The Covid-19 pandemic was detrimental to several retail chains during the height of the pandemic in the early months of 2020. Many had to shut down for long periods and reopenings limited customers in stores to adhere to public distancing measures.
Certain retailers were not affected as much by the shutdowns and public distancing measures since their business models were already accustomed to many of the measures before the pandemic.
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Online retailers, such as pet retailer Chewy, were already prepared to take orders online and deliver products to customers. Sales at brick-and-mortar pet retailers declined in the early months of the pandemic in March and April 2020, but Chewy’s online sales increased 28.7%, Retail Dive reported.
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While many apparel retailers, especially those selling work clothes, suffered during the pandemic, those who marketed casual apparel that appealed to the work-at-home workforce, such as lululemon, saw revenue increases. Lululemon Athletica (LULU)  reported a 155% increase in e-commerce sales in its second quarter of 2020.
As people stayed at home to avoid Covid-19 infections during the pandemic, many took up hobbies, such as sewing, which led to higher demand for products from certain retailers, such as fabrics and arts and crafts store Joann.
The fabrics retailer’s sales increased by 23.5% from 2020 to 2021, but it was short-lived as the pandemic subsided. When people returned to their normal post-pandemic daily activities, sales at Joann declined, and other economic issues affected revenues in the following years.
Image source: Getty Images.
Joann files for bankruptcy second time in a year Â
Joann Inc. has filed for Chapter 11 bankruptcy for the second time in less than a year after a sluggish retail environment and unintended inventory challenges impacted its ability to service its restructured funded debt.
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The Hudson, Ohio-based retailer and 12 affiliates on Jan. 15 filed their petition in the U.S. Bankruptcy Court for the District of Delaware listing $1 billion to $10 billion in assets and liabilities which included over $700 million in debt.
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The debtor listed $615.7 million in funded debt obligations and $133 million in unsecured debt in court papers. Joann was also burdened with $26 million in monthly lease and occupation obligations.
Its largest unsecured creditors include Low Tech Toy Club, owed over $7.4 million; SVP Sewing Brands, owed over $5.2 million; and Federal Express Corp., owed over $4.3 million, according to its petition.
Joann, which operates about 800 stores in 49 states and employs about 19,000 workers, blamed macroeconomic headwinds for its bankruptcy filing, including a stagnant retail economy hampered by inflation and high interest rates, as well as unintended inventory challenges.
Joann finds a stalking-horse bidder for its assetsÂ
The private company, founded in 1943 as the Cleveland Fabrics Shop in Ohio, filed for Chapter 11 protection with a stalking-horse bid to purchase the company from Gordon Brothers Retail Properties.
Gordon Brothers earlier on Dec. 27 reached a sale agreement with bankrupt Big Lots to transfer its locations to other retail owners.
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Joann hired Centerview Partners about four months ago to explore value-maximizing business alternatives, which it will continue exploring as the company pursues its case, according to a declaration by interim CEO Michael Prendergast of Alvarez & Marsal.
The fabrics retailer on March 18, 2024, filed for Chapter 11 bankruptcy the first time to reorganize and reduce its $1 billion in funded debt as it faced financial distress from online retail competition and increased merchandise costs, according to the declaration.
The company emerged from bankruptcy on April 30, 2024, with a prepackaged reorganization plan as a private company. It finished 2024 with about $2 billion in sales, including about $900 million from its fabrics and sewing business, $1.1 billion from arts and crafts sales, and $19 million from non-merchandise services.
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