Title: Joann Faces Bankruptcy Once More
Joann, the 82-year-old crafts and fabric retailer, revealed on Wednesday that they're once again filing for Chapter 11 bankruptcy due to sluggish sales and inventory problems. Remember, they went through this process back in March 2024 and emerged as a private company that kept all its stores operational.
The company faced some "acute and unexpected" inventory issues, as detailed in court documents. These challenges amounted to an "unexpected ramp-down, and in some cases, the entire cessation of production" of essential items. This stagnation affected sales, causing their $615 million debt to become an "untenable position."
This news marks yet another brick-and-mortar store confronting financial instability in a changing consumer landscape. The post-pandemic shopping boom has ended, and many firms stranded on a downward trajectory before 2020 are now heading back towards bankruptcy as retail normality returns.
In a press release, interim CEO Michael Prendergast acknowledged the "significant and lasting challenges in the retail environment" that contributed to these financial woes. Joann is now actively seeking a sale of its substantial assets, with Gordon Brothers Retail Partners, who recently bought a chunk of Big Lots, serving as the stalking horse bidder at an unspecified price. However, Joann could sell to another company if they receive a better offer.
Prendergast assured that Joann’s stores and website will remain operational, and employees will continue to be compensated while they navigate this process.
Joann's revenue has been on a steady decline, except for a brief surge during the pandemic, when people stuck at home invested more in arts and crafts. However, this pandemic-induced boom has since dwindled, and loyal shoppers have shifted towards rivals like Hobby Lobby and Michaels.
[Enrichment Data: Overall]Joann, a prominent crafts and fabric retailer, is grappling with significant financial issues leading to its second Chapter 11 bankruptcy filing within a year. This financial strain includes:
- Declining Sales: Consumers are prioritizing essential items over non-essential ones like arts and crafts supplies, leading to a decrease in sales.
- High Debt: Joann carries substantial debt obligations, amounting to $615.7 million in funded debt and $133 million in trade debt.
- Inventory Challenges: The company has faced "acute and unexpected" inventory issues, including unreliable and inconsistent deliveries from suppliers, and the discontinuation of certain products by suppliers.
- Competition: Joann faces stiff competition from rivals like Michael's, Etsy, and Hobby Lobby.
The financial troubles at Joann have significantly affected their business, leading to a decline in sales due to consumers prioritizing essential items over arts and crafts supplies. The company's high debt, amounting to $615.7 million in funded debt and $133 million in trade debt, along with inventory challenges, including unreliable deliveries and product discontinuations, have contributed to an untenable position.
