Joann to close all stores, including 3 on Long Island

Fabric and crafts retailer Joann plans to close all its stores, following the sale of the company’s assets in a bankruptcy auction.

About two weeks ago, the retailer said it planned to close 500 stores, including two on Long Island — in Westbury and West Babylon — in an attempt to right-size its store footprint and maximize the business' value.

But on Sunday, Joann said in a statement that all of its stores will close, including one other location on Long Island, in Bohemia.

Joann's announcement follows a Friday bankruptcy court auction in which the winning bidder was GA Joann Retail Partnership LLC, a subsidiary of GA Group, a provider of asset disposition, valuation and real estate services, together with Wilmington Savings Fund Society, which was Joann’s term loan agent before it filed for bankruptcy. 

“Joann leadership, our board, advisors and legal partners made every possible effort to pursue a more favorable outcome that would keep the company in business. We are committed to working constructively with the winning bidder to ensure an orderly wind-down of operations that minimizes the impact on all our stakeholders,” the Hudson, Ohio-based retailer said Sunday.

A court hearing on the planned asset sale will take place Wednesday.

If the judge approves the sale, the winning bidder will wind down Joann’s operations and conduct going-out-of-business sales, Joann said.

"The advantage of a buyer liquidating the assets quickly is to forgo incurring the expenses of operating the business," said bankruptcy attorney Patrick Collins, a partner at Uniondale law firm Farrell Fritz PC who is not involved in Joann's bankruptcy case.

Operating for more than 80 years, Joann had more than 800 stores in 49 states when it filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of Delaware on Jan. 15. It was the retailer’s second bankruptcy filing in less than a year.

When Joann filed for bankruptcy protection last month, the retailer had about 19,000 employees, of which 3,400 were full-time and 15,600 were part-time workers, according to a court filing.

The company had about $615.7 million in total funded debt obligations, according to a court filing last month.

Joann’s financial problems were caused by customers cutting back after the spending highs of the COVID-19 pandemic that started in March 2020, as well as the retailer's “outsized capital structure and operational cost center,” Michael Prendergast, interim CEO, wrote in a bankruptcy document filed in January.

As a result, the then-publicly traded retailer filed for Chapter 11 bankruptcy in March and emerged from the proceedings in April as a private company, he wrote.

But the issues persisted.

“Unfortunately, unanticipated inventory challenges post-emergence, coupled with the prolonged impact of an excessively sluggish retail economy, put Joann back into an untenable debt position,” he wrote.

By Tory N. Parrish

tory.parrish@newsday.comToryParrish1

Tory N. Parrish covers retail and small business for Newsday. She has worked at the Pittsburgh Tribune-Review and Observer-Dispatch in Utica, N.Y.