A Major Craft Retailer Just Filed For Bankruptcy

It's a sad day for creative people, and for those who sell arts and crafts supplies. In a statement released on January 15, 2025, Joann Inc., the company behind Joann Fabric and Craft Stores, announced it would be filing for Chapter 11 bankruptcy. 

Joann previously filed for bankruptcy, less than a year prior, on March 18, 2024. While Joann exited that period of bankruptcy on April 30, 2024 with a restructuring that halved the company's debt, made the company privately, rather than publicly, held, and somehow did not result in layoffs or store closures, such an exit plan is highly unlikely for this most recent filing.

Joann's January 15 press release indicates the company already has a stalking horse bidder (or initial bidder on the company's assets) in Gordon Brothers Retail Partners, LLC, a retail-focused, investing, restructuring and global asset management firm. Gordon Brothers have set the initial price for Joann with an undisclosed price. If said price is not beaten by a better offer at auction, Joann could be acquired (and likely closed out) by the Gordon Brothers, the same company that bought Big Lots, after one of the nation's biggest discount stores announced closures in October 2024. While a company's valuation hangs in the balance, so does one of the few well-known and remaining brick-and-mortar retail hubs for arts, crafts, and sewing enthusiasts, as well as the jobs of about 22,000 Joann employees.

Joann has been facing an uphill battle and a downward slide since the post-lockdown era of the COVID-19 pandemic buying boom went bust. During lockdown, the nation's sworn crafters and creative newbies alike found themselves dusting off sewing machines and gearing up for housebound craft projects. Much of the country suddenly had time for hobbies, and a desperate need for distraction. As such, even facing product shortages and supply chain challenges, Joann enjoyed a nationwide surge in demand for their supplies to rival that of any Joann store line in the weeks leading up to Halloween.

Joann was founded in 1943. In 2021, it filed for a $100 million initial public offering (or IPO) to cover company debts and generate profits for the private equity firm Leonard Green & Partners, which took the company public just a decade after a $1.6 billion buyout in 2010. In 2023, workers started to return to office and to neglect their sewing machines and art supplies. Inflation, wage stagnation, and general economic insecurity began to curtail discretionary spending for many Americans, especially those in the working-class and middle-class who found themselves doubling down on creative ways to save money without sacrificing quality of life.

In 2023, Joann laid off corporate employees, and closed a handful of stores in 2024 before the official March 2024 bankruptcy filing. In a press release for the January 2025 bankruptcy filing, Joann's interim CEO, Michael Prendergast, stated: "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."

There have been a head-spinning amount of retailers filing for Chapter 11 in recent years. Rare few of those filings have lead to successful turnarounds for retail brick-and-mortar stores and their employees, even if their branding or real estate survives to make company owners and investors a tidy packet. Case in point: what happened to Toys 'R' Us after it filed for bankruptcy.

While Joann's March 2024 bankruptcy filing included a plan of attack to cut down the company's $500 million in debt, the January 2025 filing cites "acute and unexpected" inventory issues, including the halting of some production of products sought after by Joann customers. This time, the company's solution to its financial woes is to sell itself, under court supervision, to the highest bidder. If that highest bidder is, in fact, Gordon Brothers, the company will be liquidated, and employees will be laid off.

Private equity buyouts may have hit their peak in the mid-2000s, when Joann was bought out by Leonard Green. Cash injections and leveraged buyouts have not, by and large, led to investment in brick-and-mortar shopping experiences, or at least ones accessible by those Americans who used to feel more able to afford shopping in them, compared with lower-priced giants like Amazon or Walmart. If Joann and its thousands of employees manage to make it through this bankruptcy filing, the company may have to complete restructure its business philosophy and offerings in order to survive in the new world of incredibly tight, possibly handmade, purse strings.