchandise
    earlier than originally planned.            
    implementation of our new point-of-sale and store systems SAP
    Retail package, including new human resources and workforce
    management applications;
    continued integration of our Joann.com Internet business, to
    achieve stronger synergy with our retail stores; and
    remerchandising dozens of small-format stores, over and above
    those we have scheduled for remodels.  Recent
    Developments and Business Update
   24




---



##### 



Results of
    Operations
    Fiscal Year-EndedFeb 2, 2008


Feb 3, 2007


Jan 28, 2006Net sales


100.0
%


100.0
%


100.0
%Gross margin


46.4
%


46.5
%


45.6
%Selling, general and administrative expenses


41.2
%


42.7
%


41.1
%Store pre-opening and closing costs


0.4
%


0.6
%


1.2
%Depreciation and amortization


2.8
%


2.7
%


2.3
%Goodwill impairment










1.4
%Operating profit (loss)


2.0
%


0.5
%


(0.4
)%   Comparison of the
    52 Weeks Ended February 2, 2008 and the 53 Weeks Ended
    February 3, 2007
  Net sales. large-format large-format small-format large-format large-format
          Gross margin.
 25




---



##### 



Selling, general and administrative
    expenses.
    Store pre-opening and closing
    costs.
    Depreciation and amortization.
  Operating profit.
    Interest expense.
 26




---



##### 



Income taxes.
    Comparison of
    Fiscal 2007 to Fiscal 2006
  Net sales. large-format large-format large-
  same-store
        Gross margin.
 27




---



##### 



Selling, general and administrative
    expenses.
    Store pre-opening and closing
    costs.
    Depreciation and amortization.
  Operating profit (loss). large-format large-format year-over-year. small-format small-format year-over-year.
  Interest expense.
 28




---



##### 



Income taxes.
  Cumulative effect of change in accounting
    principle.
  Store Closing
    Charges
  Note 1  Significant
    Accounting Policies,
  Store pre-opening and closing
    costs
    Stock-Based
    Compensation
    Liquidity and
    Capital Resources
   29




---



##### 



2008


2007


2006Net cash provided by (used for) operating activities

$
73.6


$
105.8


$
(31.5
)Net cash used for investing activities


(49.4
)


(33.4
)


(142.8
)Net cash (used for) provided by financing activities


(17.2
)


(71.9
)


112.6Net increase (decrease) in cash and cash equivalents

$
7.0


$
0.5


$
(61.7
)Ending cash and cash equivalents

$
25.4


$
18.4


$
17.9   Net Cash Provided
    By (Used For) Operating Activities
      Capital Expenditures
        Net Cash Used For
    Investing Activities
  Capital
    Expenditures.
  Capital
    Expenditures
   30




---



##### 



2009Outlook


2008


2007


2006Cash

$
50-$55


$
28.6


$
44.6


$
118.9Cash  landlord-reimbursed


11.0



9.1



13.5



23.9Total

$
61-$66


$
37.7


$
58.1


$
142.8   large-format
        Sale-Leaseback
    Transaction
      Net Cash (Used
    For) Provided By Financing Activities
   31




---



##### 



Sources of Liquidity
    Common Share
    Repurchases
    Sources of
    Liquidity
          Senior Bank Credit Facility.
 32




---



##### 



Senior Subordinated Notes.
    /
  Off-Balance Sheet
    Transactions
   33




---



##### 



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








AfterTotal


1 Year


1-3 Years


4-5 Years


5 Years7.5 percent senior subordinated notes

$
100.0


$



$



$
100.0


$
7.5 percent senior subordinated notes accrued
    interest(1)


33.8



7.5



22.5



3.8



Letters of
    credit(2)


44.3



44.3











Purchase
    commitments(3)


18.3



5.6



12.7







Operating leases


859.9



148.0



261.0



192.4



258.5FIN 48  Uncertain tax
    positions(4)


10.7







1.9



8.8



Promissory
    notes(5)


8.6



3.1



5.5







Total Contractual Cash Obligations

$
1,075.6


$
208.5


$
303.6


$
305.0


$
258.5     (1)
    
    Interest is included as a contractual obligation on the
    7.5 percent Notes only. The calculation of interest on
    the 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 Credit
    Facility.(2)
    
    Includes commercial letters of credit of $22.1 million and
    $22.2 million of standby letters of credit.(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)
    
    The Company adopted FIN 48 at the beginning of fiscal year
    2008.(5)
    
    Represents delayed payments in relation to the Joann.com
    acquisition.  Seasonality and
    Inflation
      Fiscal 2008



Fiscal 2007Qtr 1


Qtr 2


Qtr 3


Qtr 4



Qtr 1


Qtr 2


Qtr 3


Qtr 4Net sales

$
424.2


$
388.5


$
480.2


$
585.9



$
424.7


$
363.2


$
461.9


$
600.8Same-store sales percentage change


1.8
%


7.0
%


2.4
%


3.3
%



(3.9
)%


(8.4
)%


(5.4
)%


(6.0
)%Gross margin

$
200.6


$
177.4


$
230.5


$
263.9



$
198.0


$
172.3


$
219.1


$
270.4Gross margin percent to sales


47.3
%


45.7
%


48.0
%


45.0
%



46.6
%


47.4
%


47.4
%


45.0
%Operating profit (loss)

$
0.1


$
(26.2
)

$
16.7


$
46.8



$
(8.8
)

$
(29.5
)

$
5.0


$
42.3Operating profit (loss) percent to sales


0.0
%


(6.7
)%


3.5
%


8.0
%



(2.1
)%


(8.1
)%


1.1
%


7.0
%Net (loss) income

$
(1.7
)

$
(18.4
)

$
8.0


$
27.5



$
(6.6
)

