Craftsman Joann files for bankruptcy

Joann, the arts and crafts store that has been in business for more than 80 years, has filed for bankruptcy as consumers shy away from DIY projects, leaving the company with mounting debt.

The chain, based in Hudson, Ohio, said in a statement On Monday, the company announced it had struck a deal with its lenders for a $132 million cash injection to help reduce its debt by $505 million, a process that will see the Nasdaq-listed retailer , is taken into private ownership. It posts liabilities of $1 billion to $10 billion, and assets of $500 million to $1 billion.

Joann said its stores, about 800 nationwide, would continue to operate while the deal is completed, expected as early as next month.

The retailer, which sells yarn, fabric and home goods, has had a period of short-lived sales growth during the pandemic lockdowns, when there was a frenzy in consumer spending on home projects. But that has faded over the past two years, with consumers cutting back on discretionary spending as inflation remains relatively high, posing a challenge for the retail sector as a whole.

Joann’s shares will be delisted following the bankruptcy proceedings and the company will be owned by its lenders and other stakeholders.

In her most recent quarterly results, Joann reported a decline in sales, which her executives attributed to a challenging retail environment. The company’s competitors, Michael’s and Hobby Lobby, are both privately held, so it’s unclear how they’ve performed amid these economic headwinds.

Private equity firm Leonard Green & Partners bought Joann in 2011 for about $1.6 billion, only to spin it off publicly in 2021. Joann’s stock price initially climbed, but started to plummet a few months later, and now trades for about 20 cents a year. part.

Joann owes about $12 million to craft yarn supplier Spinrite, its largest unsecured creditor. It owes millions more to other yarn and fabric suppliers, as well as to FedEx and the commercial real estate company Jones Lang LaSalle.