Report: Craft Retailer Joann Considers Bankruptcy Filing

Fabric/craft supplies retailer Joann is reportedly considering a bankruptcy filing.

That filing could come as soon as this week, with the company striking a deal that would give control to lenders and free it of costly debt, Bloomberg News reported Saturday (March 2), citing sources with knowledge of the matter.

According to the report, Joann — which has around 850 stores nationwide — has been conducting confidential talks with its lenders as it looks for fresh capital to strengthen its cash reserves. Sources say the company is hoping to get enough support from lenders to exit Chapter 11 quickly, via a process called a prepack filing.

PYMNTS has contacted Joann for comment but has not yet received a reply.

The Bloomberg report noted that Joann, which went public in 2021, has had trouble maintaining liquidity and keeping on top of inventory levels amid a tough retail climate.

The company raised more than $34 million in a sale and leaseback deal for its Hudson, Ohio, facility, but is still facing high interest expenses and required term loan payments, the report said, citing Moody’s Investors Service note.

The news comes as consumers are cutting back on nonessentials such as crafts as they deal with high grocery costs.

“This belt-tightening trend continues even though inflation has steadily declined in recent months,” PYMNTS wrote last week. “Data from the U.S. Bureau of Labor Statistics shows grocery price inflation is outpacing standard inflation rates.”

These pricing trends likely explain why almost 58% of consumers are cutting their nonessential spending. Nearly 50% of American consumers making more than $100,000 yearly say they decrease nonessential spending whenever possible. The same held true for 61% of consumers earning less than $50,000 annually and close to two-thirds of those earning between $50,000 and $100,000 per year.

Meanwhile, PYMNTS noted last year that insolvency experts expect 2024 to bring an increased number of bankruptcies for bigger companies.

“We are expecting next year to be a big year for insolvency,” Rob Hornby, partner and managing director of AlixPartners, told the Press Association. “That is likely to be across the board, both in terms of geographies and sectors. I personally think we are definitely seeing an element of the dotcom bubble repeating itself.”