Joann, an arts and crafts company, filed for Chapter 11 bankruptcy after 81 years of operation and more than 800 stores in the U.S.
In a company statement, the Ohio-based company is filing for bankruptcy protection among issues of higher production costs and decreasing customer demand.
Despite this, its 829 stores across 49 U.S. states will remain in operation, alongside its website.
Details about the bankruptcy
According to CNN, Joann reportedly faced about $1 billion in debt. The company saw a spike of interest during the COVID-19 pandemic; however, that has since tapered off as inflation has caused some consumers to be more selective about nonessential purchases.
“On the revenue side, sales slowed as COVID-19 policies were repealed or reduced, demand for fabric and mask-related products abated, hobbyists spent less time crafting indoors, and the federal government terminated pandemic-related stimulus programs,” Joann stated in court documents gathered by CBS News.
Because of this, Joann has filed and received around $132 million in financing, expecting to reduce its debt by about half a billion.
Scott Sekella, Joann’s chief financial officer, shared in the statement that the funding is a “significant step forward” to the company’s needs, ensuring it will provide the “financial resources and flexibility necessary” to enhance the overall consumer experience.
The company added that it may become privately owned as soon as the end of April.
Joann’s bankruptcy was expected
Neil Saunders, an analyst for GlobalData, predicted that Joann was heading for bankruptcy after the company had lost a significant chunk of customers to competing rivals — a case he referred to as “when, rather than if,” per CNN.
“Weakening store standards and declining customer service levels, partly because of staffing cuts, have made (Joann) stores less desirable,” Saunders said in a statement given to CBS News.
Saunders added to CNN that the decision helps the chain with “streamlining its operations” to limit its debt amount.
Other companies filing for bankruptcy
Since the beginning of the COVID-19 pandemic, multiple retailers have gone on to file for Chapter 11 bankruptcy.
In 2020, GNC announced it was closing down more than 1,300 stores by the end of that year to prevent closure — reportedly close to half of all its locations, according to CBS News.
Retail Dive features a tracker of every major company that’s filed for Chapter 11 bankruptcy since 2020. This list includes:
- David’s Bridal.
- Guitar Center.
- J. Crew.
- Party City.
- Tuesday Morning.
As Deseret News previously reported, J.C. Penney filed for bankruptcy in 2020, as well as Bed, Bath & Beyond in 2023, both of which resulted from declining sales and cost-cutting missteps.
Joann is open to progressing through this debt and is confident “to drive long-term growth” from its next steps, per its statement.
“There is still a place for Joann, but it’s going to take a lot of work to get back into a stable position,” Saunders said to The Associated Press. “I think this bankruptcy was always inevitable. And actually, despite the disruption it causes, it’s a very good first step for getting the company back on track.”