Joann bankruptcy reflects consumer cutbacks

Jill Stiger of Mount Clemens is a quilter who also likes to sew.

Right now she can purchase crafting supplies at several Joann fabric and craft stores in Macomb County and is hoping that won’t change.

The retailer that carries a large selection of fabric, sewing machines, craft supplies and decorations has filed for Chapter 11 bankruptcy protection, as consumers continue to cut back on discretionary spending, according to a report by the Associated Press.

“That usually means they’re restructuring things,” said Stiger. “I hope that’s what it means,”

The Hudson, Ohio-based company made the announcement Monday noting that it expects to emerge from bankruptcy as early as the end of next month but is likely to become privately-owned by certain lenders and industry parties in the process, meaning its shares would no longer be publicly traded on stock exchanges.

For now all of Joann’s more than 800 stores and its website will continue to operate normally during the bankruptcy process. Vendors, landlords and other trade creditors should also not see any pay disruptions, the company said, pointing to a deal it had struck with most of its shareholders for financial support.

As a result of the filing in the U.S. Bankruptcy Court, Joann received about $132 million in new financing and is expected to reduce its balance sheet’s funded debt by about $505 million.

Scott Sekella, Joann’s Chief Financial Officer and co-lead of the CEO’s interim office, stated the transaction support agreement marked a “significant step forward” in addressing the company’s capital structure needs. He added the retailer remains committed to operating as usual so it can “best serve our millions of customers nationwide.”

The bankruptcy filing comes as consumers are taking a step back on discretionary spending, which includes products purchased for at-home crafts, at least relative to the boom experienced during COVID-19.

“Crafts, which did extremely well during the pandemic, have fallen back into slight declines as people find other things to do,” Neil Saunders, managing director of research firm GlobalData, said in The Associated Press report, adding many are now sacrificing artsy activities in order to have the money for experiences outside of the house, such as going out to eat or attending sporting events.

This puts pressure on all retailers with a stake in the