Joann, a popular fabric retail chain founded in 1943, has filed for Chapter 11 bankruptcy in January, citing $615.7 million in debt. This is not the first time Joann has filed for bankruptcy; it emerged from a previous bankruptcy in March last year.
The company claims it struggled to adjust to the post-COVID economy after increased demand during the pandemic drove sales. However, with the pandemic over, Joann saw a decline in sales due to competition from online retailers and rising merchandise costs.
In a new development, Joann was sold to a new owner, leading to the announcement of store closures across the nation. The retailer has been promoting clearance sales on its social media platforms, encouraging customers to shop before stores shut down entirely. However, customers are outraged over the policy change, particularly regarding gift card usage.
Under bankruptcy law, gift card holders are required to file claims to receive reimbursement. The company must also seek court permission to honor gift cards through a certain date. Joann’s locations will close before the end of May or when supplies run out.
This is not an isolated incident; several retailers have filed for bankruptcy in 2024, including Big Lots, Party City, Express, and Tupperware, as consumers tighten their spending. According to Coresight Research, store closures in the US are expected to escalate to 15,000 this year.
Source: https://www.thestreet.com/retail/joann-is-going-out-of-business-but-theres-one-major-problem