Joan is closing 500 stores as he is looking for buyers: NPR

Fabric and craft chain Joanne is planning to close around 500 stores nationwide (over 60% of retail stores) as it forced Chapter 11 bankruptcy within a year due to a sluggish sales and declining market share.

The company, known for its yards and its kind of thread, will close in the most closed states in order to close stores in almost every state in California, Florida, Pennsylvania and Ohio in a statement. He said he is seeking the authority of the court to do so.

“This was a very difficult decision given the huge impact it has on the team members, our customers and all the communities we serve,” he said. “To make the store’s footprint right size is an important part of our efforts to ensure the best path for Joan.”

Last March, the Hudson, Ohio-based company filed for bankruptcy protection and reported long-term debt of about $1 billion. However, at the time, 800 stores would remain open. Last month, the company announced yet another bankruptcy filing, saying the move is ready to sell the company.

Retail analyst Neil Sanders said Joanne’s debt levels were already unsustainable once he entered his first bankruptcy. “Due to the second bankruptcy, debt levels were reduced and debt had been restructured, but they were still under considerable penalty,” he said.

Saunders, managing director of GlobalData, said Joanne is also struggling to keep stock up.

“Many of the stores were very tattered,” Sanders said. “We have a lot of stock and of course we just train our customers to go elsewhere.”

As a result, Joann lost market share of online retailers and brick and mortar competitors such as Hobby Lobby and Michaels.

According to Hobby Lobby, there are around 1,000 stores in 48 states and employ around 46,000 workers. It reportedly received $8 billion in revenue last year. Michaels says there are more than 1,200 stores in the US and Canada. Neither company is public.

In a statement announcing Joan’s second bankruptcy filing on January 15th, interim CEO Michael Prendagast said, “We acknowledge that the past few years have presented significant and lasting challenges in the retail environment. To take this step.”

“After carefully considering all available strategic paths, we have determined that starting the court’s supervisory sales process is the best course of action to maximize the value of our business. I hope that this process will help you find a path that Joan can do, and it will continue to work as a continuous concern,” Prendagast said.

Retail analyst Sanders said it would be difficult to see how Joanne can recover from current troubles other than the acquisition. “This is a very unfortunate conclusion to a very long decline process,” he said. “You can close unprofitable places. You can try to bring your business back to a financial foothold of securing, but the end result is that you are a much smaller business.”