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Diving brief:
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Joann announced Wednesday that it filed for Chapter 11 in the U.S. Bankruptcy Court for the District of Delaware, intending to sell itself.
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The craft retailer, whose stores and e-commerce site remain open, is asking the court to approve the sale of “substantially all of its assets,” with Gordon Brothers as bidder.
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Joann filed for bankruptcy last March and left the company in April as a private company owned by her creditors. According to court documents filed this week, its liabilities range from $1 billion to $10 billion.
Dive overview:
As Joann finds herself in bankruptcy court for the second time in less than a year, interim CEO Michael Prendergast cited “significant and lasting challenges in the retail environment,” as well as the company’s own retailer’s financial challenges and “limited inventory levels.”
“After carefully considering all available strategic avenues, we have determined that initiating a court-supervised sale process is the best solution to maximize the value of the company,” he said, adding that the The hope is to find a path for craftsmanship. retailer to continue operating as a going concern.
For now, the company “intends to uphold its commitments to customers, team members and partners, including the continued payment of employee salaries and benefits,” according to its press release. press.
Joann last week confirmed store closures in various states that the company described as “part of its usual store location evaluation and optimization.”
Inventory issues made it particularly vulnerable, according to Neil Saunders, managing director of GlobalData.
“Inventory problems have created stock shortages and assortment gaps, which have weakened its specialist status in the fabrics and textiles sector and caused customer defections,” it said in an e -mail. “The experience in many stores is also poor, which has hurt sales.”
When Joann emerged from bankruptcy last time, she had very little room to maneuver because she still had debts, according to Saunders.
“Even though he reduced his debt burden, he did not eliminate it, which meant he had very little room for error in terms of execution,” he said. “Unfortunately, Joann has been found to be deficient on several fronts, and she is once again running low on oxygen.”
