Joann Files for Chapter 11 Bankruptcy Again Amid Financial Struggles.
Joann, the prominent fabric and craft retailer, has filed for Chapter 11 bankruptcy for the second time in less than a year. The Ohio-based company is grappling with significant financial challenges and inventory issues, continuing its struggle to overcome ongoing operational pressures.
Joann Fabrics & Crafts (@joann_stores Instagram)
In March 2024, Joann initially sought bankruptcy protection and secured approximately $132 million in new financing to address its $1 billion debt. This move was aimed at reducing its debt load by about $500 million. However, despite efforts to revamp the company, Joann has found itself in the same precarious position again.
Joann's Struggles and Goals Amid Bankruptcy
In a statement on Wednesday, Joann revealed its intention to initiate a sale process to maximise the value of its business. Interim CEO Michael Prendergast explained the ongoing challenges that led to the company’s current predicament: “Since becoming a private company in April, the Board and management team have continued to execute on top-and bottom-line initiatives to manage costs and drive value. However, the last several years have presented significant and lasting challenges in the retail environment, which, coupled with our current financial position and constrained inventory levels, forced us to take this step.”
Despite the bankruptcy filing, Joann has assured its customers that operations will continue as usual. Its stores and website will remain open, continuing to serve customers as the company moves forward with its restructuring plans.
The Next Steps for Joann: Asset Sale and Store Closures
As part of its Chapter 11 proceedings, Joann is seeking court approval to sell nearly all of its assets. Gordon Brothers Retail Partners, LLC, which recently acquired a significant portion of Big Lots, has been named the "stalking horse" bidder for Joann’s assets. This means that Gordon Brothers will set the minimum bid for the sale, although the company is open to receiving "higher and better offers."
If competitive bids arise, Joann plans to hold one or more auctions to facilitate the sale process. The retailer's focus is on securing the best possible outcome as it navigates its financial challenges.
Joann operates over 800 stores across 49 states, but reports have surfaced that at least eight locations in various states— including Iowa, North Carolina, Maryland, Pennsylvania, New York, and Massachusetts—are set to close. These closures are part of the company's regular assessment and optimization of store locations. Amanda Hayes, Joann's director of corporate communications, clarified, "These closures are part of a regular assessment and optimization of store locations."
Store Closures and New Openings
While some locations are closing, Joann continues to expand its footprint with new and remodeled stores. Recent openings include new locations in Great Falls, MT, and Maplewood, MN, as part of the company’s ongoing efforts to adapt to evolving market conditions.
Joann has not specified the exact dates for its store closures, but news reports from Pennsylvania, Iowa, Massachusetts, and Delaware indicate that closures could take place between January 12 and January 19. Notably, an employee at the Owings Mills, Maryland store confirmed that it would be closing on January 19.
