
Joann, the beloved craft supplies retailer, faces a second bankruptcy filing in less than a year as declining sales and inventory shortages plague the company.
At a Glance
- Joann files for bankruptcy again, burdened with $615 million in liabilities
- Company plans to continue operations across 800+ stores during asset liquidation
- Employees to receive pay and benefits during bankruptcy process
- Supply chain disruptions and inflation contribute to Joann’s financial struggles
- Gordon Brothers Retail Partners emerges as probable stalking-horse bidder
Joann’s Financial Struggles Deepen
Joann, the Hudson, Ohio-based retailer known for its extensive range of craft supplies and fabric materials, has filed for bankruptcy for the second time in less than a year. Despite eliminating $505 million in debt during its previous Chapter 11 bankruptcy in April, the company now faces a staggering $615 million in liabilities. This financial burden includes $133 million owed to suppliers, significantly contributing to the company’s current predicament.
The retailer’s interim Chief Executive, Michael Prendergast, expressed hope for the company’s future, stating, “We hope that this process enables us to find a path that would allow Joann to continue operating.”
Despite the challenges, Joann plans to keep its more than 800 stores and websites open during a court-supervised sale of its assets to repay creditors.
Joann’s financial troubles stem from a perfect storm of challenges. The company has faced unpredictable and inconsistent deliveries from suppliers, leading to significant inventory shortages. Some suppliers have even discontinued items that Joann heavily relied upon, further exacerbating the inventory issues. These supply chain disruptions have severely impacted the retailer’s ability to meet customer demands and maintain competitive pricing.
Adding to Joann’s woes are inflation-wary consumers, high interest rates, and fierce competition from retailers like Michael’s, Etsy, and Hobby Lobby. The pressure from online retailers and big-box chains has also taken its toll on traditional retailers like Joann, forcing them to adapt or face financial hardship.
So at least in part, they can thank Joe Biden for this.
A Broader Retail Trend
Joann’s situation is not unique in the current retail landscape. Over 60 companies have filed for bankruptcy multiple times in the last two years, highlighting the challenges faced by traditional brick-and-mortar retailers. Other notable names like Party City, Big Lots, and the Container Store have also struggled post-bankruptcy, underscoring the difficult environment for specialty retailers.
High prices, rising operating costs, and increased labor expenses have led consumers to reduce discretionary spending, directly impacting businesses like Joann. The company’s failure to evolve and adapt to changing market conditions, as noted by industry experts, has significantly affected its market presence and financial stability.
As Joann navigates through this challenging period, the company has assured that its employees will continue to receive pay and benefits during the bankruptcy process. If the sale process is approved, Gordon Brothers Retail Partners is poised to act as the stalking-horse bidder, setting the auction floor for Joann’s assets.