Joann Fabrics stores closing across the country. How did the craft store giant get here?

Yahoo

13-02-2025

Amid its second round of Chapter 11 bankruptcy proceedings in one year, struggling craft retailer Joann announced plans this week to close about 500 of its roughly 850 stores as it seeks a buyer.
The list of closing Joann stores includes 33 in Ohio and six stores in Greater Cincinnati and Northern Kentucky. The company also announced possible plans to lay off more than 1,100 employees in Ohio, most of whom are based at its Hudson headquarters.
The retail chain, founded in Cleveland in 1943, has served as a major employer and source of various crafting items for residents of Northeast Ohio and beyond.
Daleena Fredrick-Banks, an Akron seamstress and former Joann employee who has done clothing alterations for four decades, told the Beacon Journal last year: "If I need to run out and get a purple zipper or some fabric to match I can do it immediately, rather than place an online order and wait for it to come."
Here's a look at Joann's journey from powerhouse specialty retailer to a troubled brand in a tailspin.
An era of shrinking bricks-and-mortar retail hastened by the rise of online commerce caught up with Joann just as the country was starting to ease from the grip of the COVID-19 pandemic.For much of the decade before the pandemic, traditional retailers were succumbing to changing shopper habits, heavy debt, stiff competition from online retail and investor pressures to reduce their physical footprints. A raft of specialty retailers that were household names — including Borders, Blockbuster, Dressbarn, Payless ShoeSource, HH Gregg, Gymboree and The Limited — disappeared in that time. In Joann's sector, Pat Catan's went out of business, with competitor Michael's acquiring its assets.
Joann's public image remained positive. Newsweek named Joann one of "America's Most Trusted Companies" in 2022 and one of the "Greatest Workplaces for Diversity" in 2023. In 2023, Joann was on Forbes' "America's Best Large Employers" list, ranking No. 431.
But its financial outlook soured as supply and shipping costs rose, sales slumped and its stock suffered a steep decline. In October 2023, Joann was put on notice by the Nasdaq stock exchange that it would be delisted in April 2024 if its common stock could not sustain a closing price of at least $1 per share for 10 consecutive trading days during that period.
With shares languishing in penny stock territory, CreditRiskMonitor that month listed Joann among U.S. companies at high risk for filing bankruptcy.
On Nov. 1, 2023, the closing price was 56 cents. By March 4, 2024, with closing prices falling below 30 cents, Bloomberg reported that bankruptcy talks were underway.
In March 2024, Joann filed for Chapter 11 bankruptcy, then emerged from the proceedings the following month as a privately owned entity.
When Joann first declared bankruptcy last year, the company noted in a court filing that sales had slumped and, following the COVID-19 pandemic, customers' "demand for fabric and mask-related products abated."
Cost increases in 2018 and 2019 stemming from increased tariffs on Chinese imports, competition with ecommerce retailers and tightening margins after COVID lockdowns lifted were all major drains on Joann's finances, the company explained in the 2024 filings.
"At the same time, supply chain issues, in particular rising ocean freight costs, inflated inventory costs by over $150 million between fiscal years 2021 and 2023," said a court filing. "While these conditions affected the retail sector broadly, JOANN's heavy reliance on imported goods meant these conditions caused, and continue to cause, outsized impacts on the Company."
Joann sourced 44% of its purchases from foreign suppliers in its 2023 fiscal year, according to the filing.
"More than one-third of the Company's foreign-sourced products come from China," said the filing, which listed other supplier countries as India, Pakistan, South Korea, Taiwan, Turkey and Vietnam.
It was a moment of hard truth as a company that proudly touted its Northeast Ohio roots battled with global pressures.
Joann was founded in Cleveland as Cleveland Fabric Shop in 1943.
In the 1960s, the name changed to Fabri-Centers of America. The company also announced plans to add operations in Beachwood, according to a Cleveland Press article. Fabri-Centers established headquarters in Beachwood.
Hudson became home to the company's headquarters in 1990.
In February 1998, Fabri-Centers announced plans to purchase a West Coast-based competitor, House of Fabrics, for about $100 million, the Beacon Journal reported at the time.
Also at that time, Fabri-Centers reported having 907 stores in 48 states, $970 million in revenues and 17,100 employees, per the Beacon Journal.
In June 1998, Fabri-Centers announced its name change to Jo-Ann Stores.
Joann experienced financial swings during the Great Recession period between 2007 and 2009, but the setbacks were minor compared to the company's current situation.
Joann lost $1.9 million in its 2007 fiscal year, but made a profit of $15.4 million the following year.
Joann executives said in March 2008 the company benefited from competitor Walmart's decision to reduce its fabric inventory.
