IBD Stock Analysis
- Clears 12.90 buy point intraday
- Relative strength hits new high on breakout
- Reported strong earnings, sales on April 1
Industry Group Ranking
* Not real-time data. All data shown was captured at
1:15PM EDT on
Fabrics and crafts retailer Joann (JOAN) is the IBD Stock Of The Day, amid surging sales as mask sewers flock to its stores to stock up on materials during the pandemic. Joann stock broke out from its IPO base and is in buy range.
The Hudson, Ohio-based company went public on March 12. It operates 867 retail stores in 49 states.
Additionally, on April 5 Joann reported its first fiscal quarter results since its IPO. It posted Q4 net sales $840.8 million and EPS of $1.05. Fourth-quarter revenue and comparable sales increased 21%. And omnichannel net sales grew 194% vs. the year-ago quarter.
Joann was founded in 1943 with a single fabric store in Cleveland. It first went public in 1969. In 2011, private equity firm Leonard Green bought it for $1.6 billion.
Shares gapped up 6% to 12.87 on the stock market today, breaking out from its IPO base. Joann stock is just below the 12.90 buy point after hitting a record 13.54 intraday, according to MarketSmith chart analysis.
The relative strength line for JOAN stock hit a record high on Wednesday’s breakout. That bullish sign is indicated by a blue dot at the end of the RS line in MarketSmith charts. The RS line, which tracks a stock’s performance vs. the S&P 500 index, is the blue line in the chart provided.
Meanwhile, rival Michaels (MIK) announced in early March it would be going private in a $3.3 billion deal.
Supply Store For Etsy Sellers
Millions of do-it-yourselfers stocked up on fabrics and sewing materials to make fabric masks and other accessories when the pandemic hit. Among the biggest buyers were small businesses. They began mass producing masks and other items to sell on Etsy (ETSY), eBay (EBAY) and other online storefronts.
Small business owners, who quickly powered up their e-commerce presence through providers like Shopify (SHOP), make up a quarter of Joann’s customers. That’s according to the company’s pre-IPO SEC filing. Joann has added more than 8 million new customers in the last year.
“We believe that the growth of online marketplaces, such as Etsy, eBay, Shopify and other platforms, is driving the expansion of our customer base, and the success of online marketplaces is directly linked to our growth,” the company stated.
Growing Market Share
The creative products industry is a large and growing market. The Association for Creative Industries estimates a total addressable market of $40 billion.
“The industry is currently experiencing a significant acceleration for product demand in response to multiple themes that have been further solidified during the COVID-19 pandemic,” the company said in its most recent 10-K filing. That includes “heightened DIY customer behavior, amplified participation from both new and existing customers and increased digital engagement.”
Since 2016, Joann has embarked on a strategy to pivot from a traditional retailer to a fully integrated, digitally connected provider of creative products.
Joann boasts one-third market share in the sewing category, based on internal research estimates.
“While we continue to gain market share and solidify this leadership position in sewing, which represented 48% of our total net sales in fiscal 2021, we have also been growing our share of and believe we have further significant share opportunity in the arts and crafts category.”
Follow Adelia Cellini Linecker on Twitter @IBD_Adelia.
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