Joann Fabrics Bankruptcy 2025: Closing 500 Stores in USA! Something Big NEXT?

The USA Leaders

13 February 2025

Hudson — Joann Fabrics, the traditional handicraft retailer, has once again filed for bankruptcy. This is the second Chapter 11 application in less than a year. The bankruptcy of Joann Fabrics 2025 follows a battle with declining sales, inventory shortages and the relentless impact of a challenging retail environment.

As the company prepares to close 500 stores in the United States, industry observers are wondering: What's next for this once-dominant player in the craft world?

The Joann Fabrics Bankruptcy 2025 Breakdown

On January 15, 2025, Joann Inc. voluntarily filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the District of Delaware. The company reported $615.7 million in debt, with suppliers owed over $133 million and monthly rental costs at all locations rising to $26 million. Judge Craig T. Goldblatt is overseeing the proceedings while Joann searches for a buyer to rescue the company.

Key Factors Behind the Bankruptcy:

• Inventory Disruptions: Suppliers discontinued key products, causing erratic deliveries.

• Retail Turbulence: Consumer spending habits shifted toward essentials, leaving hobby-related sales in decline.

• Debt Overhang: The remnants of a $1.6 billion leveraged buyout by Leonard Green & Partners in 2011 continue to weigh heavily.

• Competition: Rivals like Michaels, Hobby Lobby, and online marketplaces such as Etsy chipped away at Joann’s market share.

The strategy: Reducing FATA

As part of its restructuring efforts, Joann plans to close 500 of its 800 stores. The decision is based on careful performance analysis to ensure that the remaining branches meet the company's long-term goals. “The right size of our retail space is crucial to securing our future,” said a company spokesperson.

Transition Measures:

• Court-approved store closures to begin by February 15, 2025.

• Launch of nationwide going-out-of-business sales.

• Continued operations for online platforms and select high-performing stores.

• Ongoing acceptance of gift cards in physical stores.

The human impact: job cuts and company relocations

The restructuring will cost hundreds of employees their jobs. WARN notices detail the gradual layoffs at the corporate headquarters in Hudson, Ohio:

• 546 employees to be laid off by March 15.
• 63 employees by March 31.
• 44 employees by April 30.
• 9 employees by May 31.

In addition, 116 jobs at the Omni Fulfillment Center in West Jefferson are at risk if operations cease.

Originally Published on: https://theusaleaders.com/news/joann-fabrics-bankruptcy-2025/

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