In a significant move reflecting the tumultuous nature of today’s retail landscape, Joann, the well-known fabric and crafts retailer, has announced plans to close approximately 500 of its stores across the United States. This decision represents more than half of its current national presence and comes on the heels of another Chapter 11 bankruptcy filing just within a year. The firm, headquartered in Hudson, Ohio, points to dwindling consumer demand and persistent inventory challenges as key drivers behind this move.
Joann’s recent filing marks its second bankruptcy declaration in just a year, having previously emerged as a private entity after a March 2024 Chapter 11 ordeal. Despite efforts to rectify operational hurdles, the company once again found itself seeking financial protection this January. With a goal of selling the business, Joann has emphasized that shutting down underperforming locations is a strategic necessity during this process.
Expressing the difficulties of this decision, Joann stressed the substantial impact it would have on their employees, customers, and the communities reliant on their stores. The company communicated this sentiment through a statement which read, Right-sizing our store footprint is a critical part of our efforts to ensure the best path forward. Currently, Joann operates about 800 stores across 49 states, but the closures will span numerous locations including Arizona, California, Colorado, Florida, and New York, to name a few.
At this juncture, specific timelines for the closures and the exact number of employees affected remain undecided, as Joann awaits court authorization to proceed with its plan. The roots of the company date back to 1943, originating as a single storefront in Cleveland, Ohio, and subsequently expanding into a national chain under the Jo-Ann Fabric and Craft Stores name before its rebranding to 'Joann' for its 75th anniversary.
The dual bankruptcy filings within the past year have occurred amidst a notable cutback in consumer discretionary spending. This shift notably impacts at-home crafting activities, which were particularly popular during the initial phase of the COVID-19 pandemic boom. Moreover, Joann faces stiff competition from peers such as Hobby Lobby and larger retailers like Target, which are making headway into the craft supplies market.
In the wake of last spring’s emergence from bankruptcy, Joann attempted a reinvention with a fresh business strategy. However, unforeseen inventory issues compounded by a languid retail economy resulted in renewed financial distress, as highlighted by interim CEO Michael Prendergast. His court declaration pointed out that stock shortages saw in-stock levels eventually drop by upwards of 10%, escalating operational challenges.
Considering these extensive economic pressures, Joann argues that a business sale represents the most viable future course. The retailer has entered into a tentative stalking horse agreement with Gordon Brothers Retail Partners, aiming to facilitate this transition.