$
(21.2
)

$
0.1


$
25.8Inventories


434.9



507.9



570.9



472.2




463.0



511.3



535.8



453.4Long-term debt


117.8



159.0



202.0



100.0




190.0



225.0



200.3



125.3  34




---



##### 



Critical
    Accounting Policies and Estimates
  and/or
  Inventory
    Valuation
        Revenue
    Recognition
      Vendor
    Allowances
   35




---



##### 



02-16,
  Gift Cards and
    Gift Card Breakage
    Valuation of
    Long-Lived Assets
        Capitalized
    Software Costs
    Store Pre-Opening
    Costs
  pre-opening
 36




---



##### 



Store Closing
    Costs
    Accrued
    Expenses
    Operating
    Leases
      Income
    Taxes
     37




---



##### 



Recent Accounting
    Pronouncements
    Statement of
    Financial Accounting Standards No. 157, Fair Value
    Measurement
    Statement of
    Financial Accounting Standards No. 159, The Fair
    Value Option for Financial Assets and Financial
    Liabilities
    Statement of
    Financial Accounting Standards No. 141 (revised 2007),
    Business Combinations
  Business Combinations non-controlling
  Statement of
    Financial Accounting Standards No. 160,
    Non-controlling Interests in Consolidated Financial
    Statements, an amendment of ARB No. 51
  Non-controlling Interests in Consolidated Financial
    Statements, an amendment of ARB No. 51
  Cautionary
    Statement Concerning Forward-Looking Statements
   38




---



##### 



Item 7A.
    Quantitative and
    Qualitative Disclosures About Market Risk       39




---



##### 



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


41Consolidated Balance Sheets as of February 2, 2008 and
    February 3, 2007


42Consolidated Statements of Operations for each of the three
    fiscal years in the period ended February 2, 2008


43Consolidated Statements of Cash Flows for each of the three
    fiscal years in the period ended February 2, 2008


44Consolidated Statements of Shareholders Equity for each of
    the three fiscal years in the period ended February 2, 2008


45Notes to Consolidated Financial Statements


46  40




---



##### 



Report of
    Independent Registered Public Accounting Firm
              
     41




---



##### 



Jo-Ann Stores,
    Inc.
  Consolidated Balance Sheets
  February 2,


February 3,2008


2007(Dollars in millions, except share and per share data)AssetsCurrent assets:Cash and cash equivalents

$
25.4


$
18.4Inventories


472.2



453.4Deferred income taxes


26.4



41.6Prepaid expenses and other current assets


23.8



30.4Total current assets


547.8



543.8Property, equipment and leasehold improvements, net


297.5



311.8Goodwill, net


11.8



Other assets


12.3



10.7Total assets

$
869.4


$
866.3Liabilities and Shareholders EquityCurrent liabilities:Accounts payable

$
145.3


$
147.5Accrued expenses


97.1



84.4Total current liabilities


242.4



231.9Long-term debt


100.0



125.3Long-term deferred income taxes






14.2Lease obligations and other long-term liabilities


87.0



85.1Commitments 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 28,072,032 and 27,400,347, respectively


1.4



1.4Additional paid-in capital


194.6



176.9Retained earnings


288.5



274.7484.5



453.0Treasury stock, at cost, 3,586,872 shares and
    3,542,885 shares, respectively


(44.5
)


(43.2
)Total shareholders equity


440.0



409.8Total liabilities and shareholders equity

$
869.4


$
866.3   See notes to consolidated financial statements
 42




---



##### 



Jo-Ann Stores,
    Inc.
  Consolidated Statements of Operations
  Fiscal Year-EndedFebruary 2,


February 3,


January 28,2008


2007


2006(Dollars in millions,except earnings per share data)Net sales

$
1,878.8


$
1,850.6


$
1,882.8Cost of sales (exclusive of depreciation and amortization shown
    separately below)


1,006.4



990.8



1,023.6Gross margin


872.4



859.8



859.2Selling, general and administrative expenses


774.8



790.5



774.0Store pre-opening and closing costs


8.4



11.1



23.4Depreciation and amortization


51.8



49.2



42.2Goodwill impairment










27.1Operating profit (loss)


37.4



9.0



(7.5
)Interest expense, net


12.5



15.6



12.8Income (loss) before income taxes


24.9



(6.6
)


(20.3
)Income tax provision (benefit)


9.5



(3.7
)


2.7Income (loss) before cumulative effect of accounting change


15.4



(2.9
)


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






1.0



Net income (loss)

$
15.4


$
(1.9
)

$
(23.0
)Income (loss) per common share  basic:Income (loss) before cumulative effect of accounting change

$
0.63


$
(0.12
)

$
(1.01
)Cumulative effect of change in accounting principle






0.04



Net income (loss)

$
0.63


$
(0.08
)

$
(1.01
)Income (loss) per common share  diluted:Income (loss) before cumulative effect of accounting change

$
0.62


$
(0.12
)

$
(1.01
)Cumulative effect of change in accounting principle






0.04



Net income (loss)

$
0.62


$
(0.08
)

$
(1.01
)   See notes to consolidated financial statements
 43




---



##### 



Jo-Ann Stores,
    Inc.
  Consolidated Statements of Cash Flows
  Fiscal Year-EndedFebruary 2,


February 3,


January 28,2008


2007


2006(Dollars in millions)Net cash flows from operating activities:Net income (loss)

$
15.4


$
(1.9
)

$
(23.0
)Adjustments to reconcile net income (loss) to net cash provided
    by (used for) operating activities:Depreciation and amortization


51.8



49.2



42.2Deferred income taxes


0.7



(3.0
)


