Fabrics and crafts retailer Joaan will shutter 533 of its roughly 850 stores in the next few months as part of a major structural overhaul amid an ongoing bankruptcy process.
Joaan representatives recently announced that over 500 US stores will cease to operate, highlighting that "right-sizing our store footprint is a critical part of our efforts to ensure the best path forward."
The company acknowledged the impact of the extreme step on its workers, customers, and the communities they serve. Court filings reveal that stores are closing in all US states, with California, Florida, New York, and Washington among those most affected by the closures.
Filing For Bankruptcy Twice In A Year
Joann's decision to massively trim its footprint nationwide comes after the company filed for Chapter 11 bankruptcy in January. This is the company's second Chapter 11 filing in less than a year; its first bankruptcy filing was in March 2024.
The Ohio-based company's latest bankruptcy filing attributed the tumultuous situation to "acute and unexpected" inventory challenges driven by elevated shipping costs and fading consumer demand.
Joann had earlier divulged in court documents that it faced an "unexpected ramp-down, and, in some cases, the entire cessation of production" of several critical products. The company also said then that it was looking for a buyer.
As the sale process advanced, the latest court filings revealed that potential suitors continued to carry out due diligence and "the debtors and their advisors were able to identify a subset of underperforming stores that are unlikely to be considered or included in any going concern bid."
"Since becoming a private company in April, the Board and management team have continued to execute on top-and bottom-line initiatives to manage costs and drive value," Michael Prendergast, interim CEO of Joann, said last month. "However, the last several years have presented significant and lasting challenges in the retail environment, which, coupled with our current financial position and constrained inventory levels, forced us to take this step."
Joaan Fabrics Stores Closing Reflect Challenges For Top Retailers
Joann is among several companies with brick-and-mortar stores struggling to stay financially afloat in a dynamic consumer environment. As US inflation notches up and hopes of interest rates take a hit, many Americans are cutting back discretionary purchases.
The latest development at Joann follows a series of store closures for major retailers. Kohl's and Macy's have also announced they will shutter operations in critical locations this year. Macy's announced last month that it would shutter 66 underperforming stores across the US. In December 2024, Party City revealed it would close all its stores after implementing mass layoffs at its New Jersey headquarters.
According to Coresigh Research, over 15,000 stores could close in 2025, which is double compared to 2024.
