[Joann, the 82-year-old fabrics and crafts retailer, has filed for bankruptcy for a second time within a year and is seeking a sale. The company stated that sluggish sales and inventory issues, including an “acute and unexpected” inability to produce certain items, led to the filing.
According to court documents, Joann’s debt has reached $615 million, making it difficult to recover financially. The company’s interim CEO, Michael Prendergast, attributed the decision to the “last several years of significant and lasting challenges” in the retail environment, in addition to current financial issues and inventory constraints.
As a result, Joann is seeking a sale of substantially all of its assets, with Gordon Brothers Retail Partners serving as the stalking horse bidder at an undisclosed price. However, the company may consider alternative bidders if a better offer is made.
Industry experts predict that if Joann cannot find a higher bidder, it will likely liquidate and lay off employees. John Bringardner, head of research firm Debtwire, believes that the company’s failure to close underperforming locations during its first bankruptcy was a mistake.
Joann’s stores and website will remain open for the time being, and employees will continue to receive their paychecks. However, the company’s revenue has been declining in recent years, except for a brief boost during the pandemic when people turned to arts and crafts as a way to pass the time. As the pandemic has subsided, customers have begun to shift their loyalty to rivals like Hobby Lobby and Michaels.
Joann’s struggles add to the growing list of struggling brick-and-mortar stores facing financial difficulties in a changing consumer environment marked by inflation and a shift towards online shopping.
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