(21.1
)Stock-based compensation expense


8.3



6.9



2.8Cumulative effect of change in accounting principle






(1.0
)


Amortization of deferred financing costs


0.9



0.9



0.9Loss on disposal and impairment of fixed assets


1.6



5.6



6.9Goodwill impairment










27.1Changes in operating assets and liabilities:(Increase) decrease in inventories


(18.8
)


61.3



(75.0
)Decrease (increase) in prepaid expenses and other current assets


6.6



4.8



(12.9
)(Decrease) increase in accounts payable


(2.2
)


0.9



(20.6
)Increase (decrease) in accrued expenses


8.2



(10.3
)


2.5(Decrease) increase in lease obligations, net


(2.6
)


3.6



34.8Increase in other long-term liabilities


4.5



0.2



1.0Other, net


(0.8
)


(11.4
)


2.9Net cash provided by (used for) operating activities


73.6



105.8



(31.5
)Net cash used for investing activities:Capital Expenditures


(37.7
)


(58.1
)


(142.8
)Net proceeds from sale-leaseback transaction






24.7



Payment for Acquisition, net of cash acquired


(11.7
)






Net cash used for investing activities


(49.4
)


(33.4
)


(142.8
)Net cash flows (used for) provided by financing activities:Net change in revolving credit facility


(25.3
)


(78.4
)


103.7Proceeds from stock-based compensation plans


7.8



5.2



7.9Other, net


0.3



1.3



1.0Net cash (used for) provided by financing activities


(17.2
)


(71.9
)


112.6Net increase (decrease) in cash and cash equivalents


7.0



0.5



(61.7
)Cash and cash equivalents at beginning of year


18.4



17.9



79.6Cash and cash equivalents at end of year

$
25.4


$
18.4


$
17.9Supplemental disclosures of cash flow information:Cash paid during the year for:Interest

$
12.5


$
15.2


$
12.8Income taxes, net of refunds


(7.2
)


20.1



26.9   See notes to consolidated financial statements
 44




---



##### 



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, January 29, 2005


22,585



3,737



$
1.3


$
151.8


$
(43.8
)

$
299.6


$
408.9Net loss























(23.0
)


(23.0
)Total comprehensive loss



























(23.0
)Exercise of stock options


630








0.1



5.4











5.5Tax benefit on equity compensation















1.8











1.8Stock-based compensation


(35
)











2.8











2.8Purchase of common stock


(27
)


27












(0.7
)






(0.7
)Issuance of treasury shares


89



(89
)







1.2



0.5







1.7Issuance of common stock  Associate Stock Ownership
    Plan


133












2.4











2.4Balance, January 28, 2006


23,375



3,675




1.4



165.4



(44.0
)


276.6



399.4Net loss























(1.9
)


(1.9
)Total comprehensive loss



























(1.9
)Exercise of stock options


223



(29
)







2.8



0.2







3.0Tax benefit on equity compensation















0.3











0.3Stock-based compensation


(42
)











6.9











6.9Purchase of common stock


(8
)


8












(0.1
)






(0.1
)Issuance of treasury shares


111



(111
)







0.9



0.7







1.6Issuance of common stock  Associate Stock Ownership
    Plan


198












2.2











2.2Cumulative effect of change in accounting principle 
    SFAS 123R (note 1)















(1.6
)










(1.6
)Balance February 3, 2007


23,857



3,543




1.4



176.9



(43.2
)


274.7



409.8Change in accounting principle - FIN 48 (note 5)























(1.6
)


(1.6
)Adjusted balance at 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


$
440.0   See notes to consolidated financial statements
 45




---



##### 



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
     46




---



##### 



Jo-Ann Stores,
    Inc.
  Notes to
    Consolidated Financial Statements (Continued)
   Note 1 
    Significant
    Accounting Policies (Continued)      Property,
    Equipment and Leasehold Improvements
      Fiscal Year2008


2007(Dollars in millions)Land and buildings

$
68.4


$
66.5Furniture, fixtures and equipment


460.1



436.6Leasehold improvements


148.0



140.8Construction in progress


11.5



12.2688.0



656.1Less accumulated depreciation and amortization


(390.5
)


(344.3
)Property, equipment and leasehold improvements, net

$
297.5


$
311.8     Software
    Development
    Goodwill
   47




---



##### 



Jo-Ann Stores,
    Inc.
  Notes to
    Consolidated Financial Statements (Continued)
   Note 1 
    Significant
    Accounting Policies (Continued)      Impairment of
    Long-Lived Assets
      Fiscal Year-Ended2008


2007


2006(Dollars in millions)SegmentLarge-format stores

$
0.4


$
3.8


$
2.6Small-format stores


0.2



0.3



0.4Total

$
0.6


$
4.1


$
3.0   Store Pre-Opening
    and Closing Costs
     48




---



##### 



Jo-Ann Stores,
    Inc.
  Notes to
    Consolidated Financial Statements (Continued)
   Note 1 
    Significant
    Accounting Policies (Continued)    Fiscal Year-Ended2008


2007


2006(Dollars in millions)Store pre-opening costs

$
3.1


$
5.0


$
13.0Store closing costs


5.3



6.1



10.4$
8.4


$
11.1


$
23.4   Accrued
    Expenses
      Fiscal Year2008


2007(Dollars in millions)Accrued taxes

$
26.2


$
18.6Accrued compensation


28.2



24.4Accrued insurance-related reserves


23.7



22.8Other accrued expenses


19.0



18.6Total accrued expenses

$
97.1


$
84.4   Financial
    Instruments
     49




---



##### 



Jo-Ann Stores,
    Inc.
  Notes to
    Consolidated Financial Statements (Continued)
   Note 1 
    Significant
    Accounting Policies (Continued)  Income
    Taxes
        Revenue
    Recognition
     50




