Artisan Joann Inc.
JOAN,
has submitted his Stock exchange prospectus with plans to offer 10.9 million shares at a price of $ 15-17 each.
The Hudson, Ohio based company expects to trade on the Nasdaq under the ticker “JOAN”. There are 11 banks that are signing the deal, led by BofA Securities and Credit Suisse.
Joann was previously a publicly traded company, but was privatized in 2011 by private equity firm Leonard Green & Partners as part of a $ 1.6 billion deal that was fraught with debt. The company was founded in Cleveland almost 75 years ago.
Joann calls himself a leader in the sewing category but is growing in the broader arts and crafts category that has gained interest during COVID-19 as shoppers spend more time at home and seek pastimes.
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Michaels Cos. Inc.
MIC, -0.09%
announced on 3 March that it will be taken privately in a $ 3.3 billion deal, and the next day reported fourth quarter earnings and sales that exceeded expectations.
And Dollar Tree Inc.
DLTR, + 0.22%
announced last week as part of fourth quarter earnings that the nationwide rollout of Crafter’s Square, its expanded arts and crafts division, has been completed.
The tailwind that Joann enjoyed during COVID-19 was accompanied by a headwind.
“[O]Our 2020 momentum was temporarily disrupted by unexpected headwinds from additional US tariffs on Chinese imports, which we estimate would have cost an additional $ 75 million annually before the mitigation, ”wrote Wade Miquelon, General Manager from Joann, contained in a letter in the prospectus.
With the internally generated cash flow, the debt burden, which was 1.36 billion US dollars on November 2, 2019, was reduced. This allowed the company to retire and repay a nominal amount of $ 433.8 million, leaving a debt of $ 929.7 million as of October 31, 2020.
Miquelon has been CEO since February 2019 after temporarily serving as Chief Financial Officer and CEO.
The company has been in a strategic turnaround since 2016 with a focus on digital improvement and the goal of making profits with “creative products”. The Joann range now includes 95,000 items (storage units) in stores and up to 245,000 items online.
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Joann achieved net sales of 2.241 billion US dollars in 2020, after 2.324 billion US dollars in 2019 and 2.314 billion US dollars in 2018. After a net profit of 35.3 million US dollars in 2019 and 96.5 million US dollars However, when it was $ 546.6 million in 2020, the net loss rose to $ 546.6 million in 2018.
According to Joann, the company had net sales of $ 423 million with its omnichannel platform in the twelve months ended October 31, 2020. At the end of the third fiscal quarter, the company had more than 69 million customers in its database.
Joann’s fiscal year ends on the Saturday that is closest to the last day in January.
Joann estimates that the IPO proceeds will be $ 78.2 million at an IPO price of $ 16. The company plans to use the proceeds from the offering to repay its outstanding US $ 72.8 million in a second lien facility.
Here are five more things you should know about Joann as he prepares for going public:
Joann plans to offer a dividend
Joann says it will pay a quarterly dividend of 40 cents per share.
Joann has proprietary fabric designs and patterns
The company’s trademarks include Casa and Place & Time.
The company also has a partnership with WeaveUp which enables customers to create their own fabrics and other items using digital printing tools.
And Joann has a patented technology called Ditto that helps users pin and cut patterns. This is “the most common pain point our customers report”.
The majority of Joann customers make items for giving or donating
Joann says that 70% of his customers make their creations as gifts or donations.
Another quarter of customers make items to be sold on platforms like eBay Inc.
EBAY, -1.48%
and Etsy Inc.
ETSY, -0.42%
Joann has won eight million new customers since February 1, 2020, many of whom have made their own face masks. Joann has also set up a program called Make to Give, which donates mask-making materials to any person or organization that needs them.
“Customers usually buy from Joann with a view to a project that requires several components,” says the brochure.
With that in mind, we believe our physical footprint is an asset as most customers are regularly looking for new insights, want to see how different items and colors work together, how a fabric falls, feel the texture and ask our experienced team for help Members. “
Many of the new customers are younger, wealthier and tend to spend more. Many buy a craft machine and spend an average of more than $ 500 the following year.
Joann cites data from SVP Worldwide which shows that 65% of new sewing enthusiasts in 2020 were 30 years of age or younger.
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Joann’s main customer is a woman in her upper 40s with an above-average household income.
Half of Joann’s branches have been identified for an update in the next seven to ten years
Joann has four store redesign tiers that cost $ 150,000 in the lower range for a “light” upgrade to $ 3 million for the most extensive remodeling. Joann carried out 24 pilots to develop this tiered plan.
As of January 30, 2021, there were 855 Joann branches in 49 states. The company states that a select group needs the most extreme redesign.
“Based on the positive results and insights from these pilots, as well as the additional improvements that are currently being developed, we believe we can achieve an average revenue increase of 5% to 25% with projects where we refresh an existing site.”
Leonard Green & Partners will own more than two thirds of the Joann shares as soon as the company is listed
Joann is controlled by Leonard Green & Partners, and the company will own 69% of the company’s common stock once the shares start trading, meaning it will continue to make most of the decisions.
As long as Leonard Green owns 50% of the common stock, he can appoint up to five directors once the company is public. If it owns a smaller percentage, it can appoint fewer directors. Leonard Green would have to own 10% or less of the shares to lose the ability to appoint at least one director.
“Accordingly, LGP is currently in control of the election of our directors and may have a controlling interest in our business, affairs and policies, including appointing our management and entering into business combinations or disposals and other corporate transactions,” the prospectus states.
