Joann Fabrics, a prominent name in the fabric and crafts retail industry for over 80 years, is closing all its remaining stores across the United States. This decision follows the company’s second Chapter 11 bankruptcy filing within a year, highlighting significant challenges in the evolving retail landscape.
Financial Struggles and Bankruptcy Filings
In March 2024, Joann filed for Chapter 11 bankruptcy protection to restructure its debt and stabilize operations. Despite these efforts, the company faced continued financial difficulties, leading to a second bankruptcy filing in January 2025. At the time of the second filing, Joann reported $615.7 million in debt, with over $133 million owed to suppliers and monthly rent costs amounting to $26 million across its locations.
Impact of Consumer Trends and Market Shifts
The retail environment has significantly changed, particularly in the crafts and fabric sectors. During the COVID-19 pandemic, Joann experienced a surge in sales as consumers turned to crafting and DIY projects. However, as pandemic restrictions eased, consumer spending habits shifted toward essentials, leading to a decline in hobby-related sales. This shift, coupled with increased competition from rivals like Michaels and Hobby Lobby and online marketplaces such as Etsy, eroded Joann’s market share.
Rising Operational Costs and Inventory Challenges
Rising operational costs exacerbated Joann’s financial woes. The company faced higher expenses for shipping overseas products and maintaining extensive physical store locations. Additionally, inventory disruptions, including suppliers discontinuing key products and erratic deliveries, led to stock shortages, further diminishing sales and customer satisfaction.
The Role of Online Shopping
The rise of e-commerce has significantly impacted traditional brick-and-mortar retailers. While Joann did establish an online presence, it struggled to compete with established online platforms that offered a wider variety of products, often at lower prices. This shift in consumer behavior toward online shopping contributed to decreased foot traffic in physical stores, affecting overall sales.
Store Closures and Liquidation
Initially, Joann announced plans to close approximately 500 of its 800 stores as part of its restructuring efforts. However, after failing to find a buyer to keep the business operational, the company liquidated all remaining stores. Going-out-of-business sales have commenced, with all locations expected to close by the end of May 2025.
Customer and Community Impact
The closure of Joann stores has elicited strong reactions from loyal customers and local communities. Many patrons have expressed disappointment, noting the loss of a valuable resource for sewing and crafting supplies. In areas where Joann was the primary fabric retailer, customers now face limited options, often resorting to online shopping or traveling significant distances to find alternative stores.
Joann Fabrics’ decision to close all its stores underscores the challenges traditional retailers face in adapting to changing consumer behaviors, rising operational costs, and the growing dominance of e-commerce. As the retail landscape continues to evolve, businesses must innovate and adapt to meet the market’s shifting demands.