Joann, the well-known fabric and craft chain, faces significant challenges as it embarks on the drastic measure of closing down about 500 stores across the United States. This alarming shift, which accounts for over 60% of its retail locations, follows slumping sales and dwindling market share, culminating in the company's second Chapter 11 bankruptcy filing within just one year. The company, based in Hudson, Ohio, announced these closures amid its struggle to maintain profitability and inventory levels, as competition from online retailers and fellow brick-and-mortar establishments continues to rise.
According to Joann's official statement, this was firmly stated as "a very difficult decision to make, ... coupled with our current financial position and constrained inventory levels, forced us to take this step," said interim CEO Michael Prendergast.
This latest bankruptcy filing, first made public on January 15, 2025, reveals how dire the circumstances are for the retailer. The initial bankruptcy filing last March revealed over $1 billion of long-term debt, with the company managing to keep its 800 stores operational at the time. Joann had reported significant losses, prompting comparisons to its competitors like Hobby Lobby and Michaels, which have been thriving with respectively estimated revenues of $8 billion for just 2024.
Retail analyst Neil Saunders elaborated on the current situationJoann is facing, noting the intense pressure on its financial model. "Going through the first bankruptcy, Joann's debt levels were already unsustainable. The debt has since been restructured, but it remains quite punishing," he explained. Saunders pointed also to significant issues with store inventory levels, as suppliers have grown wary of doing business with Joann due to its troubled status. "Many stores have become shabby, and persistent out-of-stocks trained customers to seek alternatives," he added.
Currently, the shutdown of all 800 locations is being expedited, with liquidation sales now taking place throughout the country. Joann confirmed on January 15, 2025, it would stop accepting gift cards as of February 28, 2025, leaving many customers frustrated and disappointed. Customers had been resigned to utilizing their gift card balances before the closure, which led to visible frustration across social platforms and news articles. “I just wanted the chance to use gift cards I bought,” ranted one customer on social media, reflecting the anger many are feeling over Joann's decision to halt gift card acceptance without sufficient notice.
Gift card legislation varies by state, but some residents have raised concerns, especially those from Maine, where state law prohibits expiration of such gift obligations. Following complaints, Joann received queries about how their gift card policies are still being enforced during the liquidation process.
On February 22, retail liquidator GA Group and Joann's term lenders won the bidding process for the company, following which Joann's officials emphasized their commitment to ensuring minimal disruption for stakeholders during the winding-down of operations. "JOANN leadership, our Board, advisors and legal partners made every possible effort to pursue a more favorable outcome," the retailer stated.
While the future remains uncertain for Joann, one thing is crystal clear: the number of retail closures across the nation is spiraling. Analysts are warning shoppers to use their gift cards quickly as more retailers are expected to follow suit if trends continue. With physical retail locations under mounting pressure from ecommerce giants and high operational costs, experts predict 2025 may see even more closures.
This move from Joann highlights broader challenges faced by retail businesses as they struggle to carve out profitability amid changing consumer habits. From online shopping convenience to overhead costs, many companies find themselves caught between their legacy operations and the harsh realities of today's marketplace. Customers will need to make the most of remaining sales before final closures, but the spotlight remains on how the retail industry itself responds moving forward.