Sears, Kmart and J.C. Penney took years to fail and go into bankruptcy. These once-great retailers are now almost gone. Another retailer, Joann Inc. (NASDAQ: JOAN), may go the same way. As brick-and-mortar retailers have been under siege by e-commerce operations such as Amazon, more and more traditional retailers like dying Joann fail. (These are America’s 25 dying industries.)
According to TheStreet, Joann “had its CreditRiskMonitor FRISK Score lowered to a 1.” Most companies with that score do not make it.
Joann is a penny stock that trades at $0.46, and its market cap is only $19 million. Its shares have fallen 90% in the past year. Ironically, the company recently hired several thousand employees to cover holiday shopping needs.
The most recent quarterly numbers for this retailer of sewing fabric and arts and crafts products look awful. Failing Joann posted revenue of $454 million. It had a net loss of $74 million and $19 million in cash on its balance sheet. The chief financial officer said the company was on its way to hit a goal of $200 million in cost reductions. Companies generally cannot cut their way to profits.
Chris DiTullio, chief customer officer and co-lead of the Interim Office of the CEO, made an optimist comment that had no basis. That borders on irresponsible behavior.
Joann has a footprint of 830 stores. That is small by national retail standards, which puts Joann at another disadvantage. There is a tiny chance that a surge in holiday sales could save dying Joann, but that is unlikely.
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