Joann, a beloved craft supplies retailer, faces financial turmoil as it files for bankruptcy for the second time in less than a year.
At a Glance
- Joann has filed for bankruptcy again, less than a year after its previous Chapter 11 filing
- The company now faces $615 million in liabilities, including $133 million owed to suppliers
- Over 800 stores and websites will remain open during a court-supervised asset sale
- Joann’s struggles are attributed to supply chain issues, inflation, and fierce competition
- Employees will continue to receive pay and benefits during the bankruptcy process
A Familiar Pattern of Financial Distress
Joann, the Hudson, Ohio-based craft supplies giant, has once again found itself in dire financial straits. The company, which emerged from Chapter 11 bankruptcy in April after eliminating $505 million in debt, now faces a staggering $615 million in liabilities. This second bankruptcy filing within a year highlights the persistent challenges plaguing the retail sector, particularly those specializing in discretionary goods.
The company’s interim Chief Executive, Michael Prendergast, expressed cautious optimism about the bankruptcy process, stating, “We hope that this process enables us to find a path that would allow Joann to continue operating.” Despite this hope, the road ahead appears fraught with obstacles as the company grapples with declining sales and critical inventory shortages.
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
Supply Chain Woes and Market Pressures
At the heart of Joann’s troubles lies a perfect storm of supply chain disruptions, inflationary pressures, and fierce competition. 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 situation.
This failure to adapt has left Joann vulnerable to competition from retailers like Michael’s, Etsy, and Hobby Lobby, as well as online giants and big-box chains. The company’s struggle is emblematic of a broader trend in the retail sector, with over 60 companies filing for bankruptcy multiple times in the last two years.
The Path Forward
As Joann navigates these turbulent waters, the company has announced plans for a court-supervised sale of its assets to repay creditors. If approved, Gordon Brothers Retail Partners would act as the stalking-horse bidder, setting the auction floor for Joann’s corporate assets. This process aims to keep the company’s more than 800 stores and websites operational during the transition.
In a move aimed at maintaining stability, Joann has committed to continuing pay and benefits for its employees throughout the bankruptcy process. This decision underscores the company’s recognition of its workforce’s importance in weathering this financial storm.
A Reflection of Broader Economic Challenges
Joann’s predicament is not unique in the current economic landscape. Other retailers like Party City, Big Lots, and the Container Store have also struggled post-bankruptcy, highlighting the difficult environment for brick-and-mortar stores specializing in discretionary goods. High prices, rising operating and labor costs, and cautious consumer spending have created a perfect storm for these businesses.
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Craft supplies retailer Joann declares bankruptcy for the second time in a year
