Joann, a privately held arts-and-crafts retailer, has filed for bankruptcy and is now trading on the SED$alpha$
The company has more than 800 stores nationwide and will stay open while it restructures its finances.
The company will become a private one again and will be de-listed from the stock exchange after two years after going public.
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.
“[W]e view the significant number of new customers and increased engagement by new and current customers as a very encouraging signal for the future of our business,” the company said.
The company said in its December earnings report that its third-quarter net sales had fallen by 4.1% compared to the same period in the previous year, and that it had long-term debt of over $1 billion.
The arts-and-crafts retailer, which has been around for 80 years, has filed for Chapter 11, citing a reduction in consumer 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 showed liabilities of $1 billion to $10 billion and assets of $500 million to $1 billion.
The retailer, which sells yarn, fabrics and home goods, has been coming down from a short-lived sales boom during the pandemic lockdowns when there was a frenzy in consumers spending on at-home projects. In the past two years consumers have been pulled back on discretionary spending because of high inflation which has hampered 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 both privately owned, so it is unclear how they have performed amid those economic headwinds.
The private equity firm Leonard Green & Partners bought Joann for roughly $1.6 billion in 2011, only to spin it off publicly in 2021. The stock price rose initially, but then plummeted and now trades for 20 cents a share.
Spinrite is the biggest creditor of Joann, with around $12 million in debt. It owes other yarn and fabric companies as well as FedEx and a commercial real estate firm.