Joann Inc. filed for Chapter 11 bankruptcy after struggling to maintain sales as consumers cut back on hobby spending. It announced the move March 18, saying its 800 stores and website will remain open for regular business. 

The retailer expects to exit bankruptcy as soon as late April, when it would resume functioning as a private company. It became public in 2021 following 10 years as a private company, as well as a previous period as a public company.

Joann is No. 309 in the Top 1000, Digital Commerce 360’s ranking of North America’s leading retailers by online sales. Digital Commerce 36categorizeses Joann as a Toys & Hobbies retailer.

Joann’s bankruptcy status

Joann said it entered a Transaction Support Agreement (TSA) with the majority of its financial stakeholders as of the March 18 filing. The retailer also received $132 million in new financing. It expects to reduce its debt by $505 million thanks to the new funding and agreements with lenders and vendors.

It listed $2.44 billion in total debts and $2.26 billion in total assets in the filing.

The craft retailer hired Alvarez & Marsal North America, LLC as restructuring advisor. Latham & Watkins LLP will serve as Joann’s legal advisor, it said.

“This agreement is a significant step forward in addressing JOANN’s capital structure needs, and it will provide us with the financial resources and flexibility necessary to continue to deliver best-in-class product assortments and enhance the customer experience wherever they are shopping with us,” Scott Sekella, chief financial officer and co-interim CEO, said in a statement. “This includes our more than 800 stores across the United States, 95% of which are cash flow positive. We remain committed to our suppliers, partners, team members and other stakeholders, and are focused on ensuring we continue to operate as usual so we can continue to best serve our millions of customers nationwide.”

Joann’s financial situation before bankruptcy

Joann’s most recent financial report was for its third fiscal quarter of 2024 ended Oct. 28. Net sales declined 4.1% to $539.8 million in the quarter. Comparable sales also declined 4.1%, while ecommerce sales grew 11.5% year over year. Online sales made up 13.1% of total quarterly sales. 

The retailer ended Q3 with a net loss of $21.6 million, compared to a loss of $17.5 million in the year-ago period.

Joann executives noted some consumer pullback in a call with investors in December.

“We are also experiencing some basket pressure by way of fewer items per transaction and are seeing customers shopping closer to their project needs versus stocking up and adding to their stash as in years prior,” said Chris DiTullio, chief customer officer and co-interim CEO.

“The discretionary retail environment is tough,” he added.

CEO search

Joann has not had a permanent CEO in nearly a year. Former CEO Wade Miquelon retired in May 2023. Miquelon called fiscal 2023 a “challenging year” before his exit. The retailer’s board of directors has been searching for a new CEO since then, with Chris DiTullio and Scott Sekella sharing interim CEO responsibilities.

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