Arts and crafts retailer Joan's, which has been in business for more than 80 years, has filed for bankruptcy as consumers push back on DIY projects, leaving the company with mounting debt.
chain in Hudson, Ohio, said in a statement On Monday it reached a deal with its creditors with a $132 million cash injection to help reduce its debt by $505 million, resulting in the Nasdaq-listed retailer being taken private. Its filing listed liabilities between $1 billion and $10 billion, and assets between $500 million and $1 billion.
Joan's, known as Jo-Ann Fabrics, said its stores, about 800 nationwide, will continue to operate while closing the deal, which is expected early next month.
The retailer, which sells yarn, fabrics and home goods, is coming off a short-lived sales boom during pandemic lockdowns when consumers were frantic to spend on at-home projects. But that has faded over the past two years, with relatively high inflation and consumers pulling back on discretionary spending, which has largely challenged the retail sector.
Joan's shares will be listed after its bankruptcy proceedings, and the company will be owned by its creditors and other shareholders.
In its most recent quarterly earnings report in December, Zon's reported a decline in sales that executives attributed to a challenging retail environment. The company's competitors, Michael's and Hobby Lobby, are both privately held, so it's unclear how they've fared amid those economic crises.
Private equity firm Leonard Green & Partners acquired Zon in 2011 for approximately $1.6 billion, and is set to take it public in 2021. Jon's stock price initially rose, but after a few months it began to slide, and now trades for about 20 cents a share. .
Joan owes $12 million to craft yarn supplier Spinrite. It owes millions to other yarn and fabric suppliers, as well as FedEx and commercial real estate firm Jones Lang LaSalle.
