Joann Fabrics files 2nd bankruptcy
It's seeking a buyer to rescue the chain
By: Daniel Munoz
NorthJersey.com
USA Today Network - New Jersey
..... Last year [2024] tough for brick-and-mortar businesses big and small, and this year [2025] is starting off no differently.
.....
Joann Fabrics announced that it was declaring Chapter 11 bankruptcy for the second time within a 12-month period as it seeks a buyer to rescue the beleaguer chain.
..... Chapter 11 bankruptcies provide businesses with some breathing room to get their finances in order without liquidating all their assets and effectively going out of business.
..... In court documents, the 82-year-old Hudson, Ohio-based chain one of the nation's largest sellers of fabrics and craft supplies - cited sluggish sales and inventory issues, including nearly $616 million in "untenable" debt.
..... "The last reveal 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 the step," Joann's interim CEO, Michael Prendrgast, said in a statement.
..... Joann emerged form bankruptcy last April [2024] a private company, a move that saved all of its stores, including the 11 in New Jersey.
..... Gorden Brothers Retail Partners, which recently made large purchases of the struggling Big Lots chain, is the stalking horse bidder, or first bidder in the company's assets before it goes to a public auction.
..... A stalking horse bidder "is chosen by the bankrupt company and becomes the minimum amount the assets can be purchased for," said an Invesptopedia post, though that minimum price has not been disclosed.
..... John Bringardner, head of Debtwire, said if Gordon Brothers wins the bid, it will probably liquidate Joann's assets, close stores and try to sell the company;s intellectual property, the Washington Post said.
..... A company spokesperson would not say whether the 11 locations in New Jersey would be affected by the bankruptcy.
..... The New Jersey stores are in:
* Cherry Hill
* Colonia
* Deptford
* Lawrenceville
* Mays Landing
* Mount Laurel
* Paramus
* Riverdale
* Shrewsbury
* Succassunna
* Toms River
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The chain saw its business boom during the COVID-19 pandemic, as Americans sued the extra time amid stay-at-home orders and the extra money from stimulus payments to delve into crafts.
..... But the "number of people engaging in crafts and making has declined over the past few years," and the company in turn "struggled to turn a profit and was in desperate need of recapitalization," retail analyst Neil Saunders said last year. [2024] Joann noted in court filings that the inventory issues were "acute and unexpected" and that it saw an "unexpected ramp-down, and, in some cases, the entire cessation of product" of items highly sought by shoppers.
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The company joins a long list of brick-and-mortar stores that have shut down or drastically curtailed operations, including Stop & shop, big Lots, BuyBuy Baby, Family Dollar, Rite Aid, CVS, Bed Bath & Beyond and Christmas Tree Shops.
..... Despite three interest rate cuts last year [2024] by the Federal Reserve, rates have remain high and made borrowing more costly for items like credit cards, auto loans and mortgages.
..... Retail store closures in 2024 were nearly 58% higher then in 2023, according to data from the research firm CoreSight. Unless Joann can find a buyer, Saunders said Wednesday [01/15/2025] morning, "Its future now looks very uncertain."