Joann Fabrics and Crafts has filed for bankruptcy after 81 years of service. The company has filed for Chapter 11 bankruptcy protection as it tries to fix its financial situation.
According to the fabric store, all of its locations will remain open, and customers will still be able to buy products from them online or in-store.
Joann Fabrics and Crafts Files for Bankruptcy
After filing for Chapter 11 bankruptcy protection, Joann Fabrics and Crafts released a statement explaining their legal decision. However, the popular store also explained how this bankruptcy may impact customers.
For the most part, Joann stressed that its 850 stores, which are located in 49 states, will not be affected by this bankruptcy move.
Stores Will Stay Open
Therefore, this means all Joann stores will stay open and continue to operate as normal. Nothing will change at any of their locations.
The company also explained that its website would continue to be open for all customers. Potential shoppers will be able to use their website, just as they did before the company filed for bankruptcy. Joann Fabrics has said that nothing major will change for customers.
Joann’s Statement
In a statement, the company discussed their legal filing, as well as what customers can expect. However, they also talked about their vendors and landlords.
“Customers, vendors, landlords, and other trade creditors will not see any disruption in services,” it said in a statement. “The Company remains as focused as ever on providing customers with quality products and services that inspire their creativity.”
Joann Is $1 Billion in Debt
This Chapter 11 bankruptcy comes after Joann revealed it was more than $1 billion in debt in the last quarter. This debt is the result of shrinking revenues, as well as a widening net loss.
According to the fabrics store, this debt has also been increased, thanks to an “uncertain consumer environment.”
Joann Still Doesn’t Have a CEO
For more than a year, Joann hasn’t had a full-time CEO. Last May, the company’s CEO, Wade Miquelon, stepped down and retired after he had a “challenging” year. Miquelon ran Joann for seven years.
Since then, the company has only had interim CEOs. Currently, Chris DiTullio is the chief customer officer, as well as the co-lead of the interim office of the CEO.
DiTullio’s Statement
DiTullio also released a statement, thanking the support that the company had received.
“We appreciate the support from our financial and industry stakeholders in this agreement, and their confidence in our ability to continue driving positive business change,” he said.
Joann’s Success With Crafters
DiTullio also talked about how Joann has long had success, for the past 80 years, with crafters and those who look to create things.
“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,” DiTullio said.
Joann on Wall Street
In 2021, Joann went public when the COVID-19 pandemic was ongoing. The pandemic led to an increase in sales at Joann, as many people sought crafts they could do by themselves at home.
After Joann first appeared on the stock market, it debuted at $12 a share. It ended up rising to almost $17. However, this recent news — and its more than $1 billion in debt — has changed things for the company.
The Stock Market Now
Currently, Joann has seen its shares trading down by almost 20%. Clearly, Wall Street reacted to the news.
However, now that Joann has filed for bankruptcy, it will become privately owned again once the process is completed. This will result in the company being delisted from the Nasdaq. This could all occur within the next month.
Joann’s Ongoing Decline
For years now, Joann has struggled to keep up with revenue and changing consumer interests. Though it did have a surge in consumer activity during the COVID-19 pandemic, when many people sought out new projects to do at home, it didn’t last.
Ongoing inflation has also hampered Joann’s overall business, as many people are choosing to only spend their money on essential items.
Joann’s Bankruptcy Isn’t a Shock
Many analysts aren’t surprised by Joann’s bankruptcy news, as they knew it would eventually happen.
“The bankruptcy of Joann has been looming for a long time and was always a matter of when, rather than if,” Neil Saunders, the managing director and retail analyst for GlobalData, said. “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.”
