A JOANN IPO is coming to market soon. With over 75 years of history, it’s a household name. And that’s one reason investors are anticipating JOANN stock.
But is JOANN a good investment opportunity? Here’s what we know…
JOANN IPO: The Business
Founded in 1943, JOANN is an American arts and fabrics retailer. The company is based out of Cleveland, Ohio and is the U.S’ leader in the sewing market. JOANN operates 855 stores across 49 states. The company states its mission is “to inspire the creative spirit in each of us—our customers and ourselves.”
Although the company’s main focus is sewing, JOANN expanded its offerings to meet the needs of a growing industry. It aims to be not just the top place for sewing but a one-stop-shop for “supplies, guidance and inspiration needed to achieve any project or passion.” A growing player in the arts and crafts market, JOANN’s biggest competitors are Michaels (Nasdaq: MIK) and Hobby Lobby.
The company recently announced a JOANN IPO. But before we get into the details about JOANN stock, let’s good at the market.
JOANN Stock: The Market
It’s not surprising JOANN chose now to go public. As a result of the COVID-19 pandemic, there’s been an increase in people taking on new projects. JOANN’s primary industry is creative projects. According to the JOANN IPO prospectus…
The Creative Products industry is a large and growing market, which according to a 2017 Association for Creative Industries (AFCI) study is in excess of $40 billion. The industry is currently experiencing a significant acceleration in response to multiple secular themes that have been further solidified during the COVID-19 pandemic, such as heightened DIY customer behavior, amplified participation from both new and existing customers, and increased digital engagement, of which we are a key beneficiary because we have positioned ourselves and our go-forward strategies to capitalize on increased demand for Creative Products. Participation includes a broad range of activities such as sewing, quilting, apparel making, crafting and home decorating.
The company says its inhouse research from July 31, 2020 shows the industry grew over 4% in the last five years. Additionally, according to the Bloomberg and Morning Consult survey in the prospectus, about 30% of Americans participated in sewing and clothes repair during the pandemic. JOANN says the industry’s year-over year sales grew by 22% in 2020.
JOANN offers an assortment of products, averaging more than 95,000 stock-keeping units (SKUs) in stores and 245,000 online. The company claims over 50% of product sales can’t be directly matched with competitors because of its own-brand products. This includes copyrighted fabric and designs. It also offers socially-distant options such as delivery, curbside, and buy online, pick up in store.
One thing noted in the JOANN IPO prospectus is demographics. As a result of Millennials, the number of sewists has grown at a compound annual growth rate of 12% since 2012. SVP Worldwide estimates 65% of sewists are 30 years old or younger. This brings the average age down from 48 in 2004 to 37 in 2020.
So, in summary, JOANN is a market leader in sewing, a large player in arts and crafts and is well-positioned to continue growing its business. But before we look at when investors can expect JOANN stock, let’s talk finance.
The Financial Data
In 2018, JOANN recorded $2.31 billion in net sales. It grew to $2.32 billion in 2019 before falling to $2.2 billion in 2020. However, JOANN’s year ended February 1, which means its 2020 information doesn’t represent net sales during the pandemic. But the company does provide data for the 39 weeks ended October 31, 2020 and November 2, 2019. In 2019, net sales were $1.55 billion. It grew to $1.92 billion in 2020.
Looking at profitability, there are some mixed signals. In 2018 and 2019, JOANN recorded net income of $96.5 million and $35.3 million, respectively. But for the year ended February 1, 2020, JOANN recorded a net loss of $546.6 million. This is due to the company’s goodwill and trade name impairment. The good news is for the 39 weeks ended October 31, 2020, JOANN didn’t have goodwill and trade name impairment costs and recorded a net income of $174 million.
Additionally, JOANN has outstanding debt. As of November 2, 2019, that debt was $1.36 billion. The company was able to use internally generated cash flow to pay off $433.8 million. JOANN claims its total reduced debt is $929.7 million as of October 31, 2020. As far as paying off more debt with proceeds from the IPO, it’s not mentioned. The company plans to use the funds from offering JOANN stock for general corporate purposes.
So, the big question: when is the JOANN IPO date? And should you buy?
JOANN IPO Date, Price and More
JOANN filed to go public on February 16, 2021. However, there’s currently no JOANN IPO date, price range or number of offer shares. Analysts believe JOANN may price similarly to competitor Michales, who went public in 2014 with a price range of $17 to $19. Michaels ultimately priced on the lower end, but investors may see the opposite with JOANN.
The company filed for JOANN stock to trade on the Nasdaq under the ticker symbol JOAN.
If you’re looking for the latest investment opportunities, sign up for our free Liberty Through Wealth e-letter! You’ll get useful tips and insight from our investing experts straight into your inbox. And if IPO investing interests you, check out our IPO Calendar to stay up-to-date on the latest offerings.
It’s likely JOANN stock will see a successful debut but not a big one-day pop. However, until we get a better idea of investor demand, it’ll be hard to know. Check back for more updated information on the JOANN IPO.