Nearly five years ago, a successful fabric and craft retailer embarked upon an aggressive and ambitious West Coast acquisition touted by its CEO as necessary to expand the company’s reach and solidify its position as a national industry force.
But integrating acquisitions into existing operations often requires more time than initial forecasts outline.
Such is the case of Hudson-based Jo-Ann Stores and its CEO Alan Rosskamm.
In February 1998, with his company’s stock price trading in the $20-plus per share range, Rosskamm engineered the acquisition of California-based House of Fabrics. That provided the West Coast locations his then-Fabri-Centers of America lacked in its quest for a true coast-to-coast presence.
Instead of resulting in immediate corporate juggernaut status, the merger created inconsistencies with Jo-Ann’s inventory tracking and distribution abilities. For a company reliant on accurate forecasting to compensate for seasonal sales swings, the problem was enormous.
Not surprisingly, Wall Street took notice, and wary investors sent Jo-Ann’s stock on an unprecedented two-year slide.
Rosskamm remained undeterred. He instituted a series of process improvements designed to better integrate the operations and eliminate the problems.
On March 20, 2000, Jo-Ann went live with the largest implementation of SAP Retail ever completed. That same day, its stock closed at a paltry $8.50 per share. The enterprisewide software package addressed merchandising and centralized store replenishments — two crucial issues that had become unreliable. The system further provided the ability to supply stores with merchandise based on regional and customer demand, thereby increasing sales.
Two years later, the company is enjoying the results of Rosskamm’s efforts. Jo-Ann recently reported a second-quarter profit of $2 million on sales of $353.7 million. That represented a significant increase from 2001’s second quarter, when it lost $16.1 million on sales of $330.2 million.
This was the first time in more than 20 years that Jo-Ann generated a profit during its second quarter, historically its lowest sales volume quarter.
Today, with Jo-Ann’s stock price at greater than $30 per share, it’s hard to believe that as recently as a year ago, it traded at less than $5.
The lesson is that good business leaders recognize the need for patience when undertaking large-scale organizational change. Great ones are willing to accept criticism and not let it deter them from keeping focused on their goals.
For Rosskamm, his vision of Jo-Ann Stores becoming a nationwide industry powerhouse is finally being realized, and it’s time for him to receive the credit due him.
