by Will Kessler
Major fabric and craft retailer Joann announced Monday that it was filing for bankruptcy as consumers pull back on spending due to harsh economic conditions.
The retailer recently reached an agreement with a majority of its financial stakeholders as well as other financing parties, giving the company around $132 million in new financing while also reducing the debt on the company’s balance sheet by around $505 million, according to an announcement from Joann. Retail sales across the U.S. economy have continued to slump in recent months, growing just 0.6 percent month-to-month in February, not including inflation, and declining 1.1 percent in January as consumers pull back on non-essentials as prices rise.
“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, said in the release. “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.”
Joann currently operates over 800 stores in the U.S. and describes 95 percent of them as cash flow positive, according to the announcement. The company will continue to operate stores and its e-commerce website despite the filings, but is expected to become a private company at the completion of the deal, owned by certain lenders, and will no longer be listed on the stock exchange.
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The company’s net sales fell 4.1 percent in the third quarter year-over-year to $539.8 million, equating to a net loss of $21.6 million in the quarter, according to Joann’s earnings report. Joann’s long-term debt was around $1.15 billion as of October 28, 2023.
Inflation has continued to remain elevated, with the consumer price index rising 3.2 percent year-over-year in February, far higher than the Federal Reserve’s 2 percent target, after increasing 3.1 percent in January. In an attempt to decelerate inflation, the Fed has placed its federal funds rate in a range of 5.25 percent and 5.50 percent, the highest in 23 years, placing upward pressure on interest rates across the economy.
Joann did not immediately respond to a request to comment from the Daily Caller News Foundation.
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Will Kessler is a reporter at Daily Caller News Foundation.
Photo “Joann Fabrics Store” by Joann Fabrics.
