Joann files for bankruptcy amid big debt; to go private
Joann Inc. filed for Chapter 11 bankruptcy protection — with plans for a quick exit.
The fabric and crafts retailer said it has entered into a transaction support agreement agreement with most of its financial stakeholders and expects to emerge from bankruptcy as early as the end of next month. Following the process, Joann will become a private company owned by some of its lenders and industry parties and its shares will no longer be listed on Nasdaq.
Joann said it has received about $132 million in new financing and expects to reduce funded debt on its balance sheet by approximately $505 million. According to its most recent quarterly earnings release, the company has more than $1 billion in debt.
Joann’e 800-plus stores and website will remain open for business during the bankruptcy process.
“This agreement is a significant step forward in addressing Joann’s capital structure needs, and it will provide us with the financial resources and flexibility necessary to continue to deliver best-in-class product assortments and enhance the customer experience wherever they are shopping with us,” said CFO Scott Sekella, CFO and co-lead of the Interim Office of the CEO. “This includes our more than 800 stores across the United States, 95 percent of which are cash flow positive. “
Joann has been without a permanent chief since May when Wade Miquelon retired as president and CEO. In recent years, the retailer, an early winner during the pandemic, has been challenged with declining sales.
For its third quarter, ended Oct. 28, Joann’s net sales fell 4.1% to $539.8 million. Total comparable sales were down 4.1%. The company reported a net loss of $21.6 million compared to a net loss of $17.5 million in the same quarter last year.
“We are excited by our progress on both top and bottom-line initiatives in the past year and are confident the steps we are taking will allow Joann to drive long-term growth. said Chris DiTullio, chief customer officer and co-lead of the Interim Office of the CEO. We appreciate the support from our financial and industry stakeholders in this agreement, and their confidence in our ability to continue driving positive business change.”
Joann operates 829 stores across 49 states.