The fabrics retailer has filed for Chapter 11

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New York CNN —Joann, the 81-year-old fabric and craft retailer, has filed for bankruptcy as it struggles with customers cutting back on discretionary spending.
In a statement Monday, the Ohio-based company said it filed for Chapter 11 bankruptcy protection and has secured $132 million in fresh funding that helps reduce its debt in half, which had ballooned to $1 billion.
Its roughly 850 stores and website will remain open for business.
Joann’s revenue has been on the decline in recent years, except for a brief pandemic boom during the height of Covid when people stuck at home spent more money on arts and crafts.
However, that has since faded, and inflation has soared, prompting customers to spend less on non-essential items.
“This agreement is a significant step forward in addressing Joann’s capital structure needs, and it will provide us with the financial resources and flexibility necessary to continue to deliver best-in-class product assortments and enhance the customer experience wherever they are shopping with us,” said Scott Sekella, the company’s chief financial officer, in the company statement.
Joann’s stock was delisted from the Nasdaq and will become privately owned following the bankruptcy process, which it expects to happen as fast as next month.
“The bankruptcy of Joann has been looming for a long time and was always a matter of when, rather than if,” said Neil Saunders, managing director and retail analyst for GlobalData, in a note Monday.
“The bankruptcy process will now allow the arts and crafts chain to receive an infusion of cash at the same time as streamlining its operations and reducing debt levels.”Saunders said that its customers are increasingly shopping at lower-priced rivals, like Hobby Lobby, because of “weakening store standards and declining customer service levels, partly because of staffing cuts, have made stores less desirable.”

CNN New York —.

As a result of its customers’ reduction in discretionary spending, 81-year-old fabric and craft retailer Joann has declared bankruptcy.

The Ohio-based business announced in a statement on Monday that it had filed for Chapter 11 bankruptcy protection and had obtained $132 million in new funding, which would help cut its debt in half, which had grown to $1 billion. Its website and about 850 stores will continue to be operational.

Except for a brief pandemic boom during the height of the Covid pandemic when people stayed at home and spent more money on crafts, Joann’s revenue has been declining recently. But since then, that has diminished and inflation has increased, leading consumers to spend less on non-essential goods.

According to a company statement, chief financial officer Scott Sekella stated, “This agreement is a significant step forward in addressing Joann’s capital structure needs, and it will provide us with the financial resources and flexibility necessary to continue to deliver best-in-class product assortments and enhance the customer experience wherever they are shopping with us.”.

It expects the bankruptcy process to conclude as soon as next month. Joann’s stock was delisted from the Nasdaq and will subsequently be privately held.

Neil Saunders, managing director and retail analyst at GlobalData, wrote in a note on Monday that “Joann’s bankruptcy has been looming for a long time and was always a matter of when, rather than if.”. “The arts and crafts chain will now be able to streamline its operations and lower its debt levels while simultaneously receiving an infusion of cash through the bankruptcy process. “.

Because of “weakening store standards and declining customer service levels, partly because of staffing cuts, have made stores less desirable,” according to Saunders, its customers are increasingly choosing to shop at lower-cost competitors like Hobby Lobby. “.

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