- Joann announced a $200 million annual cost reduction plan that relies on declining ocean freight rates, President and CEO Wade Miquelon said during a Q3 earnings call.
- The craft retailer expects to realize its goal by fiscal year 2025, the CEO told investors. Around half of the expected savings from the company’s cost reduction plan will come from supply chain savings largely driven by reductions in ocean freight costs.
- Joann expects to realize $15 million to $20 million in savings next quarter due to lower ocean expenses. “Excess import freight costs have now effectively transitioned from headwinds to tailwinds,” said CFO Scott Sekella.
Joann spent $35.3 million in excess freight expenses in Q4 2021 as spot rates were driven by congestion and backlogs at major ports. More recently in Q3, Joann spent $18.5 million in excess import freight costs, according to an earnings report.
“Input costs, including supply chain costs, have reached an inflection point from highly inflationary to deflationary and we are organizing to capitalize on the reversing trend and capture significant value,” Miquelon said.
Joann joins the list of retailers benefiting from reduced freight costs following 2021’s heightened rate environment. Victoria’s Secret, Gap Inc. and Hasbro are among the many retailers that have touted savings from normalizing spot rates on both ocean and air lanes.
Cooling demand and easing congestion continues to push container rates down, according to a Jan. 4 Freightos Baltic Index update. Average rates from Asia to the U.S. West Coast fell 89% year over year to $1,382 per FEU, Freightos reported.
East Coast prices have also fallen, and are down 82% year over year to $2,898 per FEU, according to Freightos.