Fabrics Giant Joann Files For Bankruptcy

The company has been in business since 1943.

<p>Photo By Tim Leedy/MediaNews Group/Reading Eagle via Getty Images</p>

Photo By Tim Leedy/MediaNews Group/Reading Eagle via Getty Images

Joann, the nation’s largest fabric, sewing, and craft retailer, filed for Chapter 11 bankruptcy protection earlier this week.

Joann, which has been in business since 1943, announced that it had secured approximately $132 million in "new financing and related financial accommodations and expects to reduce funded debt on its balance sheet by approximately $505 million."  The 81-year-old Ohio-based company predicts that it will emerge from bankruptcy as early as the end of next month.

“Over the past several months, Joann has made meaningful business improvements through the execution of our ‘Focus, Simplify and Grow’ cost reduction initiative,” Chris DiTullio, Chief Customer Officer and co-lead of the Interim Office of the CEO, said in a news release. “We are excited by our progress on both top and bottom-line initiatives in the past year and are confident the steps we are taking will allow Joann to drive long-term growth. We appreciate the support from our financial and industry stakeholders in this agreement, and their confidence in our ability to continue driving positive business change. There is no other retailer with the same ability to serve sewists, quilters, crocheters, crafters and other creative enthusiasts as we have for the past 80 years, and we take great pride in seeing the passion and engagement of our millions of customers and our team members.”

Despite the legal filing, Joann will stay in business and its website and roughly 850 stores will “continue to operate as usual.”

“Customers, vendors, landlords, and other trade creditors will not see any disruption in services,” the company said. “[Joann] remains as focused as ever on providing customers with quality products and services that inspire their creativity."

According to The Associated Press, Joann's bankruptcy filing can be attributed to a “slowdown in discretionary spending overall” and consumers’ “step back from at-home crafts” following the COVID-19 pandemic boom.

"Crafts, which did extremely well during the pandemic, have fallen back into slight declines as people find other things to do," Neil Saunders, managing director of research firm GlobalData, told the AP.

“There is still a place for Joann, but it’s going to take a lot of work to get back into a stable position,” he added. “I think this bankruptcy was always inevitable. And actually, despite the disruption it causes, it’s a very good first step for getting the company back on track.”

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