Crafts retailer Joann seeks bankruptcy
Joann, the arts-and-crafts retailer that has operated for more than 80 years, has filed for bankruptcy as consumers pare back on do-it-yourself projects, leaving the company with mounting debt.
The chain, which is based in Hudson, Ohio, said in a statement on Monday that it had struck a deal with its lenders for a $132 million cash injection to help reduce its debt by $505 million, a process that will result in the retailer, which is listed on the Nasdaq stock exchange, being taken into private ownership. Its filing listed liabilities of $1 billion to $10 billion, and assets of $500 million to $1 billion.
Joann, whose outlets were once called Jo-ann Fabrics, said its stores, roughly 800 nationwide, would continue to operate as it closes the deal, which is expected as early as next month.
The retailer, which sells yarn, fabrics and home goods, has been coming down from a short-lived sales boom during the pandemic lockdowns when there was a frenzy in consumers spending on at-home projects. But that has faded in the past two years, with consumers pulling back on discretionary spending as inflation remains relatively high, which has challenged the retail sector at large.
Joann’s shares will be delisted after its bankruptcy proceedings, and the company will be owned by its lenders and other stakeholders.
In its most recent quarterly earnings report in December, Joann reported a dip in sales, which its executives attributed to a challenging retail environment. The company’s competitors, Michael’s and Hobby Lobby, are both privately owned, so
it is unclear how they have performed amid those economic headwinds.
The private equity firm Leonard Green & Partners bought Joann for $1.6 billion in 2011, only to spin it off publicly in 2021. Joann’s stock initially climbed to
more than $16, but it began to tumble a few months later and now trades for about 20 cents a share.
Joann owes about $12 million to Spinrite, a craft yarn supplier, its largest unsecured creditor. It owes millions more to other yarn and fabric providers, as well as Fedex and the commercial real estate firm Jones Lang Lasalle.