Craft retailer JoAnn files for bankruptcy

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Joann’s, the arts-and-crafts retailer that has been in operation for more than 80 years, has filed for bankruptcy as consumers have stopped paying attention to DIY projects, leaving the company with increasing debt.

The chain, which is based in Hudson, Ohio, said in a statement on Monday that it had reached a deal with its lenders for a $132 million cash injection to help reduce its debt to $505 million, a The process that results in a retailer, which is listed on the Nasdaq Stock Exchange, being taken under private ownership. Its filing listed liabilities of $1 billion to $10 billion and assets of $500 million to $1 billion.

JoAnn, whose outlets were once called Jo-Ann Fabrics, said its stores, about 800 nationwide, will continue to operate as the deal is completed, which is expected early next month.

The retailer, which sells yarn, fabric and home goods, is coming off a short-lived sales surge during the pandemic lockdown, when consumers had a frenzy of spending on home projects. But this has faded over the past two years as inflation has remained relatively high, with consumers pulling back on discretionary spending, which has largely challenged the retail sector.

Joan’s shares will be delisted following bankruptcy proceedings, and the company will be owned by its creditors and other stakeholders.

In its most recent quarterly earnings report in December, Joann’s reported a decline in sales, which its executives attributed to the challenging retail environment. The company’s competitors, Michael’s and Hobby Lobby, are both privately owned, so it’s unclear how they have performed amid those economic headwinds.

Private equity firm Leonard Green & Partners purchased Joann’s in 2011 for approximately $1.6 billion, closing to go public in 2021. Joann’s stock price initially climbed, but after a few months it began to decline, and now trades at about 20 cents per share. share.

Joann owes about $12 million to the craft yarn supplier, Spinrite, which is its largest unsecured creditor. It owes millions to other yarn and fabric providers as well as FedEx and commercial real estate firm Jones Lang LaSalle.

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