Joann, a popular store for fabrics and crafts, has filed for Chapter 11 bankruptcy. This means it's making a plan to reorganize its business to stay open and pay back the money it owes over time.
Robert Letvosky, a professor at St. Michael's College who knows about business and accounting, says that only a few Joann stores in the United States will close forever. He's not sure if the one in South Burlington will stay open.
Crafters who live nearby in Vermont are worried about the possible closing of the South Burlington store. They rely on it for their supplies and are unhappy about the situation.
Joann Fabrics and Craft Facing Bankruptcy: Concerns Rise Among Local Residents
Shelburne resident Carol Parven Hutter expressed her shock upon hearing about the potential closure of her local Joann store. "I am shocked first of all because I was just there 3 times last week," Hutter said.
Hutter, who works with arts and crafts, emphasized her preference for in-person shopping over online purchases. She fears the loss of face-to-face assistance in finding the right supplies.
"Having a person that knows something is very helpful. YouTube works, but a person looking at you and you can ask the real question is where it's at," Hutter said.
According to Robert Letvosky, a business and accounting expert, Joann's financial struggles have escalated recently. In 2021, the craft store was paying around $69 million annually in interest, which has surged by almost 50 percent. Letvosky highlights that Joann faces an annual interest expense of $102 million.
"Here you've got a company that had a fair bit of debt, and the interest expenses went through the roof, so on the expense side, they were hurt that way. They're going to come out of it and save, they're going to eliminate frankly probably up to 500 million in debt, and they'll come out of this ultimately perhaps with few stores," Letvosky explained.
Joann Continues Operations Despite Bankruptcy
The well-known fabric and crafts retailer Joann has officially filed for bankruptcy as part of a financial reorganization effort.
Documents obtained by NBC News reveal that the company, headquartered in Hudson, Ohio, submitted for Chapter 11 bankruptcy protection on March 18.
Despite this legal move, Joann reassures customers that it will continue to operate. In a press release accompanying the filing, Joann stated that all of its 800-plus stores and website would remain open for business without disrupting services.
The company emphasized its commitment to providing quality products and services that inspire creativity, ensuring that customers, vendors, landlords, and other creditors will not be affected.
Established in 1943, Joann announced securing approximately $132 million in new financing and related financial support. As stated in its release, this move is expected to significantly reduce the company's debt by approximately $505 million.
Chris DiTullio, Chief Customer Officer and co-lead of the Interim Office of the CEO, expressed optimism about JOANN's recent business improvements.
"In the past several months, JOANN has implemented our Focus, Simplify, and Grow cost reduction initiative, resulting in significant progress," DiTullio stated in a release. "We've seen positive developments in our top and bottom-line initiatives over the past year, and we believe these steps will pave the way for long-term growth."
DiTullio acknowledged the support received from financial and industry stakeholders, highlighting their confidence in JOANN's ability to drive positive change.
The Chapter 11 process is anticipated to conclude by late April, marking a milestone in JOANN's efforts to strengthen its business operations.
Related Article: Joann Fabric and Crafts Seeks Bankruptcy Protection, Aiming to Keep 850 Stores Open Across the US
