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 as those familiar with mergers and acquisitions understand, integrating new 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, providing the West Coast locations his then-named 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 a two-year slide.
Despite this, Rosskamm remained undeterred. He instituted a series of process improvements designed to better integrate the two operations and eliminate the problems, and vowed to bring the company back to profitability.
On March 20, 2000, Jo-Ann went live with the largest implementation of SAP Retail ever completed. That same day, the company’s 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.
Three years later, the company is enjoying the results of Rosskamm’s efforts. Last year, Jo-Ann recorded the strongest earnings performance in its 60-year history, which included a profitable second quarter — Jo-Ann’s first in more than 20 years. And with its stock price at greater than $30 per share, it’s hard to believe that as recent as January 2002 it traded at less than $8.
Good business leaders recognize the need for patience when undertaking large-scale organizational change. Great ones are willing to accept criticism and don’t 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.