---



##### 



Jo-Ann Stores,
    Inc.
  Notes to
    Consolidated Financial Statements (Continued)
   Note 1 
    Significant
    Accounting Policies (Continued)    Cost of
    Sales
    02-16,
  Operating
    Leases
      Advertising
    Costs
   51




---



##### 



Jo-Ann Stores,
    Inc.
  Notes to
    Consolidated Financial Statements (Continued)
   Note 1 
    Significant
    Accounting Policies (Continued)  Earnings Per
    Share
    Fiscal Year-Ended2008


2007


2006(Dollars in millions, except per share data)Income (loss) before cumulative effect of accounting change

$
15.4


$
(2.9
)

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






1.0



Net income (loss)

$
15.4


$
(1.9
)

$
(23.0
)Weighted average shares outstanding (shares in thousands):Basic


24,296



23,519



22,716Incremental shares from assumed exercise of stock options


324







Incremental restricted shares


330







Diluted


24,950



23,519



22,716Income (loss) per common share  basic:Income (loss) before cumulative effect of accounting change

$
0.63


$
(0.12
)

$
(1.01
)Cumulative effect of change in accounting principle






0.04



Net income (loss) per common share

$
0.63


$
(0.08
)

$
(1.01
)Income (loss) per common share  diluted:Income (loss) before cumulative effect of accounting change

$
0.62


$
(0.12
)

$
(1.01
)Cumulative effect of change in accounting principle






0.04



Net income (loss) per common share

$
0.62


$
(0.08
)

$
(1.01
)       Stock-Based
    Compensation
   52




---



##### 



Jo-Ann Stores,
    Inc.
  Notes to
    Consolidated Financial Statements (Continued)
   Note 1 
    Significant
    Accounting Policies (Continued)      Fiscal Year-Ended2008


2007


2006(Dollars in millions)Stock option compensation
    expense(a)

$
2.9


$
3.3


$
2.5Restricted stock award amortization


5.4



3.6



0.3$
8.3


$
6.9


$
2.8     (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.        Fiscal Year-Ended2008

2007

2006Weighted average fair value of options granted

$7.99

$5.69

$6.64Expected volatility of underlying stock

.388 to .417

.418 to .584

.513 to .568Risk-free interest rates

3.3% to 4.9%

4.2% to 5.2%

3.5% to 4.4%Expected life

2.2 to 5.2 years

2.2 to 5.2 years

4 yearsExpected life  Associate Stock Ownership Plan

6 months

6 months

6 months     Recent Accounting
    Pronouncements
    Statement of
    Financial Accounting Standards No. 157, Fair Value
    Measurement
   53




---



##### 



Jo-Ann Stores,
    Inc.
  Notes to
    Consolidated Financial Statements (Continued)
   Note 1 
    Significant
    Accounting Policies (Continued)    Statement of
    Financial Accounting Standards No. 159, The Fair
    Value Option for Financial Assets and Financial
    Liabilities
    Statement of
    Financial Accounting Standards No. 141 (revised 2007),
    Business Combinations
  Business Combinations
  Statement of
    Financial Accounting Standards No. 160,
    Non-controlling Interests in Consolidated Financial
    Statements, an amendment of ARB No. 51
  Non-controlling Interests in Consolidated Financial
    Statements, an amendment of ARB No. 51
  Note 2 
    Goodwill     54




---



##### 



Jo-Ann Stores,
    Inc.
  Notes to
    Consolidated Financial Statements (Continued)
   Note 2 
    Goodwill
    (Continued)  near-term
  Note 3
    
    Business Combinations          As ofNovember 5,2007(Dollars in millions)Cash

$
2.9Inventories


0.8Prepaid expenses and other current assets


0.5Property, plant and equipment


1.4Deferred income taxes


11.4Goodwill


11.8Accounts payable


(2.6
)Accrued expenses


(2.6
)Total acquisition cost

$
23.6   55




---



##### 



Jo-Ann Stores,
    Inc.
  Notes to
    Consolidated Financial Statements (Continued)
  Note 4 
    Store
    Closings    Fiscal Year-Ended2008


2007


2006(Dollars in millions)Store Closing Charges:Non-cancelable lease obligations

$
1.3


$
0.7


$
2.3Asset related charges


0.9



1.5



3.9Other costs


3.1



3.9



4.2Total

$
5.3


$
6.1


$
10.4           Note 5 
    Income
    Taxes         56




---



##### 



Jo-Ann Stores,
    Inc.
  Notes to
    Consolidated Financial Statements (Continued)
   Note 5 
    Income Taxes
    (Continued)      Fiscal Year2008(Dollars in millions)Balance at February 4, 2007

$
7.6Increases related to prior year tax positions


Decreases related to prior year tax positions


Increases related to current year tax positions


1.0Settlements


Lapse of statue of limitations


(0.8
)Balance at February 2, 2008

$
7.8     Fiscal Year-Ended2008


2007


2006Current:Federal

$
7.3


$
(3.3
)

$
20.4State and local


1.5



2.6



3.48.8



(0.7
)


23.8Deferred


0.7



(3.0
)


(21.1
)Income tax provision (benefit)

$
9.5


$
(3.7
)

$
2.7     Fiscal Year-Ended2008


2007


2006(Dollars in millions)Federal income tax at the statutory rate

$
8.7


$
(2.3
)

$
(7.1
)Effect of:Non-deductible goodwill impairment










9.5State and local taxes


1.4



0.4



0.3Settlement of federal tax liabilities from prior years






(1.1
)


Other, net


(0.6
)


(0.7
)


Income tax provision (benefit)

$
9.5


$
(3.7
)

