Why is Joann set to close its 500 stores nationwide? Reasons explained

Joann, the fabric and crafts store chain, is set to shut down over 500 U.S. locations. This news comes a year after the company started bankruptcy proceedings, showing how brick-and-mortar stores face challenges to stay open.

The full list of store closures has yet to be revealed. The company's shutdown cannot be avoided, but it promised its employees that it is dedicated to supporting them during this transition.

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Why is Joann set to close its 500 stores nationwide?

The company is set to close the stores due to financial issues. It first filed for bankruptcy in March 2024, securing about $132 million in financing. This move aimed to handle its $1 billion debt. The company had other ideas to keep the business running.

At first, the company hoped to keep all its stores open to stabilize its financial situation. However, in January 2025, Joann filed Chapter 11 proceedings to conduct a divestiture process. Despite emerging as a private company, it managed to continue operating all its locations for a brief period.

As recently filed, the company's second bankruptcy petition revealed the existence of inventory problems as a major root of the company's present difficulties. As stated in court papers, it met with "unexpected ramp-down, and, in some cases, the entire cessation of production” of some products. This downfall significantly impacted business operations, making it difficult for the company to sustain itself.

Interim CEO of Joann Michael Prendergast revealed:

"Since becoming a private company in April, the Board and management team have continued to execute on top-and bottom-line initiatives to manage costs and drive value.”

Prendergast added:

“However, the last several years have presented significant and lasting challenges in the retail environment, which, coupled with our current financial position and constrained inventory levels, forced us to take this step."

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Economic Factors Affecting Joann and Other Retailers

On top of supply chain problems, wider economic issues have also affected Joann's situation. As inflation has increased, many consumers have cut back on extra spending, hurting retail businesses that rely on non-essential purchases.

The company is not the only one dealing with these problems. Many other retail chains have had to close stores because fewer people are coming in, and shopping habits are changing.

The retail company keeps running its business under bankruptcy course, but it's now selling off what it owns. Gordon Brothers Retail Partners, LLC has stepped in as the "stalking horse" bidder, setting a starting price for the upcoming sale of Joann's stuff.

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The company has filed motions to allow salary continuation throughout the restructuring. The exact schedule of store closures and the number of staff impacted is yet to be revealed.

Other retailers, such as Kohl’s and Macy’s, have also announced store closures. It is reported that over 15,000 stores are set to close in 2025.