Joann fabrics is closing hundreds of ‘underperforming’ stores in the latest blow to a beloved retail chain

In another devastating blow to customers and employees of Joann Inc, the popular fabric and crafts retailer is moving to close a significant chunk of its brick-and-mortar locations as part of ongoing bankruptcy proceedings, according to a court filing on Wednesday.

The company, which filed for Chapter 11 protection a second time last month, had initially said it would continue operating its approximately 800 stores as it restructured and sought a buyer.

However, it told a court this week that it has now identified a number of underperforming locations during the bidding process that it wants to close as a way of cutting costs.

“As the sale process progressed, and prospective bidders continued to conduct diligence and refine their potential bids, the Debtors and their advisors were able to identify a subset of underperforming stores that are unlikely to be considered or included in any going concern bid,” lawyers for the retailer said in the court filing.

The filing lists hundreds of locations across more than 40 states, with big states like California, Florida, Illinois, and Michigan being hit the hardest. Joann says in the filing that it would like to begin store closing sales immediately. It warns that additional locations are likely to close as well.

Reached for comment by Fast Company, Joann spokesperson Amanda Hayes confirmed the closings in a statement.

“As part of the ongoing Chapter 11 process and our efforts to maximize the value of the business, JOANN has filed a motion seeking court authority to begin closing approximately 500 stores across the nation,” the statement read. “This was a very difficult decision to make, given the major impact we know it will have on our Team Members, our customers and all of the communities we serve. A careful analysis of store performance and future strategic fit for the Company determined which stores should remain operating as usual at this time. Right-sizing our store footprint is a critical part of our efforts to ensure the best path forward for JOANN.”

A difficult needle to thread

Founded in 1943, Joann has faced significant challenges in recent years, with factors such as the pandemic, inflation, and the broader shift to online retail hindering its operations. It was taken private last year when it filed for bankruptcy a first time, but it said at the time that it expected to continue operations once it emerged.

A second bankruptcy came at the beginning of this year. Although Joann told customers that stores would remain open during the process, it warned that it could go out of business if it is unable to find a suitable buyer.

Gordon Brothers, the restructuring firm that recently took control of embattled retailer Big Lots, has emerged as a “stalking horse” bidder for Joann. If it is successful, the firm is likely to liquidate and close all stores.

This story is developing….

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