$
2.7  57




---



##### 



Jo-Ann Stores,
    Inc.
  Notes to
    Consolidated Financial Statements (Continued)
   Note 5 
    Income Taxes
    (Continued)    Fiscal YearAsset/(Liability)2008


2007(Dollars in millions)CurrentDeferred tax assets:Inventory items

$
10.7


$
15.1Lease obligations


0.6



0.9Employee benefits


9.0



8.9Federal net operating loss carryback






9.5Other


6.1



7.2Net current deferred tax asset

$
26.4


$
41.6Non-currentDeferred tax assets:Lease obligations

$
29.6


$
30.5Equity investment






2.5Employee benefits


8.0



6.7Federal net operating loss carryforwards


11.1



State net operating loss carryforwards


3.0



1.1Other


7.1



2.4Valuation allowances


(1.7
)


(2.7
)57.1



40.5Deferred tax liabilities:Depreciation


(54.4
)


(54.1
)Other


(0.6
)


(0.6
)(55.0
)


(54.7
)Net non-current deferred tax asset (liability)

$
2.1


$
(14.2
)    58




---



##### 



Jo-Ann Stores,
    Inc.
  Notes to
    Consolidated Financial Statements (Continued)
  Note 6 
    Financing    Fiscal Year2008


2007(Dollars in millions)Credit Facility

$



$
25.37.5 percent senior subordinated notes


100.0



100.0Total Long-term debt

$
100.0


$
125.3   Secured Credit
    Facility
        cross-default
   59




---



##### 



Jo-Ann Stores,
    Inc.
  Notes to
    Consolidated Financial Statements (Continued)
   Note 6 
    Financing
    (Continued)  Senior
    Subordinated Notes
    and/or
  Note 7 
    Capital
    Stock  Shareholders
    Rights Plan
    Right to Acquire
    Shares
    Note 8 
    Stock-Based
    Compensation   60




---



##### 



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

Overview1998 Incentive Compensation Plan (the 1998 Plan)

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 an employee stock
    purchase program and a deferred stock program for non-employee
    directors. At February 2, 2008, 1,661,585 stock options and
    570,930 restricted shares were outstanding under the 1998 Plan.
    This plan terminates on June 3, 2008, but the termination
    will not affect awards that are outstanding under the plan at
    the termination date.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. At
    February 2, 2008, 12,900 stock options were outstanding
    under the Directors Stock Option Plan.1994 Executive Incentive Plan (the Executive Plan)

Previously used to award restricted share awards to executive
    officers, senior management and other key employees. This plan
    terminated on January 31, 2004. The termination of the plan
    does not affect awards that are currently outstanding under the
    plan. At February 2, 2008, 21,850 restricted shares were
    outstanding under the Executive Plan.1990 Employee Stock Option and Stock Appreciation Rights Plan
    (the 1990 Plan)

Previously used to award stock options to officers and key
    employees. This plan terminated on March 14, 2000. The
    termination of the plan does not affect awards that are
    currently outstanding under the plan. At February 2, 2008,
    2,500 options were outstanding under the 1990 Plan.     Stock
    Options
   61




---



##### 



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 February 3, 2007


1,607,297


$
15.51Granted


660,173



24.26Exercised


(347,877
)


16.02Cancelled


(242,608
)


20.90Outstanding at February 2, 2008


1,676,985


$
18.06



4.4 years


$
1,672,019Expected to vest


1,440,575


$
17.84



4.2 years


$
1,649,263Exercisable at February 2, 2008


727,340


$
14.38



2.6 years


$
1,609,610     (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
       62




---



##### 



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 February 3, 2007


707,750


$
17.21Granted


178,068



24.00Vested


(212,422
)


22.77Cancelled


(80,616
)


21.73Outstanding at February 2, 2008


592,780


$
19.75       Restricted
    Shares  Performance-Based Awards
     63




---



##### 



Jo-Ann Stores,
    Inc.
  Notes to
    Consolidated Financial Statements (Continued)
   Note 8 
    Stock-Based
    Compensation (Continued)  Shares Available
    to Grant
    Employee Stock
    Purchase Program
    Non-Employee
    Directors Deferred Stock Program
  non-employee
  Note 9 
    Savings Plan
    Retirement and Postretirement Benefits   64




---



##### 



Jo-Ann Stores,
    Inc.
  Notes to
    Consolidated Financial Statements (Continued)
   Note 9 
    Savings Plan
    Retirement and Postretirement Benefits (Continued)      Note 10 
    Commitments and
    Contingencies    Note 11 
    Leases        MinimumFiscal Year-Ended

Rentals(Dollars in millions)2009

$
148.02010


138.32011


122.72012


103.82013


88.6Thereafter


258.5$
859.9  65




---



##### 



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

2008


2007


2006(Dollars in millions)Minimum rent expense

$
146.4


$
143.1


$
141.5Contingent rent expense


1.6



2.0



3.0Sublease rent expense


(9.6
)


(10.9
)


(10.5
)$
138.4


$
134.2


$
134.0   Sale-Leaseback
    Transaction
      Note 12 
    Segment
    Reporting    small-format
 66




---



##### 



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


Small-formatStores


Stores


Other


ConsolidatedFiscal 2008Net sales

$
954.5


$
912.4


$
11.9


$
1,878.8Store pre-opening and closing costs


2.5



5.9







8.4Depreciation and amortization


30.6



9.4



11.8



51.8Operating profit (loss)


63.0



100.6



(126.2
)


37.4Capital expenditures


10.0



16.6



11.1



37.7Property, equipment and leasehold improvements, net


166.0



37.8



93.7



297.5Fiscal 2007Net sales

$
895.5


$
955.1


$



$
1,850.6Store pre-opening and closing costs


5.6



5.5







11.1Depreciation and amortization


28.4



9.4



11.4



49.2Operating profit (loss)


