Joann files for bankruptcy — again
New York
CNN
—
Joann, the fabrics and crafts retailer, has filed for bankruptcy for a second time within a year and announced that it's seeking a sale.
The 82-year-old retailer said in statement Wednesday that sluggish sales and inventory issues forced Joann to file for Chapter 11 again. Joann first filed for bankruptcy in March 2024 and emerged a month later as a private company, keeping all of its stores open.
Joann blamed inventory issues that were "acute and unexpected," revealing in court documents that it faced an "unexpected ramp-down, and, in some cases, the entire cessation of production" of important items that shoppers come to the store for. That stunted sales and put its $615 million debt in an "untenable position."
The company joins a growing list of struggling brick-and-mortar stores that are unable to stay financially viable in a changing consumer environment. Inflation has made Americans dial back on discretionary purchases. The post-pandemic shopping boom has ended, and many stores that were on a downward trajectory before 2020 are now headed back down that path to bankruptcy as normalcy returns to the retail industry.
The "last several years have presented significant and lasting challenges in the retail environment, which, coupled with our current financial position and constrained inventory levels, forced us to take this step," said interim CEO Michael Prendergast said in a press release.
Party City retail store logo in the Queens borough of New York City, NY, January 8, 2022.
Anthony Behar/Sipa/AP
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Joann is now seeking a sale of substantially all of its assets. Gordon Brothers Retail Partners, which recently bought much of Big Lots, is the stalking horse bidder at an undisclosed price. However, it could sell itself to another company if Joann receives a better offer.
"We remain committed to continuing to support them and serving our customers, the sewists, quilters, crocheters, crafters and other creative enthusiasts we have served for more than 80 years, during the process," Prendergast said.
Joann's stores and website remains open while it navigates the sales process. Employees will also continue to get paid.
Joann's revenue has been on the decline in recent years, except for a brief pandemic boom during the height of Covid when people stuck at home spent more money on arts and crafts.
However, that has since faded.. Loyal shoppers have also shifted away from Joann to rivals, like Hobby Lobby and Michaels, a retail expert previously told CNN.
