december 2010

Investor Presentation
december 2010
 Forward Looking Statement
This presentation contains forward-looking statements within the
meaning of the safe harbor provisions of the Securities Litigation
Reform Act of 1995. Terms such as "expect," "believe," "continue,"
and "grow," as well as similar comments, are forward-looking in
nature. Although the Company believes its plans are based upon
reasonable assumptions, it can give no assurances that such
expectations can be attained. Factors that could cause actual
results to differ materially from the Company's expectations include:
general business and economic conditions, competitive factors, raw
materials purchasing, and fluctuations in demand. Please refer to
the Company's Securities and Exchange Commission filings for
further information.

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 History
1943 – Founded as Cleveland Fabric Shop
1976 – Listed on the NYSE
1994 – Acquired 342 Clothworld stores
1995 – First large-format store
1998 – Acquired 261 House of Fabrics stores
2007 – Acquired Joann.com
Today – Leading specialty retailer of sewing
and craft products in the U.S.

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 Overview
WA
29 VT ME
MT ND
4 5 NH
4
OR 7 MN 8 • National Presence
24 ID 19 MA
WI
NY
24
756 stores
8 SD
36 48 states
1 19 MI RI
WY 41 1
PA
NE
4
IA
10 OH 42
NJ
12
CT
10
• 234 large-format
NV IN 54% of revenues
5 UT IL 52 DE
26 WV 35,900 sq. ft. avg.
11 CO 33 VA 3
CA 14 KS MO KY 5 MD
22
83 8 11 4
NC
16 • 522 small-format
OK TN 8 7 44% of revenues
AZ
13
NM 4 SC 14,900 sq. ft. avg.
AR
6 AL 2
2 MS GA
2
4 13 • Joann.com
LA 2% of revenues
TX 4
35
AK
AK FL >20 stores Ì Distribution Center
66 49
10-20 stores
HI
1-9 stores

*As of 10/30/10

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 Industry
$27 Billion Market
Category Mix
• Sewing and craft market is roughly
$2.7B
$27 billion with relatively flat
volume the past three years Floral
10%

• Craft segment is approximately $20 $5.4B $11.9B

billion and has historically grown at Painting &
Finishing General Craft
a faster rate than sewing 20% 44%

• JAS share of the total industry last

Sewing &
year was 7.4%; with a 16.6% share Needlecraft
26%
among specialty retailers

$7.0B

* Source: CHA Attitude and Usage Study – December 2009

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 Competition
Fragmented market provides opportunity to capture share

Discounters 20% (-2%)

Fabrics Crafts

Specialty 43% (+5%)

Other 37% (-3%) Quilt Shops Catalogs Art Stores

Fabric Stores Internet Craft Stores
*Source: CHA Attitude and Usage Study – December 2009
Parentheses represent change vs. last year

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 Customer
• 56% of U.S. households sew or craft
• Favorable demographics:
– Women of baby boom generation
– College educated
– Higher than average income
• Enjoys purchasing sewing and craft
merchandise at one store
• Over 50% of purchases used to make
handicrafts for gift giving
* Source: CHA Attitude and Usage Study – December 2009, SIRS research and JAS data

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 Customer
• Consumers have been changed by the economic crisis
• Value systems shifting from conspicuous consumption
• Consumers aspiring to a cost-effective “life-better-lived”
• Emphasis on thoughtful purchases and products which
are customized, hand-crafted and eco-friendly
• Recession has caused lasting behavioral change
• JAS positioned to benefit from shift in consumer behavior

* Source: Wall Street Journal 12/17/2009

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 Operating Priorities
• Accelerate new store growth
• Accelerate remodel activity
• Drive same-store sales
• Expand gross margin
• Invest in management training
• Enhance technology

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 Accelerate New Store Growth
• Smaller prototype stores
¾ +/- 22,000 square foot standard prototype
¾ +/- 15,000 square foot small market or urban prototype

100
80
80
70
55-60 60
# New 60
Stores
40
30
21 20
20
6
0
FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15

• Store closures of roughly 30 - 40 per year

• Net store growth of over 100 units by FY15
• Estimated 3% square footage CAGR FY11 – FY15
• Long term build-out opportunity for 1,000 stores

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 Store Portfolio Update
• Store portfolio will continue to migrate toward 15K to 25K size
350

300 286

250
Store Count

200 184 (1)

165
150

100 81

50 40

-
< 15K 15K-20K 20K-25K 25K-30K > 30K
Square Ft
New since FY05 Remodel since FY07 No activity
Store count as of FY11 Q3
(1)
Includes 91 stores between 35K and 40K and 65 stores +40K

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 Accelerate Remodel Activity
• 114 small-format remodels complete thru FY11
• Remodels averaging incremental 10% same-store sales
lift and generating strong returns
• Opportunity for over 250 remodels in next four years
– Approximately 60 remodels planned for FY12
• 40 small-format remodels
• 10 large-format remodels
• 5 small-format store expansions
• 5 downsizing of oversized stores

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 Drive Same-Store Sales
• Dynamic new craft product lines
• Enhanced in-store presentations
• Update fabric quality to match
consumer demands
• Regionalized fabric assortments
• Strategic targeted marketing
• Focus on education and product
demonstrations

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 Expand Gross Margin
Direct Sourcing Initiative
• Moving beyond high volume basic fabrics to fashion
• Moving into basic craft categories
• Direct imports to exceed half of total imports in FY11
3% 13%
FY08 Sales FY11 Sales
26% Domestic Domestic

Import 15% Direct Import

Direct Import Import

71% 72%

Merchandising Technology Investments

• JDA Demand & Fulfillment – FY10
• Promotional Planning – FY12
• Pricing Optimization – FY13

