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JOANN Inc. Files for Bankruptcy Again as Retail Industry Struggles

Storefront of JOANN fabric store with signage indicating bankruptcy.

News Summary

JOANN Inc., the largest sewing and fabric company in the U.S., has announced its second Chapter 11 bankruptcy filing in a year due to ongoing sales struggles and inventory issues. The company previously filed for bankruptcy in March 2024 and aimed to reduce its significant debt. Despite these challenges, JOANN is committed to keeping its over 800 stores open while navigating this financial transition. The situation reflects broader struggles in the retail sector, with other companies like Dirt Cheap also filing for bankruptcy amid tough market conditions.

JOANN Inc. Files for Bankruptcy Again as Retail Industry Struggles

In a move sending ripples through the retail landscape, JOANN Inc., the country’s largest sewing and fabric company, has officially announced its plan to file for Chapter 11 bankruptcy for the second time in just 12 months. This storied company, founded way back in 1943, has been grappling with sluggish sales and inventory issues, leading them to this hard decision.

History Repeats Itself

JOANN’s financial woes are not entirely new. The company already filed for bankruptcy in March 2024, which initially helped them reduce a staggering $505 million in debt, but it seems that the challenges have resurfaced. Just last month, JOANN emerged from its prior bankruptcy as a private company with hopes of reinventing its business model.

Despite their historic challenges, the company is committed to maintaining operations as normal across its more than 800 stores in the United States, including seven locations in Louisiana. The team at JOANN aims to reassure suppliers, partners, and employees as they navigate this tricky financial transition.

The Broader Retail Landscape

But JOANN isn’t alone on this rocky road. Dirt Cheap, a well-known chain offering steep discounts on returned and liquidated goods, has also filed for bankruptcy protection. Based in Mississippi, this retailer announced plans to close all 68 of its location across several states, including 9 stores in Louisiana in cities like Lafayette and Slidell. Dirt Cheap has kicked off going-out-of-business sales, with discounts ranging from 40% to 90% off retail prices, enticing bargain-hunters amidst the chaos.

Unfortunately, Dirt Cheap’s sales have been adversely affected due to the shrinking buying power of their customers, thanks to rising inflation, causing them to grapple with profitability. Other discount retailers, such as <Big Lots and Dollar Tree, are also feeling the heat, with several store closures happening recently.

Fashion Retail Faces Challenges

Forever 21 has also declared bankruptcy, planning to shut down around 354 locations by May 1. The issues are largely attributed to rising operational costs and stiff competition from foreign fast fashion brands. While closing sales are set to begin for Forever 21, some locations may still remain operational depending on potential buyers stepping in during this challenging time.

Interestingly, the operator of Forever 21, F21 OpCo, has filed motions to use cash collateral to ensure that employee wages and benefits continue throughout this closure process. Despite the pullback on physical store locations, parent company Authentic Brands remains optimistic and plans to evolve Forever 21’s business model into new arenas once the dust settles.

The Future of Retail

As JOANN, Dirt Cheap, and Forever 21 navigate these turbulent waters, they remind us of the waves of change rattling the retail sector today. While it’s tough times ahead for these brands, they’re also an opportunity for reinvention and recovery. For consumers, the upcoming going-out-of-business sales may just provide a silver lining—an opportunity for fantastic deals while the companies regroup.

In conclusion, as we watch this unfolding story in the retail sector, it’s essential to remember that change in business can often lead to new beginnings. Whether you’re hunting for sewing supplies, bargain deals, or the latest fashion pieces, this roller coaster of a retail world is certainly captivating.