51.1



95.5



(137.6
)


9.0Capital expenditures


29.3



9.0



19.8



58.1Property, equipment and leasehold improvements, net


181.7



39.0



91.1



311.8Fiscal 2006Net sales

$
808.0


$
1,074.8


$



$
1,882.8Store pre-opening and closing costs


12.8



10.6







23.4Depreciation and amortization


21.8



10.0



10.4



42.2Operating profit (loss)


38.7



107.4



(153.6
)


(7.5
)Capital expenditures


69.9



12.0



60.9



142.8Property, equipment and leasehold improvements, net


171.1



41.9



118.7



331.7   67




---



##### 



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


Second


Third


FourthFiscal 2008

Quarter


Quarter


Quarter


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

$
424.2


$
388.5


$
480.2


$
585.9Gross margin


200.6



177.4



230.5



263.9Net (loss) income


(1.7
)


(18.4
)


8.0



27.5Net (loss) income per common share:Basic

$
(0.07
)

$
(0.76
)

$
0.33


$
1.12Diluted


(0.07
)


(0.76
)


0.32



1.10   First


Second


Third


FourthFiscal 2007

Quarter


Quarter


Quarter


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

$
424.7


$
363.2


$
461.9


$
600.8Gross margin


198.0



172.3



219.1



270.4(Loss) income before cumulative effect of accounting change


(7.6
)


(21.2
)


0.1



25.8Net (loss) income


(6.6
)


(21.2
)


0.1



25.8Net (loss) income per common share:(Loss) income per common share  basic:(Loss) income before cumulative effect of accounting change

$
(0.32
)

$
(0.90
)

$
0.00


$
1.09Net (loss) income


(0.28
)


(0.90
)


0.00



1.09(Loss) income per common share  diluted:(Loss) income before cumulative effect of accounting change


(0.32
)


(0.90
)


0.00



1.05Net (loss) income


(0.28
)


(0.90
)


0.00



1.05   68




---



##### 



Jo-Ann Stores,
    Inc.
  Notes to
    Consolidated Financial Statements (Continued)
  Note 14 
    Consolidating
    Financial Statements    February 2, 2008


February 3, 2007Consolidating




Guarantor











GuarantorBalance Sheets

Parent


Subsidiaries


Eliminations


Consolidated


Parent


Subsidiaries


Eliminations


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

$
(1.0
)

$
26.4






$
25.4


$
(8.8
)

$
27.2






$
18.4Inventories


208.5



263.7







472.2



200.8



252.6







453.4Deferred income taxes


20.1



6.3







26.4



35.2



6.4







41.6Prepaid expenses and other current assets


17.8



6.0







23.8



20.7



9.7







30.4Total current assets


245.4



302.4







547.8



247.9



295.9







543.8Property, equipment and leasehold improvements, net


142.8



154.7







297.5



149.6



162.2







311.8Goodwill, net


11.8











11.8















Other assets


12.8



(0.5
)






12.3



9.2



1.5







10.7Investment in subsidiaries


70.9







(70.9
)






50.3







(50.3
)


Intercompany receivable


355.5







(355.5
)






358.1







(358.1
)


Total assets

$
839.2


$
456.6


$
(426.4
)

$
869.4


$
815.1


$
459.6


$
(408.4
)

$
866.3Liabilities and Shareholders EquityCurrent liabilities:Accounts payable

$
151.6


$
(6.3
)





$
145.3


$
144.2


$
3.3






$
147.5Accrued expenses


96.5



0.6







97.1



82.8



1.6







84.4Total current liabilities


248.1



(5.7
)






242.4



227.0



4.9







231.9Long-term debt


100.0











100.0



125.3











125.3Long-term deferred income taxes


(5.2
)


5.2











(1.5
)


15.7







14.2Lease obligations and other long-term liabilities


56.3



30.7







87.0



54.5



30.6







85.1Intercompany payable






355.5



(355.5
)










358.1



(358.1
)


Shareholders equity:Preferred stock






























Common stock


1.4











1.4



1.4











1.4Additional paid-in capital


194.6











194.6



176.9











176.9Retained earnings


288.5



70.9



(70.9
)


288.5



274.7



50.3



(50.3
)


274.7484.5



70.9



(70.9
)


484.5



453.0



50.3



(50.3
)


453.0Treasury stock, at cost


(44.5
)










(44.5
)


(43.2
)










(43.2
)Total shareholders equity


440.0



70.9



(70.9
)


440.0



409.8



50.3



(50.3
)


409.8Total liabilities and shareholders equity

$
839.2


$
456.6


$
(426.4
)

$
869.4


$
815.1


$
459.6


$
(408.4
)

$
866.3   69




---



##### 



Jo-Ann Stores,
    Inc.
  Notes to
    Consolidated Financial Statements (Continued)
  Note 14 
    Consolidating
    Financial Statements (Continued)  Fiscal Year-EndedFebruary 2, 2008


February 3, 2007Consolidating Statement




Guarantor











Guarantorof Operations

Parent


Subsidiaries


Eliminations


Consolidated


Parent


Subsidiaries


Eliminations


Consolidated(Dollars in millions)Net sales

$
1,024.6


$
1,405.2


$
(551.0
)

$
1,878.8


$
1,029.3


$
1,387.8


$
(566.5
)

$
1,850.6Cost of sales (exclusive of depreciation and amortization shown
    separately below)


612.4



945.0



(551.0
)


1,006.4



605.8



951.5



(566.5
)