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 Invest in Management Training
• Management training
– Developed new training programs for
store managers and assistants
• Performance management
– New system provides on-line access to
performance reviews, compensation
management and succession planning
• Mystery shoppers
– New secret shopper program initiated
in FY11
– Provides independent feedback on store
conditions and service

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 Enhance Technology
Current Status
• SAP core enterprise software updated in FY08
• Point of sale hardware and software replaced in FY09
• New HR systems and labor management systems in FY09
• New replenishment system in FY10
• E-commerce platform and site updated in FY10
Future Enhancements
• IT hardware rationalization
• Merchandising systems upgrades
• HR performance management systems
• Ongoing e-commerce investment

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 FY10 Results
FY 10 FY 09

Sales (millions) $1,991 $1,901

Total sales growth % 4.7% 1.2%

Same-store sales % 3.1% 0.5%

Gross Margin % 49.0% 46.4%

SG&A % 39.9% 40.8%

Operating Profit 5.7% 2.1%

EPS $2.51 $0.86

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 FY11 Q3 YTD Results
FY 11 FY 10

Sales (millions) $1,455 $1,389

Total sales growth % 4.8% 4.5%

Same-store sales % 4.2% 2.5%

Gross Margin % 50.9% 49.6%

SG&A % 41.2% 42.2%

Operating Profit 6.1% 3.8%

EPS $1.95 $1.12

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 Positive Sales Trends
5.0%

4.0%

3.0%

2.0%

1.0%

0.0%

-1.0%

-2.0%

-3.0%
Q1 Q2 Q3 Q4 Q1 Q2 Q3
FY10 FY11

Same-store sales Transactions Ticket

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 Gross Margin and SG&A
51%
49.9%
49.0%
49%

47% 46.5% 46.4% 46.4%

45.6%
% of Sales

45%

42.7%
43%

41.1% 41.2%
40.8%
41%
39.9%
39.2%
39%

37%
2006 2007 2008 2009 2010 Q3 LTM

Fiscal Year

Gross Margin SG&A

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 Operating Profit
($’s in millions)

$2,100 8%
$2,057
$2,050 7%

$1,991 7.3%
$2,000 6%

Operating Profit %
$1,950 5%
5.7%
Net Sales

$1,901
$1,900 $1,883 $1,879 4%

$1,851
$1,850 2.1% 3%
2.0%
$1,800 2%
1.0%
$1,750 0.5% 1%

$1,700 0%
2006 * 2007 2008 2009 2010 Q3 LTM

Fiscal Year

Net Sales %Op. Profit

* Excluding FY06 goodwill impairment

Operating Profit defined as profit before interest and taxes

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 EBITDA
($’s in millions)
$225 $220
11.5%
10.7%
$181
$175 10.0%
9.1%

8.5%
$125

EBITDA %
$104
EBITDA

$98
7.0%
5.5%
$75 $65 $65
5.2%
5.5%

$25
3.5% 3.5%
4.0%

2006 * 2007 2008 2009 2010 Q3 LTM

-$25 2.5%

EBITDA %EBITDA
* Excludes FY06 goodwill impairment
EBITDA defined as earnings before interest, taxes, depreciation and stock based compensation

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 Earnings Per Share
$3.35 - $3.45

$3.20

$2.70 $2.51

$2.20
EPS

$1.70

$1.20
$0.86
$0.62
$0.70

$0.18
$0.20 ($0.08)

-$0.30
2006 * 2007 2008 2009 2010 2011
Guidance
Fiscal Year
* Excludes FY06 goodwill impairment

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 Balance Sheet
($’s in millions)
$250

$217
$204
$200

$150
$125
$112
$100 $98
$100
$81
$66
$48 $48
$50
$25
$18 $18
$0
$0
2006 2007 2008 2009 2010 2010 Q3 2011 Q3
Fiscal Year Quarter
Debt Cash

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 Return on Invested Capital
25.0%

20.0% 18.8%

15.3%
15.0%

10.0%
7.0% 6.4%
5.0%

0.0%

-1.7%
-5.0%
-5.4%
-10.0%
FY06 FY07 FY08 FY09 FY10 FY11 Q3 LTM

ROIC = (Operating Profit – Cash Taxes) / (Avg. Total Assets – Avg. Cash – Avg. Current Liabilities)

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 Compelling Store Economics
• Proforma sales represent minimum required to achieve 16% IRR
• FY11 openings exceeding proforma targets by a double digit percentage
Existing Stores 22,000 Sf Pro Forma 15,000 Sf Pro Forma
Large Small
Format Format Yr 1 Yr 4 Yr 1 Yr 4
Size 36,509 14,708 22,000 15,000
Sales (thousands) $ 4,706 $ 1,699 $ 2,622 $ 2,865 $ 1,647 $ 1,800
Sales / Sq Foot $ 129 $ 115 $ 119 $ 130 $ 110 $ 120
Cash Flow (a) $ 663 $ 268 $ 341 $ 423 $ 254 $ 303
Cash Flow % 14.1% 15.8% 13.0% 14.8% 15.4% 16.8%

Store Investment, net new:

Capital, net (b) $ 592 $ 531
Inventory, net (c) $ 466 $ 288
Pre-opening costs $ 160 $ 130
Total $ 1,218 $ 949

(a) Excludes depreciation, corporate margin items, distribution center expenses and corporate administrative expenses
(b) Net of landlord allowances
(c) Net of Accounts Payable support

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 Long-Term Outlook
• Same-store sales growth of 2% to 4% per year

• Annual improvement in gross margin rate

• Annual improvement in SG&A leverage

• Open approximately 290 stores over next five years

• Remodel approximately 300 stores over next five years

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 Thank You

december 2010