In financial results for the second quarter of Joann's 2009 fiscal year, announced in August 2008, the company reported a net loss of $11.7 million, compared to a $18.4 million loss for the same period the prior year, per the Beacon Journal.
Three months later, in a third-quarter report filed with the U.S. Securities and Exchange Commission (SEC), the company acknowledged: "We performed better than many retailers, but we are not immune to the current market conditions."
Later in the report, the company said, "If we are unable to procure products and services when needed, or if we experience further deterioration in sales traffic in our stores over an extended period of time, our sales and cash flows could be negatively impacted in future periods."
But those fears quickly dissipated as Joann proved resilient during that economic crunch.
In the first quarter of its 2010 fiscal year, Joann announced earnings of $8.6 million, a year-over-year increase of $3 million.
The company said in the first quarter report for its 2010 fiscal year: "We believe that the customer is seeking affordable activities to enjoy with her family and friends during the current challenging economic environment. The customer traffic within our stores seems to be reflecting this trend."
Darrell Webb, the company's then-chairman, president and chief executive, said the company ''grew sales, expanded margins, improved earnings and continued to reduce our debt.''
In May 2010, Joann reported a debt-free first quarter. The company announced "record financial results" with net income reaching 66 cents a share, twice the value from a year earlier.
In 2011, private equity investment firm Leonard Green & Partners purchased Joann for about $1.6 billion.
At the time of the purchase announcement, industry experts said such acquisitions were attractive; investment firms viewed steady retail operations as stable and safe risks as consumer spending began to pick up again in the aftermath of the Great Recession.
In February 2015, the company brought Jill Soltau aboard as CEO. In October of that year, the company announced it was eliminating 103 jobs as part of a strategic reorganization of its support center in Hudson.
Soltau was a prominent opponent of President Donald Trump's plan in his first term to place tariffs on Chinese imports, telling Business Insider in an August 2018 interview that 42% of all goods sold at Joann stores would be subject to tariffs and that small businesses that heavily rely on the company's retail products would be especially punished.
Within two months of that interview, Soltau left the company to become CEO of J.C. Penney.
Soltau also oversaw the rebranding of the stores from Jo-Ann Fabrics to Joann.By 2017, Joann had grown to the point where the company was on Forbes' 2017 America's Largest Private Companies list with $2.4 billion of annual revenue and employing about 23,000 people. It then had more than 867 locations across the country.
Wade Miquelon was named interim president and CEO of Joann in October 2018, then in February 2019, was named president and CEO of the company and a member of its board of directors.
Leonard Green & Partners still owned a majority stake in Joann in 2021, when the craft retailer went public with shares initially priced at $12.
For its second quarter of fiscal year 2023, Joann in September 2022 reported a loss of $56.9 million compared to a profit of $5.2 million for the second quarter of fiscal year 2022.
Miquelon said at the time: "Despite persistent inflationary pressures and an ongoing volatile operating environment for discretionary categories, I am very encouraged by the quality of inventory, our strong in-stock position, and improving sales cadence as we head into the back half of the fiscal year.'
Miquelon retired in May 2023. Chris DiTullio and Scott Sekella were appointed to lead the interim Office of the Chief Executive Officer.
The company then appointed Michael Prendergast as interim CEO in June 2024, with DiTullio remaining as chief customer officer and Sekella as chief financial officer, Retail Dive reported. In a court filing from its ongoing Chapter 11 bankruptcy case, Joann said it now employs about 19,000 people.
The Joann stores closing in Northeast Ohio are:
1500 Canton Road in Lakemore.
3977 Medina Road in the Montrose shopping area of Bath.
5381 Darrow Road in Hudson, on Joann's headquarters campus.
5005 Grande Boulevard in Medina.
26337 Brookpark Road in North Olmsted.
1533 Golden Gate Plaza in Mayfield Heights.
15765 State Route 170 in East Liverpool.
400 Mill Ave. SE in New Philadelphia.
5555 Youngstown Warren Road in Niles.
441 Boardman Poland Road in Youngstown.
Throughout Ohio, 33 Joann stores will close, according to court filings. The store at the Belden Park Crossing shopping plaza in Jackson Township was not among those listed.
USA Today has compiled a full list of stores that Joann plans to close, available at bit.ly/42RCFHN.
Patrick Williams covers growth and development for the Akron Beacon Journal. He can be reached by email at [e-mail] or on X, formerly known as Twitter, @pwilliamsOH.
This article originally appeared on Akron Beacon Journal: Joann Fabrics stores closing nationwide amid craft chain's bankruptcy