Joann files for financial setback for second period within a year, seeks to sell all assets

Joann, an 82-year-ancient fabric and craft retailer, announced it has filed for Chapter 11 financial setback for a second period within a year due to monetary and inventory issues.

The corporation originally announced in March 2024 that it had filed for financial setback protection in Delaware after securing around $132 million in recent capitalization, which was expected to reduce its $1 billion total obligation by about $500 million. On Wednesday, the Ohio-based retailer released a statement about the second financial setback filing and its intention to “facilitate a sale procedure to maximize the worth of its business.”

“Since becoming a private corporation in April, the Board and management throng have continued to execute on top-and bottom-line initiatives to manage costs and drive worth,” Michael Prendergast, interim CEO of Joann, said. “However, the last several years have presented significant and lasting challenges in the retail surroundings, which, coupled with our current monetary position and constrained inventory levels, forced us to receive this step.”

Despite announcing the commencement of voluntary Chapter 11 proceedings, Joann said its stores and website are “open in the ordinary course and continue to serve customers.”

Here is what to recognize about Joann’s financial setback filing and what could arrive next for the struggling retailer.

What does the financial setback cruel for Joann?

Joann is seeking court approval to sell substantially all of its assets, the retailer’s statement reads.

Gordon Brothers Retail Partners, LLC, which recently bought much of large Lots, would be the “stalking horse” bidder to acquire Joann, the corporation said. The proposed sale of Joann is “subject to higher and better offers” as the corporation “continues to actively solicit alternate bids.”

If more qualified bids are submitted during the court-supervised sale processes, Joann plans to conduct an auction or auctions, according to the statement. In this scenario, the stalking horse bidder, Gordon Brothers Retail Partners, would set the floor for the auction procedure.

Joann announces store closures amid monetary struggles

Joann has more than 800 stores across 49 states, but last week, Retail Dive reported that at least eight stores across Iowa, North Carolina, Maryland, Pennsylvania, recent York and Massachusetts are closing.

Amanda Hayes, Joann’s director of corporate communications, told Retail Drive in a statement that the closures are “part of schedule store location evaluation and optimization.” She added how Joann “opened recent and remodeled locations in recent months, including recent stores in Great Falls, MT and Maplewood, MN.”

Joann did not provide information on the date of the looming closings. Local information outlets in Pennsylvania, Iowa, Massachusetts and Delaware reported dates for local store closures ranging from Jan. 12 to Jan. 19. A worker at the Owings Mills, Maryland location said it would be closing Jan. 19.

According to Retail Dive, local information reports and confirmation provided to USA TODAY, the closing stores are located at:

• Maryland: 10377 Reisterstown Rd, Owings Mills
• Massachusetts: 2267 Northampton St., Holyoke
• recent York: 2309 N Triphammer Rd, Ithaca
• North Carolina: 2102 US Hwy 70 SE, Hickory
• Iowa: 3200 Agency Street, Ste 110, Burlington
• Pennsylvania: 2481 E State St, Hermitage and 1746 E 3rd St, Williamsport

Who owns Joann?

Joann was founded in 1943 and sells various crafting supplies, including fabric by the yard, sewing machines, Cricut machines, yarn, home decor and more.

The corporation went private in 2011 when it was acquired by the stake firm Leonard Green & Partners for about $1.6 billion. In 2021, Joann, still majority-owned by Leonard Green & Partners, went community at an initial $12 a distribute.

Joann became a private corporation again in April following its initial financial setback filing, so its shares were no longer listed by the Nasdaq or any other national ownership swap.

Contributing: Mary Walrath-Holdridge & Emily DeLetter/ USA TODAY