Joann Inc., the Hudson-based retailer, on the brink of Chapter 11 bankruptcy, report says
A major U.S. retailer based in Hudson is reportedly on the brink of bankruptcy.
Bloomberg reported that craft retailer Joann Inc. is in talks with lenders to enter Chapter 11 bankruptcy to shed debt.
The retailer with some 830 stores across 49 states has been working to trim costs and employees.
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Just last month, Joann closed its Wooster store and another store in Zanesville in January. There were layoffs at its Hudson headquarters last year.
The company that has been around for about 80 years reported a 4% drop in revenue in December — missing analysts estimates as it continued to find its footing after the pandemic, which spurred sales and interest in home hobby projects.
Joann is the No. 1 employer in the city of Hudson with 979 employees as of last January — the latest numbers readily available from the city.
Jody Roberts, communications manager for the city, said Hudson has not received any formal notice from Joann about plans to seek bankruptcy protection.
The company did not respond to requests for comment Monday.
What would bankruptcy mean for Joann customers?
If Joann files for bankruptcy, legal experts say the company's day-to-day operations from a customer perspective should be business as usual.
The purpose of such filings are to get a retailer's financial house in order and restructure debt to be able to save the core business operations.
As part of the restructuring, there is an effort to trim costs so some more store closings could be in the future to take underperforming or more costly locations off the books.
How is the stock market reacting to the report?
Following news of the expected filing, Joann stock (JOAN) reached a new low on the Nasdaq exchange.
Already in "penny stock" territory and at risk for being delisted by Nasdaq next month, the stock opened the day at 40 cents per share and fell as low as 26 cents per share before rising back to 29 cents as of 1:37 p.m. Monday.
A company is considered out of compliance with Nasdaq's minimum listing criteria and given a warning if its stock falls below $1 for 10 consecutive days; Joann received this warning Oct. 19. Its stock has not closed at or above the $1 mark since Sept. 6.
The company was given until April 16 to return to compliance, including a period of 10 consecutive trading days closing above $1 per share; failure to do so will result in Joann's removal from the exchange. Nasdaq-listed companies enjoy better visibility among investors than over-the-counter stocks that are not affiliated with a centralized trading network.
Where did Joann get its start?
Although Joann is now based in Hudson, the retailer got its start in Cleveland.
A group of German immigrants Hilda and Berthold Reich, Sigmund and Mathilda Rohrbach, and Justin and Alma Zimmerman opened the Cleveland Fabric Shop in 1943.
The number of shops grew and became Jo-Ann Fabrics (combining the names of two daughters from the founding families, Joan and Jacqueline Ann) and expanded to other locations.
The company went public in 1969 and grew through a series of acquisitions over the ensuing decades. It was taken private again in 2011, and returned to public trading in 2021.
This article originally appeared on Akron Beacon Journal: Hudson-based retailer Joann Inc. is on the brink of bankruptcy filing
