Joann Fabrics Mulls a Bankruptcy Filing

Bed Bath and Beyond may soon have some company in strip-mall heaven.

Arts and crafts retailer Joann Inc, a.k.a. Joann Fabrics, is considering filing for bankruptcy as soon as this week, according to a report from Bloomberg over the weekend.

Threading the Needle

Joann Fabrics is facing the same existential headwinds that have rocked fellow retail giants like Macy’s and the aforementioned Bed Bath and Beyond. The publicly traded chain, which still owns and operates 850 locations across the US, has seen its share price plummet some 85%, closing Friday at about 50 cents.

Last fall, the company laid off workers at its Hudson, Ohio, headquarters, and in December, it raised $34 million in a sale and lease-back of its headquarters. But the moves haven’t been enough to silence lender concerns:

• While discussions are ongoing, Bloomberg reports Joann is likely to file Chapter 11 bankruptcy in a so-called pre-pack filing. The move would give lenders control of the company and allow it to shed some of its debt load.
• The company says it has a long-term debt load of about $1.1 billion. According to data compiled by Bloomberg, its term loan due 2028 is being quoted at less than 10 cents on the dollar.

Mall’s Well That Ends Well: The retail blues are spreading. Last month, Nike announced layoffs totaling 1,600 employees. Meanwhile, Bloomberg also reports that discount home goods store Big Lots is seeking new financing amid dwindling liquidity, while fashion retailer and Bonobos parent company Express is discussing restructuring options with its lenders. It’s almost no wonder that fast-fashion (and fast-everything) seller Temu is making such a push into the US market.