(LibertySociety.com) – Crafts and fabrics retail outlet Joann filed for Chapter 11 bankruptcy protection on March 18, but plans to keep its website and doors open. The company launched 81 years ago and now boasts over 850 stores nationwide. However, Joann has accumulated nearly $1 billion in debt in recent years. During the pandemic, Joann saw a surge in revenue as people delved into arts and crafts while spending more time at home. Soaring inflation has resulted in decreased consumer spending on non-essential products.
Joann will begin restructuring to compete with similar companies, including Hobby Lobby. The company released a statement announcing the filing, ensuring that there would not be any disruption to operations. The statement said that Joann “remains as focused as ever.” The company will now be privately owned after the bankruptcy process is complete. The Joann stock will also be delisted from the Nasdaq. The company also announced that it had secured $132 million in funding to cut the debt in half.
GlobalData retail analyst and managing director Neil Saunders said that Joann’s bankruptcy had been expected for a while, but it allowed the company to receive the cash infusion. The funding will coincide with the company’s plan to restructure and reduce debt. Saunders noted that consumers have opted to shop for arts and crafts at places like Hobby Lobby and other competitors because of their lower price points. Staffing cuts at Joann’s have also resulted in lower-quality customer service.
Shares of the company’s stock dropped by 20 percent following the news. It only went public back in 2021, with the stock price reaching nearly $17. Now the shares are only worth around $0.25. The company has operated without a CEO since May 2023, after Wade Miquelon retired. The company expressed appreciation for the support of stakeholders and their belief in the brand. The statement boasted the company’s unique ability to provide services for its customers.
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