Stores will remain open as the arts and crafts giant takes a U-turn
Joann, a Singly-Directed Company Filled with Private Equity for a Reorganization and a $1.4$-Billion Debt
As the company restructures its finances, the more than 800 stores nationwide will remain open and the website will stay active.
“We remain committed to our suppliers, partners, Team Members and other stakeholders, and are focused on ensuring that we continue to operate as usual so we can continue to best serve our millions of customers nationwide,” the chief financial officer said in a statement.
The company said in an SEC filing earlier that year that the COVID-19 pandemic had spurred growth in the sewing and broader crafting industry, with people across the U.S. fashioning their own masks and using the additional time at home for DIY pursuits.
The company said it believed the number of new customers and increased engagement by current customers was a positive sign for the future.
The company said in a December earnings report that its third-quarter net sales had dipped by 4.1% compared to the same period the year before, and its long-term debt was roughly $1.2 billion.
The company with more than 80 years of experience has filed for reorganization as consumers cut back on their discretionary spending.
The chain, which is based in Hudson, Ohio, said in a statement on Monday that 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 result in the retailer, which is listed on the Nasdaq stock exchange, being taken into private ownership. Its filing listed assets and liabilities of between $500 million and $1 billion.
The H1N1 scare caused a short-lived sales boom in the retailer, which sells yarn, fabrics and home goods. But that has faded in the past two years, with consumers pulling back on discretionary spending as inflation remains relatively high, which has challenged the retail sector at large.
In its most recent quarterly earnings report in December, Joann reported a dip in sales, which its executives attributed to a challenging retail environment. The company’s competitors Michael’s and Hobby Lobby are privately owned so it is not clear how they have performed.
The private equity firm Leonard Green & Partners bought Joann for roughly $1.6 billion in 2011, only to spin it off publicly in 2021. After initially increasing, the stock price began to tumble a few months later and now trades for 20 cents a share.
Joann owes about $12 million to Spinrite, a craft yarn supplier, its largest unsecured creditor. FedEx and the real estate company Jones Lang LaSalle are two of the companies it owes millions more to.
