Straight Up Scoop: Joann's Corporate Shake-up and Staff Reductions
Restructuring implemented at Joann, resulting in job losses
Joann, the beloved craft store, dropped a bomb on Wednesday, announcing changes to their corporate structure that resulted in some employees being given the boot. These folks hailed from various departments, according to a statement they shared with Retail Dive.
The company is tight-lipped about the number of individuals affected or the details of any severance packages. They failed to disclose which departments were hit hardest by these staff cuts. News of this restructuring and axing of jobs comes just a few months after their CEO called it quits and about two weeks after they reported their Q2 earnings.
Last quarter saw a 3% increase in e-commerce sales, with a gross profit of $232 million, up 8%. However, Joann's net sales for the quarter dropped 2.1% to a total of $453.8 million compared to the same period the previous year.
Joann confirmed that they're on a mission to boost profitability, grow revenue, and operate more efficiently. The spokesperson added that these tough decisions were necessary for the business's wellbeing. They've managed to secure price concessions from suppliers, putting them on track to achieve a whopping $60 million in product cost savings this year. In addition, they're on course to slash supply chain, product, and corporate costs by a staggering $200 million.
As of January 2022, Joann employed around 22,000 full-time, part-time, seasonal, and temporary workers. They had 829 physical stores spread out across 49 states as of late August.
Despite lingering doubts about the retail environment, Joann's top brass expressed optimism. They're hopeful that their strategic shifts, coupled with continued cost reduction strategies, will put them on track to fulfill their full-year projections.
With their CEO retiring in May, the interim CEO duties are being shared by Chris DiTullio, the Chief Customer Officer, and Scott Sekella, the Chief Financial Officer. Sekella was optimistic during an earnings call. He pointed out healthy consumer engagement in Joann's core textiles-related sewing and craft businesses, which could signal positive performance in other categories.
Joann reported a Q2 net loss of $73.3 million compared to the same period the previous year. They had a long-term debt of nearly $1.1 billion as of July 29 and anticipate net sales to drop 1% to 3% for the entire year.
Joann acknowledged in an August 31 securities filing that they might face delisting due to noncompliance with Nasdaq's continued listing requirements. This could potentially impact their stock price, liquidity, and ability to secure new investments.
As Joann prepares for the second half of the year, including the crucial holiday season, they announced in an August 24 announcement prior to their earnings report that they planned to hire more than 5,000 new team members. However, when Retail Dive reached out for clarification on whether they're still moving forward with these holiday hiring plans, Joann remained mum.
- Joann's announcement of corporate changes resulted in staff reductions across various departments, as stated in theRetail Dive's report.
- Joann's Q2 earnings report showed a 3% increase in e-commerce sales and a gross profit of $232 million, up 8%, yet their net sales dropped 2.1%.
- The company aims to boost profitability, grow revenue, and operate more efficiently, marking a significant shift in their business strategy.
- Despite the staff cuts, Joann plans to hire more than 5,000 new team members for the upcoming holiday season, but their response regarding these hiring plans remained unclear.
- Joann's top management expressed optimism about their strategic shifts and cost reduction strategies for the year.
- The company is currently dealing with a long-term debt of nearly $1.1 billion, potentially impacting their stock price, liquidity, and ability to secure new investments.
- Joann's interim CEO duties are being shared by Chris DiTullio, the Chief Customer Officer, and Scott Sekella, the Chief Financial Officer.
- The company's AI and technology updates are expected to play a crucial role in improving their profitability and staying competitive within the industry, including personal-finance and retail business sectors.
