A popular store for sewing and craft enthusiasts throughout the United States announced this week that it has filed for bankruptcy.

Joann Fabrics, an 81-year-old retailer that operates approximately 850 stores in 49 states, announced on March 18 that it had filed for Chapter 11 bankruptcy protection and has secured $132 million in fresh funding that helps reduce its debt in half.

According to reports, Joann had experienced a financial boost during the pandemic when people were at home and spent more money on arts and crafts.  However, that has since faded and revenue has declined in recent years, with inflation leading customers to spend less on non-essential items.

What Does This News Mean For The Future Of Joann Fabrics?

While this news may cause concern for the popular retailer's loyal customers, including those in Minnesota and Wisconsin where over 40 Joann locations can be found, the company is confident they have a plan in place that will allow them to exit bankruptcy quickly.

Scott Sekella, JOANN’s Chief Financial Officer and co-lead of the Interim Office of the CEO said in the news release:

“This agreement is a significant step forward in addressing JOANN’s capital structure needs, and it will provide us with the financial resources and flexibility necessary to continue to deliver best-in-class product assortments and enhance the customer experience wherever they are shopping with us."

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He added that 95% of Joann stores are currently cash flow positive and that he expects all stores to continue to operate as usual during the bankruptcy period. So, if all goes as planned, it should be business as usual for Joann's customers, including those enrolled in its reward program, and its employees.

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Once the bankruptcy process is completed, which could be as early as next month, Joann announced it will become a private company and its shares will no longer be listed on Nasdaq or any other national stock exchange.

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