990.8Gross margin


412.2



460.2







872.4



423.5



436.3







859.8Selling, general and administrative expenses


383.9



390.9







774.8



395.4



395.1







790.5Store pre-opening and closing costs


4.0



4.4







8.4



4.5



6.6







11.1Depreciation and amortization


25.8



26.0







51.8



24.7



24.5







49.2Operating (loss) profit


(1.5
)


38.9







37.4



(1.1
)


10.1







9.0Interest expense, net


5.5



7.0







12.5



6.5



9.1







15.6(Loss) income before income taxes


(7.0
)


31.9







24.9



(7.6
)


1.0







(6.6
)Income tax (benefit) provision


(1.8
)


11.3







9.5



(2.1
)


(1.6
)






(3.7
)(Loss) income before equity income (loss) and cumulative effect


(5.2
)


20.6







15.4



(5.5
)


2.6







(2.9
)Equity income (loss) from subsidiaries


20.6







(20.6
)






2.6







(2.6
)


Income (loss) before cumulative effect


15.4



20.6



(20.6
)


15.4



(2.9
)


2.6



(2.6
)


(2.9
)Cumulative effect of accounting change, net of tax


















1.0











1.0Net income (loss)

$
15.4


$
20.6


$
(20.6
)

$
15.4


$
(1.9
)

$
2.6


$
(2.6
)

$
(1.9
)   Fiscal Year-Ended January 28, 2006GuarantorConsolidating Statement of Operations

Parent


Subsidiaries


Eliminations


Consolidated(Dollars in millions)Net sales

$
1,041.5


$
1,452.5


$
(611.2
)

$
1,882.8Cost of sales (exclusive of depreciation and amortization shown
    separately below)


622.8



1,012.0



(611.2
)


1,023.6Gross margin


418.7



440.5







859.2Selling, general and administrative expenses


369.7



404.3







774.0Store pre-opening and closing costs


14.9



8.5







23.4Depreciation and amortization


21.0



21.2







42.2Goodwill impairment






27.1







27.1Operating profit (loss) profit


13.1



(20.6
)






(7.5
)Interest expense, net


5.0



7.8







12.8Income (loss) before income taxes


8.1



(28.4
)






(20.3
)Income tax provision (benefit)


3.2



(0.5
)






2.7Income (loss) before equity loss


4.9



(27.9
)






(23.0
)Equity loss from subsidiaries


(27.9
)






27.9



Net loss

$
(23.0
)

$
(27.9
)

$
27.9


$
(23.0
)  70




---



##### 



Jo-Ann Stores,
    Inc.
  Notes to
    Consolidated Financial Statements (Continued)
   Note 14 
    Consolidating
    Financial Statements (Continued)  Fiscal Year-EndedFebruary 2, 2008


February 3, 2007Consolidating Statements of




Guarantor











GuarantorCash Flows

Parent


Subsidiaries


Eliminations


Consolidated


Parent


Subsidiaries


Eliminations


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

$
55.7


$
17.9


$



$
73.6


$
54.8


$
51.0


$



$
105.8Net cash flows used for investing activities:Capital expenditures


(19.0
)


(18.7
)






(37.7
)


(22.2
)


(35.9
)






(58.1
)Payment for Acquisition, net of cash acquired


(11.7
)










(11.7
)














Net proceeds from sale-leaseback transaction






















24.7







24.7Net cash used for investing activities


(30.7
)


(18.7
)






(49.4
)


(22.2
)


(11.2
)






(33.4
)Net cash flows used for financing activities:Net change in revolving credit facility


(25.3
)










(25.3
)


(78.4
)










(78.4
)Dividends paid














15.0



(15.0
)Proceeds from stock-based compensation plans


7.8











7.8



5.2











5.2Other, net


0.3











0.3



1.3











1.3Net cash used for financing activities


(17.2
)










(17.2
)


(56.9
)


(15.0
)






(71.9
)Net (decrease) increase in cash and cash equivalents


7.8



(0.8
)






7.0



(24.3
)


24.8







0.5Cash and cash equivalents at beginning of year


(8.8
)


27.2







18.4



15.5



2.4







17.9Cash and cash equivalents at end of year

$
(1.0
)

$
26.4


$



$
25.4


$
(8.8
)

$
27.2


$



$
18.4   Fiscal Year-Ended January 28, 2006GuarantorConsolidating Statements of Cash Flows

Parent


Subsidiaries


Eliminations


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

$
(101.1
)

$
69.6


$



$
(31.5
)Net cash flows used for investing activities:Capital expenditures


(72.6
)


(70.2
)






(142.8
)Net cash used for investing activities


(72.6
)


(70.2
)






(142.8
)Net cash flows provided by financing activities:Net change in revolving credit facility


103.7











103.7Proceeds from stock-based compensation plans


7.9











7.9Other, net


1.0











1.0Net cash provided by financing activities


112.6











112.6Net decrease in cash and cash equivalents


(61.1
)


(0.6
)






(61.7
)Cash and cash equivalents at beginning of year


76.6



3.0







79.6Cash and cash equivalents at end of year

$
15.5


$
2.4


$



$
17.9   71




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##### 



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)
  Internal Control 
    Integrated Framework.
    Changes in Internal Control Over Financial
    Reporting
 72




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##### 



Report of
    Independent Registered Public Accounting Firm
                
    73




---



##### 



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   74




---



##### 



Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence  180-day
    Item 14.
    Principal
    Accountant Fees and Services   75




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##### 



PART IV
  Item 15.
    Exhibits and
    Financial Statement Schedules    Financial Statements
  Form 10-K
  Financial Statement Schedules
    Exhibits
  Form 10-K, Form 10-K.
 76




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##### 



Index to
    Exhibits
  ExhibitNumber

Exhibit Description3
.1

Amended and Restated Articles of Incorporation of Jo-Ann Stores,
    Inc.3
.2

Amended and Restated Code of Regulations4
.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

