Joann to Close Over 500 Stores Amid Financial Struggles
NEW YORK, NY - Struggling arts and crafts retailer Joann Fabrics and Crafts plans to shut down approximately 500 locations across the United States, representing more than half of its current domestic footprint. The closures come after the company filed for Chapter 11 bankruptcy protection for the second time in a year, citing factors such as weak consumer demand and inventory issues.
Joann initially filed for Chapter 11 in March 2022, later emerging as a private company. However, ongoing operational challenges prompted another bankruptcy filing in January 2023. The company now seeks to sell its business and views store closures as a necessary step to facilitate this process.
"This was an extremely difficult decision, given the significant impact it will have on our team members, customers, and the communities we serve," the company said in a statement. "However, right-sizing our store footprint is an essential aspect of our efforts to secure the company's future."
Joann currently operates around 800 stores in 49 states. The initial list of locations slated for closure includes stores in Arizona, California, Colorado, Florida, Georgia, Illinois, Michigan, New York, Pennsylvania, Texas, and others.
The exact timing of the closures and the number of employees affected are still unknown. Joann's motion filed on Wednesday requests court approval to initiate the store closing process.
Joann's history dates back to 1943, with its first store in Cleveland, Ohio. The retailer subsequently expanded to become a national chain. Formerly known as Jo-Ann Fabric and Craft Stores, the company adopted the shortened "Joann" name for its 75th anniversary.
Both of Joann's bankruptcy filings have occurred amidst a decline in discretionary spending, as consumers have shifted away from at-home crafting activities post-pandemic. The company has also faced increasing competition from rivals like Hobby Lobby and larger retailers like Target, which offer a wide range of art supplies and kits.
Despite implementing a new business plan after emerging from bankruptcy last spring, Joann faced "unanticipated inventory challenges," which coupled with a sluggish retail economy, led to an "untenable debt position," according to Michael Prendergast, interim CEO.
Joann's inventory shortages significantly impacted its core business, resulting in reduced in-stock levels and operational distress. The company maintains that a sale of the business is the best solution to overcome these challenges. Joann currently has a proposed "stalking horse" bid agreement in place with Gordon Brothers Retail Partners.