Is A.C. Moore dreaming of a Jo-Ann Stores-style buyout?

The A.C. Moore Arts & Crafts Inc. retail chain hung a handmade “for sale” sign on itself Tuesday.

The Berlin, N.J., company became the latest retailer to disclose that it was “exploring strategic alternatives.” The choices mentioned in its brief statement include a potential sale, corporate financing, or raising more capital.

The announcement, made before the stock market had opened, stirred shareholders into action. On Tuesday, the stock price jumped 17 percent, or 41 cents, to close at $2.85 on more than six times the average daily volume for the last five years.

No doubt, some may be hoping that the process will lead to an outcome similar to that of one of A.C. Moore’s big competitors, Jo-Ann Stores Inc., which agreed to be taken private Dec. 23 in a deal valued at $1.6 billion.

Leonard Green & Partners L.P.’s offer of $61 a share for Ohio-based Jo-Ann Stores valued the fabric retailer at 7.8 times earnings before interest, taxes, depreciation, and amortization over its last four quarters.

It’s hard to imagine what someone might be willing to pay for A.C. Moore because it has lost money for its last 11 quarters and been unable to halt a slide in net sales. It lost $8.15 million, or 33 cents a share, in the third quarter ended Oct. 2.

In contrast, Jo-Ann Stores and the biggest player in the crafts-and-hobby industry, Michaels Stores Inc., posted higher sales and improved operating profits for the first three quarters of 2010. Irving, Texas-based Michaels Stores was taken private in a $5.52 billion transaction by Bain Capital and Blackstone Group L.P. in 2006.

With net sales of $468.89 million in its fiscal year ended Jan. 2, 2010, A.C. Moore is but a swatch of fabric next to the bolts of Jo-Ann ($1.99 billion in net sales) and bead work of Michaels ($3.89 billion). A.C. Moore’s annual sales have declined each year since they hit $589.51 million in 2006.

A.C. Moore hired former Office Depot Inc. executive Rick A. Lepley as chief executive officer in June 2006 to remake the do-it-yourself chain. A biting recession made that job harder to accomplish, and Lepley retired last March, leaving it to current CEO Joseph A. Jeffries to complete the task.

In Tuesday’s statement, the company said it had “received third-party expressions of interest” but did not disclose who made them or what they were. It also said not to expect any more details unless the board approves a specific deal.

With 134 stores in the eastern United States, A.C. Moore has come a long way since it opened its first store in Moorestown in 1985. But it remains tiny compared with other regional players in its industry such as Hobby Lobby Stores Inc., of Oklahoma City, with its 469 stores, and Hancock Fabrics Inc., a Baldwyn, Miss., chain with 266 stores.

Hobby Lobby was acquired nearly two years ago, while Hancock Fabrics emerged from bankruptcy in August 2008. (Notice any pattern here?) Hancock recently said it would not renew the employment agreement of Jane F. Aggers, the CEO who steered the company through bankruptcy.

However, it’s not just the hobby-and-craft industry that’s wobbly. The whole retail industry is undergoing one of its periodic shakeouts, with big names such as Blockbuster Inc. in bankruptcy and Borders Group Inc. reportedly set to join it there this week.

A.C. Moore has one thing in its corner: It probably had more cash on its balance sheet at the end of its fiscal year than Borders. A.C. Moore said it finished the year with more than $35 million in cash. Borders hasn’t announced its cash position, but it had $23.1 million as of Oct. 30.

Janney Montgomery Scott L.L.C., the Philadelphia investment-banking firm that A.C. Moore hired to serve as its financial adviser, is once again in the position of trying to help a regional player find its financial footing. Last month, debt-burdened Tasty Baking Co. retained Janney to help it refinance or find a buyer for the maker of Tastykake cakes and pies.

In the end, though, it’s up to A.C. Moore’s board to craft a deal to ensure the company has a shot at 25 more years.

UPDATED ON 2/17/11: I incorrectly identified Hobby Lobby Stores Inc. as having been acquired, but a company representative told me that ownership had not changed in 40 years. I'd confused it with a company with a similiar name -- Hobby Lobby International Inc. -- that had been sold in early 2009.