We often take for granted that our favorite stores will always be there, especially those in niche markets.
Sadly, as the Biden economy continues to see a massive downturn, it’s becoming more difficult for these companies to maintain solid footing.
Now, yet another popular American retailer has filed for bankruptcy after being in business for over 80 years, and the customers who depend on it are left stunned.
Joann Fabrics files Chapter 11
Joann Inc. is an Ohio-based retailer that was founded in 1943 and now operates 829 stores across 49 states.
The retailer specializes in selling a large variety of fabrics, along with an assortment of arts and crafts items.
Unfortunately, the company has now filed for Chapter 11 bankruptcy protection after being in business for 81 years.
The company made the announcement this week and said that it could become privately owned as soon as sometime in April.
The Joann Fabric and Crafts website and its stores will remain open and continue operating normally, per a company press release.
Chris DiTullio, chief customer officer and co-lead of the interim office of the CEO, said, “There is no other retailer with the same ability to serve sewists, quilters, crocheters, crafters, and other creative enthusiasts as we have for the past 80 years, and we take great pride in seeing the passion and engagement of our millions of customers and our Team Members.”
Scott Sekella, Joann’s chief financial officer and co-lead of the interim office of the CEO added, “This agreement is a significant step forward in addressing Joann’s capital structure needs, and it will provide us with the financial resources and flexibility necessary to continue to deliver best-in-class product assortments and enhance the customer experience wherever they are shopping with us.”
Joann Inc. went private in 2011 and then went public a decade later, initially offering investors $12 a share, but as of Monday, the stock opened at 25 cents a share.
According to the press release, Joann Inc. has received approximately $132 million in new financing commitments and “expects to reduce funded debt on its balance sheet by approximately $505 million.”
Revenue has been declining
During the COVID-19 pandemic, retailers like Joann Fabrics and Crafts saw a boom in sales as Americans looked for ways to stay entertained while they were stuck at home.
However, since the lockdowns were lifted and inflation continues to soar, fewer Americans are spending money on “discretionary” items.
Joann’s stock was delisted from the Nasdaq, and according to Neil Saunders, managing director and retail analyst for GlobalData, “The bankruptcy of Joann has been looming for a long time and was always a matter of when, rather than if.”
“The bankruptcy process will now allow the arts and crafts chain to receive an infusion of cash at the same time as streamlining its operations and reducing debt levels,” he added.
Saunders said customers are constantly looking for lower prices and tend to shop at competitors like Hobby Lobby due to “weakening store standards and declining customer service levels, partly because of staffing cuts, [which] have made stores less desirable.”
Informed American will keep you up-to-date on any developments to this ongoing story.
