
Joann, a beloved craft supplies retailer, files for bankruptcy again as financial woes and supply chain issues persist.
At a Glance
- Joann has filed for bankruptcy for the second time in less than a year due to declining sales and inventory shortages.
- The company faces $615 million in liabilities, including $133 million owed to suppliers.
- Joann plans to keep its 800+ stores open while conducting a court-supervised asset sale.
- Supply chain disruptions, inflation, and competition from other retailers have hindered recovery efforts.
- Gordon Brothers Retail Partners may emerge as the initial bidder in the asset auction process.
A Second Bankruptcy in Less Than a Year
Joann, the Hudson, Ohio-based craft supplies retailer, has found itself in a difficult position once again. Despite emerging from Chapter 11 bankruptcy in April after eliminating $505 million in debt, the company has filed for bankruptcy protection for the second time in less than a year. This move comes as Joann grapples with persistent financial struggles, declining sales, and ongoing inventory shortages that have severely impacted its operations.
The company now faces a staggering $615 million in liabilities, compounded by an additional $133 million owed to suppliers. These mounting debts have forced Joann to take drastic measures to address its financial predicament and fulfill its obligations to creditors.
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 Stores Open Amid Restructuring
Despite the dire circumstances, Joann is determined to keep its doors open for customers and employees alike. The retailer has announced plans to continue operating its more than 800 stores and websites while undergoing a court-supervised asset sale. This strategic move aims to repay creditors while maintaining the company’s presence in the craft supplies market.
“We hope that this process enables us to find a path that would allow Joann to continue operating”, announced interim Chief Executive Michael Prendergas.
In a reassuring move for its workforce, Joann has committed to continuing pay and benefits for its employees throughout the bankruptcy process. This decision underscores the company’s dedication to its staff during these challenging times.
Supply Chain Woes and Market Pressures
Joann’s financial troubles can be attributed to a perfect storm of challenges. The company has faced unpredictable and inconsistent deliveries from suppliers, leading to significant inventory challenges. Some suppliers have even discontinued items that Joann heavily relied upon, further exacerbating the inventory issues plaguing the retailer.
Moreover, Joann finds itself under pressure from multiple fronts. Inflation-wary consumers, high interest rates, and fierce competition from retailers like Michael’s, Etsy, and Hobby Lobby have all contributed to the company’s struggles. The craft supplies market has become increasingly competitive, with online retailers and big-box chains posing significant challenges to traditional retailers like Joann.
A Broader Trend in Retail
Joann’s situation is not unique in the current 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 like Party City, Big Lots, and the Container Store have also struggled to regain their footing after emerging from bankruptcy.
High prices, rising operating and labor costs, and reduced discretionary spending by consumers have created a challenging environment for businesses like Joann. These factors have forced many retailers to reassess their strategies and seek innovative solutions to remain competitive in an ever-changing market.
The Path Forward
As Joann navigates through this tumultuous period, the company’s future remains uncertain. If the court approves Joann’s sale process, Gordon Brothers Retail Partners is poised to act as the stalking-horse bidder, setting the auction floor for the company’s assets. This process will be crucial in determining the fate of the beloved craft supplies retailer.
Sources:
Craft supplies retailer Joann declares bankruptcy for the second time in a year