April 21, 2024

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Crafts retailer, Joann's, files for bankruptcy

Crafts retailer, Joann's, files for bankruptcy

Joan's, an arts and crafts retailer that has been in business for more than 80 years, has filed for bankruptcy, as consumers cut back on costs for DIY projects, leaving the company with mounting debt.

The chain, headquartered in Hudson, Ohio, He said in a statement On Monday it entered into an agreement with its lenders for a $132 million cash injection to help reduce its debt by $505 million, a process that will see the Nasdaq-listed retailer take private ownership. Its file included liabilities ranging from $1 billion to $10 billion, and assets ranging from $500 million to $1 billion.

JoAnn, whose outlets were previously called Jo-Ann Fabrics, said its stores, which number about 800 nationwide, will continue to operate with the completion of the deal, which is expected to go live early next month.

The retailer, which sells yarn, fabric and home goods, was coming off a short-lived sales boom during pandemic lockdowns when there was a frenzy in consumer spending on home projects. But this has faded in the past two years, with consumers pulling back on discretionary spending and inflation remaining relatively high, posing a challenge for the retail sector overall.

Joann's shares will be delisted following the bankruptcy proceedings, and the company will be owned by its lenders and other stakeholders.

In its last quarterly earnings report in December, Joan's reported a decline in sales, which executives attributed to the difficult retail environment. The company's competitors, Michael's and Hobby Lobby, are privately owned, so it's unclear how they have fared amid those economic headwinds.

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Private equity firm Leonard Green & Partners bought Guan for roughly $1.6 billion in 2011, then sold it publicly in 2021. Guan's stock price initially rose, but began to fall after a few months, and it now trades for about 20 cents per share. . .

Joan owes about $12 million to Spinrite, an artisan yarn supplier, which is her largest unsecured creditor. It owes millions more to other thread and fabric suppliers, as well as FedEx and commercial real estate firm Jones Lang LaSalle.