Employment Agreement dated October 21, 2005 between the
    Company and Alan Rosskamm (filed as Exhibit 10.1 to the
    Companys
    Form 8-K
    filed with the Commission on October 26, 2005 and
    incorporated herein by reference)*10
.4

Employment Agreement dated October 21, 2005 between the
    Company and David Holmberg (filed as Exhibit 10.2 to the
    Companys
    Form 8-K
    filed with the Commission on October 26, 2005 and
    incorporated herein by reference)*10
.5

Fabri-Centers of America, Inc. 1990 Employees Stock Option and
    Stock Appreciation Rights Plan, as amended (filed as
    Exhibit 10.8 to the Companys
    Form 10-K
    filed with the Commission on May 2, 2003 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)10
.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) 77




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##### 



ExhibitNumber

Exhibit Description10
.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*10
.17

Fabri-Centers of America, Inc. Executive Incentive Plan (filed
    as Exhibit 11 to the Companys
    Form 10-K
    filed with the Commission on May 2, 2003 and incorporated
    herein by reference)*10
.18

Fabri-Centers of America, Inc. 1996 Stock Option Plan for
    Non-Employee Directors (filed as Exhibit 10.16 to the
    Companys
    Form 10-K
    filed with the Commission on April 19, 2007 and
    incorporated herein by reference)*10
.19

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
.20

Form of Notice of Grant of Non-Qualified Stock Option (filed as
    Exhibit 10.2 to the Registrants
    Form 8-K
    filed with the Commission on November 23, 2005 and
    incorporated herein by reference)*10
.21

Letter Agreement entered into on November 22, 2005 between
    the Registrant and David Bolen regarding Mr. Bolens
    departure from the Company (filed as Exhibit 10.21 to the
    Registrants
    Form 10-K
    filed with the Commission on April 13, 2006 and
    incorporated herein by reference)*10
.22

Letter Agreement entered into on November 23, 2005 between
    the Registrant and David Holmberg regarding
    Mr. Holmbergs employment with the Company (filed as
    Exhibit 10.22 to the Registrants
    Form 10-K
    filed with the Commission on April 13, 2006 and
    incorporated herein by reference)*10
.23

Letter Agreement entered into on February 28, 2006 between
    the Registrant and Alan Rosskamm regarding
    Mr. Rosskamms cessation of the Chairman, President
    and Chief Executive Officer positions upon the assumption of
    those roles by another individual (filed as Exhibit 10.23
    to the Registrants
    Form 10-K
    filed with the Commission on April 13, 2006 and
    incorporated herein by reference)*10
.24

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
    Registrants
    Form 10-Q
    filed with the Commission on September 7, 2006 and
    incorporated herein by reference)*10
.25

Amended Employment Agreement dated February 19, 2008
    between the Company and Darrell Webb*10
.26

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
    Registrants
    Form 10-Q
    filed with the Commission on September 7, 2006 and
    incorporated herein by reference)*10
.27

Amended Employment Agreement dated February 19, 2008
    between the Company and Travis Smith*10
.28

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
    Registrants
    Form 10-Q
    filed with the Commission on September 7, 2006 and
    incorporated herein by reference)*10
.29

Amended Employment Agreement dated February 19, 2008
    between the Company and James Kerr*10
.30

Split Dollar Insurance Agreement dated July 27, 2006
    between the Company and James Kerr (filed as Exhibit 10.7
    to the Registrants
    Form 10-Q
    filed with the Commission on September 7, 2006 and
    incorporated herein by reference)*10
.31

Split Dollar Insurance Agreement dated July 28, 2006
    between the Company and David Holmberg (filed as
    Exhibit 10.8 to the Registrants
    Form 10-Q
    filed with the Commission on September 7, 2006 and
    incorporated herein by reference)* 78




---



##### 



ExhibitNumber

Exhibit Description10
.32

Lease Agreement, dated as of October 19, 2006, between
    BPVisalia LLC, as Landlord, and Jo-Ann Stores Supply Chain
    Management, Inc., as Tenant (incorporated by reference to
    Exhibit 10.1 of
    Form 8-K,
    filed with the Securities and Exchange Commission on
    October 25, 2006)10
.33

Split Dollar Insurance Agreement dated August 14, 2007
    between the Company and Darrell Webb (filed as Exhibit 10.1
    to the Registrants
    Form 8-K
    filed with the Commission on August 20, 2007 and
    incorporated herein by reference)*10
.34

Split Dollar Insurance Agreement dated August 14, 2007
    between the Company and Travis Smith (filed as Exhibit 10.2
    to the Registrants
    Form 8-K
    filed with the Commission on August 20, 2007 and
    incorporated herein by reference)*10
.35

Letter Agreement entered into on September 12, 2007 between
    the Company and David Holmberg regarding the termination of
    Mr. Holmbergs employment with the Company (filed as
    Exhibit 10.5 to the Registrants
    Form 10-Q
    filed with the Commission on December 13, 2007 and
    incorporated herein by reference)*10
.36

Employment Agreement dated November 19, 2007 between the
    Company and Kenneth Haverkost (filed as Exhibit 10.2 to the
    Registrants
    Form 10-Q
    filed with the Commission on December 13, 2007 and
    incorporated herein by reference)*10
.37

Form of Director Indemnification Agreements21


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 79




---



##### 



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

Title/s/  Darrell
    WebbDarrell
    Webb

Chairman of the Board, President,
    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/  Ira
    Gumberg*Ira
    Gumberg

Director/s/  Patricia
    Morrison*Patricia
    Morrison

Director/s/  Frank
    Newman*Frank
    Newman

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
  NOTE: Form 10-K
 80