Jo-Ann Stores ( JAS) sewed up a fourth quarter that beat analysts' expectations, but the company's bottom-line results sank into the red on a hefty impairment charge. The arts-and-crafts retailer said Monday that it swung to a fourth-quarter loss of $18 million, or 78 cents a share, from a year-earlier profit of $32.3 million, or $1.40 a share. The latest quarter's results included a goodwill impairment charge of $27.1 million, or $1.17 a share. Excluding the charge, earnings were $9.1 million, or 39 cents a share. Analysts polled by Thomson First Call expected earnings of 31 cents a share, before items. Jo-Ann's fourth-quarter sales rose to $604.1 million from $588.2 million, though same-store sales fell 3%. The company's gross margins dropped to 41.9% from 45.4%, which the company attributed to higher promotional activity and markdowns. "This year clearly has been a challenging and disappointing time for Jo-Ann Stores," said Chairman and CEO Alan Rosskamm in a statement. "We entered the year with high expectations and, in hindsight, with overly optimistic merchandising plans. The challenges of a slowing market and declining traffic were exacerbated by merchandising and marketing decisions that proved to be ineffective as we tried to counter negative industry trends during the year." Rosskamm said fiscal 2007 will be a year of transition and projected a "difficult" first half amid industry softness, cost cuts and change in its merchandise assortment plan. The company said it expects same-store sales to decline 4% to 5% in the first half of the year. "However, in the second half of the year we expect to be positioned for substantial improvement in our operational and financial performance," Rosskamm said. "We believe this strategy will enable us to end the year with lower debt balances and result in a stronger, more disciplined organization."