JOANN has filed for Chapter 11 bankruptcy for the second time in a year and aims to sell the company while keeping stores open.
Key Facts:
– The craft retailer first filed for bankruptcy in March 2024.
– It exited Chapter 11 only a month later, becoming a private company.
– A second filing was made Wednesday, citing inventory trouble and sluggish sales.
– JOANN owes around $615 million and has a stalking horse bidder in place.
– The company operates about 800 stores, employing roughly 19,000 people.
The Rest of The Story:
JOANN experienced a boom in business during the COVID-19 lockdowns but saw sales drop after restrictions were lifted.
Inflation and high borrowing costs made debt more difficult to handle, and the retailer faced a new wave of financial pressure.
Even after closing certain locations, JOANN assured customers that all remaining stores will continue to operate, and online services will stay up.
The company’s management hopes to find a buyer soon, building on the base price set by Gordon Brothers Retailer Partners.
Founded in 1943, JOANN has long been known for its craft supplies, fabrics, and home decor merchandise.
Its second bankruptcy in such a short time suggests these recent struggles have created serious obstacles to a sustainable turnaround.
Joann, the fabric and crafts retailer that emerged from Chapter 11 less than a year ago, is considering filing for bankruptcy again as it runs out of cash https://t.co/vvEMCfKYb9
— Bloomberg Asia (@BloombergAsia) January 10, 2025
Commentary:
This second bankruptcy is a tough reminder that operating a retail chain during high inflation and steep borrowing costs is no simple task.
Rising expenses for labor and materials have made it harder for companies to cover debt while maintaining competitive prices.
Despite JOANN’s storied past, it now faces an uphill battle.
Given the heavy debt load and the lingering challenges from the past year, it appears likely that this retailer’s road back to profitability may soon come to an end.
The Bottom Line:
JOANN’s second bankruptcy and search for a buyer underscore the ongoing challenges for retailers in a costly economic environment.
READ NEXT: Starbucks Reverses Course, Makes a Major Change Effective January 27th: No More Freeloaders
The company’s future now hinges on successful bidding and a potential sale.