Joann to Shutter All Outlets

Bankrupt craft retailer Joann will be closing all its stores, backtracking on a previous plan to keep some locations open.

The company plans to sell the business to the highest bidder, a firm called GA Group, which said it would start going-out-of-business sales at all its stores, Reuters reported Monday (Feb. 24).

Joann had hoped a potential buyer would sustain its 82-year-old business with 800 locations across the U.S.

The Ohio-based company said it had made every effort to continue operating, according to Reuters. Joann will continue accepting customer gift cards until Feb. 28. It added that it would try to minimize disruption to employees, customers and vendors as it closes down its stores over the next several weeks.

Joann filed for bankruptcy in January, the second time in less than a year.

Joann had 800 stores with $538.3 million of inventory and 19,000 employees in 49 states, according to the bankruptcy filing. It had $615.7 million in debt, owes over $133 million to its suppliers, and spends $26 million per month on rent at its stores.

Interim CEO Michael Prendergast said in a court filing at the time that Joann’s debt position became untenable soon after emerging from its first bankruptcy due to “unanticipated inventory challenges” amid a “sluggish retail economy.”

According to the Reuters report, Joann struggled with disruptions in its supply chain.

“Suppliers have eliminated some products Joann relied on, while deliveries of yarn and sewing items became unpredictable, limiting its ability to serve as a one-stop-shop for craft and hobby projects,” the report said, citing court documents.

Joann also filed for bankruptcy protection last March, and emerged from Chapter 11 six weeks later, after it had managed to halve its debt. The company said at the time that the bankruptcy plan put it “in its best financial position in recent history.”

As PYMNTS reported last April, brick-and-mortar retailers have struggled to compete with eCommerce competitors.

Retail sales at hobby shops dipped 4% in April, according to data from the Census Bureau.

“Even when consumers do spend in this category, it is increasingly not at specialty retailers, according to supplementary research from the PYMNTS Intelligence report ‘Whole Paycheck Report: New Consumer Spend Data Finds Amazon Way Ahead of Walmart,’” PYMNTS wrote. “Instead, they are opting for the convenience and affordability of retail giants.”