S&P rates Jo-Ann Stores notes B-

Standard & Poor's said it assigned its B- rating to Jo-Ann Stores Inc.'s proposed $100 million senior subordinated note offering due 2012. The proceeds will be used to repurchase $64 million of 10.375% senior subordinated notes due 2007, as well as for general corporate purposes.

At the same time, S&P revised its outlook on Jo-Ann to positive from stable due to the company's stabilized operating performance and declining leverage. Outstanding ratings on the company, including the B+ corporate credit rating, were affirmed.

S&P said the ratings on Jo-Ann Stores reflect the risks associated with the company's participation in the competitive and fragmented craft and hobby industry, its store conversion strategy, and its growth strategy. These risks are somewhat mitigated by the company's established national brand, leading market position in fabrics, and solid credit measures for the rating.

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