Joann Fabrics Announces Closure of 500 Stores Amid Bankruptcy Struggles

Joann Fabrics, a prominent name in the crafting and fabric retail industry, has announced plans to close approximately 500 of its 800 stores across the United States. This decision comes as the company navigates its second bankruptcy filing in less than a year, citing significant financial challenges and a need to restructure its operations.

Talked About

• Joann Fabrics will close about 500 stores nationwide, impacting nearly 60% of its locations.

• The company filed for Chapter 11 bankruptcy for the second time in January 2025, following an initial filing in March 2024.

• The closures are part of a strategy to "right-size" the business and improve financial stability.

• Affected states include California, Florida, Michigan, and New York, among others.

Background on Joann Fabrics

Founded in 1943, Joann Fabrics has been a staple for crafters and DIY enthusiasts, offering a wide range of fabrics, craft supplies, and home décor items. However, the company has faced increasing challenges in recent years, including rising operational costs and changing consumer behaviors, which have led to declining sales.

In March 2024, Joann first filed for bankruptcy, securing $132 million in financing to address its $1 billion debt. The company briefly emerged as a private entity but struggled to maintain profitability, leading to a second bankruptcy filing in January 2025. This latest move aims to facilitate a sale process and maximize the value of the business.

Reasons for Store Closures

The decision to close 500 stores was not made lightly. Joann's management stated that a careful analysis of store performance and future strategic fit was conducted to determine which locations would remain operational. The closures are expected to have a significant impact on employees, customers, and the communities served by these stores.

The company emphasized that right-sizing its store footprint is critical for ensuring a sustainable future. Joann's interim CEO, Michael Prendergast, acknowledged the difficult nature of this decision, highlighting the ongoing challenges in the retail environment.

Impact on Employees and Customers

The closures will affect approximately 19,000 employees across the country. Joann has expressed its commitment to supporting its team members during this transition. Customers are encouraged to take advantage of going-out-of-business sales, which are expected to begin shortly after court approval.

While the company continues to operate its remaining stores and online platform, it has ceased accepting gift cards for online purchases. This change reflects the financial constraints the company is currently facing.

Future Outlook

As Joann Fabrics moves forward with its restructuring efforts, the company aims to stabilize its operations and explore potential buyers. The retail landscape continues to evolve, and Joann's ability to adapt will be crucial in determining its long-term viability.

The closures are part of a broader trend in the retail sector, where many brick-and-mortar stores are struggling to compete with online shopping and changing consumer preferences. Joann's situation serves as a reminder of the challenges faced by traditional retailers in today's market.