Joann Fabric and Craft Stores, a beloved American retailer, files for bankruptcy for the second time in a year, leaving crafters and investors wondering about its future.
At a Glance
- Joann has filed for bankruptcy again, less than a year after its previous Chapter 11 filing
- The company faces $615 million in liabilities, despite eliminating $505 million in debt last year
- Over 800 stores remain open as Joann seeks a court-supervised sale of assets
- Supply chain issues, inflation, and fierce competition contribute to Joann’s financial struggles
- Employees will continue to receive pay and benefits during the bankruptcy process
A Familiar Pattern: Joann’s Second Bankruptcy Filing
Joann, the well-known fabric and craft supplies retailer, has once again found itself in financial turmoil. The company, which emerged from Chapter 11 bankruptcy in April 2024, has filed for bankruptcy protection for the second time in less than a year. This move comes as a result of declining sales, inventory shortages, and mounting debts that have pushed the retailer further into financial distress.
Despite its previous efforts to alleviate financial burdens through a $505 million debt reduction, Joann now faces $615 million in liabilities. The company also owes $133 million to suppliers, further complicating its financial situation. These staggering figures highlight the severity of Joann’s financial challenges and the urgent need for restructuring.
Joann, the store known for its litany of fabrics and crafts, filed bankruptcy in the middle of the night for the second time in a year.https://t.co/dL1Mtg7Lh2
— Local 12/WKRC-TV (@Local12) January 15, 2025
Keeping the Doors Open: Joann’s Strategy During Bankruptcy
In an effort to maintain operations and protect its workforce, Joann plans to keep its more than 800 stores and websites open during the bankruptcy process. The company has opted for a court-supervised sale of its assets to repay creditors, a move that aims to preserve the business while addressing its financial obligations.
“We hope that this process enables us to find a path that would allow Joann to continue operating”, announced interim Chief Executive Michael Prendergast. Employees at Joann will continue to receive pay and benefits during the bankruptcy process, providing some stability for the workforce amid the company’s financial uncertainty. This commitment to its employees demonstrates Joann’s effort to navigate the bankruptcy process responsibly.
Supply Chain Woes and Market Pressures
Joann’s financial struggles can be attributed to a combination of factors, including supply chain disruptions and intense market competition. The company has faced unpredictable and inconsistent deliveries from suppliers, leading to significant inventory challenges. Some suppliers have even discontinued items that Joann relied upon, further exacerbating the retailer’s inventory issues.
Market pressures have also played a significant role in Joann’s difficulties. The company faces stiff competition from retailers like Michael’s, Etsy, and Hobby Lobby, as well as online marketplaces and big-box stores. Inflation-wary consumers and high interest rates have led to reduced discretionary spending, further impacting businesses like Joann that rely on consumer crafting and hobby purchases.
A Broader Trend in Retail
Joann’s situation is not unique in the retail landscape. Over 60 companies have filed for bankruptcy multiple times in the last two years, indicating a broader trend of financial instability in the sector. Other retailers such as Party City, Big Lots, and the Container Store have also struggled post-bankruptcy, highlighting the challenges faced by traditional brick-and-mortar stores in an evolving retail environment.
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Craft supplies retailer Joann declares bankruptcy for the second time in a year
