Shares of Jo-Ann Stores jump after 1Q profit

Investors sent shares of Jo-Ann Stores Inc. surging Thursday after the fabric and craft retailer swung to a fiscal first-quarter profit and beat Wall Street's expectations.

Shares rose 74 cents, or 3.5 percent, to $21.89. The stock has traded in a range of $9.03 to $34.75 over the past 52 weeks, and is up about 67 percent since the start of the year.

Jo-Ann Stores said it earned 12 cents per share during the period, compared with a loss of 7 cents per share in the year ago period. Analysts polled by Thomson Financial expected, on average, earnings of a penny per share for the quarter.

Meanwhile, the company raised the low end of its fiscal year profit forecast, and now expects to earn between 75 cents and 85 cents per share. Previously it expected to earn 70 cents to 85 cents per share, and analysts expect earnings of 87 cents per share for the year.

Wachovia Capital Markets analyst Ralph Jean said the results were likely helped by a 4.5 percent increase in same-store sales and show the company has "successfully managed a fundamental turnaround."

Same-store sales, or sales at stores open at least a year, is a key indicator of retailer performance since it measures growth at existing stores rather than newly opened ones.

The latest results mark an improvement of sorts over last year when the Hudson, Ohio, company posted several quarterly losses and had to recall a children's product made in China that contained lead.

"Given the beneficial change in the competitive landscape as Wal-Mart vacates the fabric business and two direct competitors having filed for bankruptcy, we believe operating fundamentals are improving," Jean said in a note to clients.

He rates shares "Market Perform."

For fiscal 2009, Jean raised his estimates to earnings of 95 cents per share from 90 cents per share. Analysts polled by Thomson Financial expect, on average, earnings of 88 cents per share for the year.

Wedbush Morgan Securities analyst Joan Storms raised her price target to $22 from $17, implying she expects the stock to rise 4 percent over Wednesday's $21.15 close. She rates shares "Hold."

The company was not immediately available to comment.