Joann hopes to exit Chapter 11 by as early as April 2024.
Arts and crafts retailer Joann Inc. has filed for Chapter 11 bankruptcy protection but expects to emerge from administration within weeks.
The Ohio-based retailer announced that it had entered into what is called a “transaction support agreement” (TSA) with the majority of its financial stakeholders and is targeting a fast track turnaround to go private.
The financial restructuring contemplated by the TSA will be implemented through a pre-packaged court-supervised process in which Joann will continue to operate in the ordinary course of business. On completion of the process, progressed via the District of Delaware, Joann will be owned by a number of its lenders and industry parties and its shares will no longer be listed on the Nasdaq, the company said in a statement today.
Joann added that it had received around $132 million in fresh financing and said that it expects to reduce funded debt on its balance sheet by approximately $505 million. According to its most recent quarterly earnings release, the company is currently more than $1 billion in debt.
Joann operates 829 stores across 49 states around the U.S. and its stores and website will remain open for business during the Chapter 11 bankruptcy process.
Joann Agreement
Scott Sekella, Joanns Chief Financial Officer and co-lead of the Interim Office of the CEO, added in a statement: “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. This includes our more than 800 stores across the United States, 95% of which are cash flow positive.”
Joann said that 95% of its stores are profitable. (Photo by: Don & Melinda Crawford/Education ... [+]
“Over the past several months, Joann has made meaningful business improvements through the execution of our Focus, Simplify and Grow cost reduction initiative,” added Chris DiTullio, Chief Customer Officer and co-lead of the Interim Office of the CEO. “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.”
A strong pandemic performer, Joann was established 80 years ago from a single storefront in Cleveland, Ohio, to become the nation’s category leader in sewing and fabrics and one of the fastest growing competitors in the arts and crafts industry.
However, Joann has not had a permanent chief executive since May last year after the retirement of former President and CEO Wade Miquelon.
In recent years, the retailer has been hit by falling sales and reported a net sales fall for its third quarter, ended Oct. 28, of 4.1% to $539.8 million. Total comparable sales were also down 4.1%. The company reported a net loss of $21.6 million for the period, compared with a net loss of $17.5 million in the same quarter last year.
But with a pre-pack deal all but sewn up, the retailer seems confident it could be a private company by as soon as April.
