Joann files for Chapter 11 bankruptcy amid ongoing struggles

In January 2025, Joann Inc., the Ohio-based fabrics and crafts retailer, filed for Chapter 11 bankruptcy protection for the second time in less than a year. The company cited ongoing soft sales and significant inventory problems that have severely impacted its financial health. Joann had initially filed for bankruptcy in March 2024, emerging a month later as a private company while retaining operations at its approximately 800 locations. Despite efforts to rebound, including introducing new product lines and price reductions, the 82-year-old retailer failed to overcome the persistent decline in sales and has been unable to regain market share from competitors like Hobby Lobby and Michaels. As part of the current bankruptcy process, Joann is actively seeking a buyer for substantially all of its assets under Section 363 of the U.S. Bankruptcy Code. Gordon Brothers Retail Partners has emerged as the stalking horse bidder, but the company remains open to counter-offers from other interested buyers. This latest move follows a pattern seen in the retail environment, where many companies are grappling with supply chain disruptions, inflation impacts, and a post-pandemic shift in consumer spending habits. Industry analysts have raised concerns about Joann's future, suggesting that it might have been a mistake not to close underperforming locations during its initial bankruptcy proceedings. Without a stronger buyer emerging during the auction process, Joann may be forced into liquidation, leading to greater layoffs and finally exiting the market altogether. As the company continues through the bankruptcy procedure, its stores and website remain operational, and employees continue to receive their pay, but uncertainty looms over the future of the business. The challenges facing Joann are symptomatic of broader struggles within the retail sector, particularly among brick-and-mortar establishments. Many businesses that thrived during the early days of the pandemic found themselves falling back to the challenges that predated 2020. This turn of events reflects a global shopping trend where consumers are more selective about their discretionary spending, further complicating the retail landscape for companies like Joann.