Joann Seeks Bankruptcy Protection for 2nd Time in Under a Year

Crafts chain Joann is seeking bankruptcy protection for the second time in under a year.

Saddled with declining sales, the company had $615.7 million in funded debt obligations as well as $133 million of trade debt due and outstanding, Bloomberg News reported Wednesday (Jan. 15), citing bankruptcy court filings.

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

Now, the company wants the bankruptcy court to allow it to sell off most of its assets, the report said. Gordon Brothers Retail Partners — which recently agreed to acquire Big Lots after it declared bankruptcy — would act as the stalking-horse bidder for the sale. In the meantime, Joann’s stores would stay open.

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

As noted here last April, it wasn’t a great time to be in the crafting retail industry, as hobby stores weren’t benefitting from an uptick in retail sales. The reason? Consumers were prioritizing essential items over non-essential items.

“Many shoppers are having trouble justifying spending on, say, fancy scrapbooking paper,” PYMNTS wrote, pointing to research showing that 60% of shoppers have cut down on nonessential retail purchases.

And even when shoppers do spend in that category, the report added, it is often at more convenient, affordable retail giants, and not specialty retailers like Joann.

The company’s new bankruptcy comes on the heels of a string of similar filings among retailers recently. In addition to Big Lots, Party City and The Container store have also declared bankruptcy in the past few months.

Many retailers have struggled amid rising inflation and steep interest rates, and two weeks into 2025, many consumers expect to see high inflation continue, according to the latest edition of the University of Michigan’s Surveys of Consumers.

Long stretches of inflationary pressure led consumers to adopt cost containment measures when shopping, Matt Garfield, managing director for retail and consumer products at FTI Consulting, told PYMNTS in an interview earlier this month.

“Consumers, feeling the effects of sustained inflation, are adopting cost-containment measures such as trading down to private labels, shopping at discount or wholesale retailers, and focusing on pantry essentials,” Garfield said. “This shift has led to decreased basket sizes and more focused shopping trips.”