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Joann Store in Illinois in 2018 photo.
new york
CNN
—
Joanne, an 81-year-old fabric and crafts retailer, has filed for bankruptcy after struggling to cut back on customers' discretionary spending.
The Ohio-based company said in a statement Monday that it has filed for Chapter 11 bankruptcy protection and will receive $132 million in new funding to help cut its $1 billion debt in half. announced that it had been secured. Approximately 850 stores and websites will remain open.
Joanne's income has been on the decline in recent years, except for a brief pandemic boom during the height of the coronavirus pandemic when people were stuck at home and had more money to spend on arts and crafts. But that trend has since faded, with inflation soaring and customers cutting back on spending on non-essentials.
“This agreement is an important step forward in addressing Joan's capital structure needs and ensuring we continue to offer best-in-class assortment and enhance the customer experience wherever customers shop.” It provides us with financial resources and flexibility,” Scott Sekera, the company's chief financial officer, said in a company statement.
Joanne's shares will be delisted from the Nasdaq and will be made private through bankruptcy proceedings, which are expected to be completed as early as next month.
“Joan's bankruptcy has been looming for a long time and has always been a question of when, not when,” Neil Saunders, managing director and retail analyst at GlobalData, said in a note Monday. “The bankruptcy process will allow the arts and crafts chain to streamline its operations and reduce its debt levels while also receiving an infusion of cash.”
Sanders said customers are increasingly shopping at lower-priced competitors like Hobby Lobby because of “weakening store standards and declining customer service levels, in part due to staff cuts.” “The drop in consumer spending is making stores less desirable.”
