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Six of the 11 Joann fabrics stores in New Jersey are slated to close amid its bankruptcy as the company plans to close 500 “underperforming” stores out of the 850 it has nationwide.
In January, Joann announced that it was declaring Chapter 11 bankruptcy for the second time within a 12-month period as it seeks a buyer to rescue the beleaguered chain.
Chapter 11 bankruptcies provide businesses with some breathing room to get their finances in order without liquidating all their assets and effectively going out of business.
"This was a very difficult decision to make, given the major impact we know it will have on our team members, our customers and all of the communities we serve," a Joann spokesperson told NorthJersey.com partner USA TODAY on Wednesday.
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"A careful analysis of store performance and future strategic fit for the company determined which stores should remain operating as usual at this time," the company spokesperson said.
In court documents, the 82-year-old Hudson, Ohio-based chain — one of the nation’s largest sellers of fabrics and craft supplies — cited sluggish sales and inventory issues, including nearly $616 million in “untenable” debt.
Gordon Brothers Retail Partners, which recently made large purchases of the struggling Big Lots chain, is the stalking horse bidder, or first bidder on the company’s assets before it goes to a public auction.
“As the sale process progressed, and prospective bidders continued to conduct diligence and refine their potential bids, the debtors and their advisors were able to identify a subset of underperforming stores that are unlikely to be considered or included in any going concern bid,” read court documents dated Wednesday.
What NJ locations are closing?
Six Joann locations in New Jersey are closing, court documents showed:
That leaves five in the state:
Out of bankruptcy in April
Joann emerged from bankruptcy last April as a private company, a move that saved all of its stores at the time, including the 11 in New Jersey.
The chain saw its business boom during the COVID-19 pandemic, as Americans used the extra time amid stay-at-home orders and the extra money from stimulus payments to delve into crafts.
But the “number of people engaging in crafts and making has declined over the past few years,” and the company in turn “struggled to turn a profit and was in desperate need of recapitalization,” retail analyst Neil Saunders said last year.
Joann noted in court filings that the inventory issues were “acute and unexpected,” and that it saw an “unexpected ramp-down, and, in some cases, the entire cessation of production” of items highly sought by shoppers.
Long list of chains that have closed or reduced operations
The company joins a long list of brick-and-mortar stores that have recently shut down or drastically curtailed operations, including Stop & Shop, Big Lots, Buybuy Baby, Family Dollar, Rite Aid, CVS, Bed Bath & Beyond and Christmas Tree Shops.
Despite three interest rate cuts last year by the Federal Reserve, rates have remained high and made borrowing more costly for items like credit cards, auto loans and mortgages.
This article contains material from USA Today.
Daniel Munoz covers business, consumer affairs, labor and the economy for NorthJersey.com and The Record.
Email: [email protected]; Twitter:@danielmunoz100 and Facebook