Inside the bankruptcy disaster of Joann Fabrics

Fortune

Joann Fabrics announced it would close all of its more than 800 stores in the U.S. and lay off 19,000 workers, including more than 15,000 part-time store associates.

Transcript

00:00No shade to Michael's and Hobby Lobby or anything like that, but like Joanne is like home.

00:06The closing of Joanne has really struck a nerve and you may have even seen on TikTok,

00:11on Instagram, people are making goodbye videos. People are grieving. So Joanne was started by

00:18two German immigrant families in Cleveland in 1945. And for the first half of its life,

00:24it was a kind of classic American family business success story.

00:30Now, typically, private equity would buy a company, make changes, whether it's cost cutting

00:38or improvements to increase the value of that company and then sell it and make a profit.

00:44But it doesn't always work out.

00:51As we all know, there was this return to crafting and hobbies. And that happened because lockdowns

00:57and even after the lockdowns, most of us were just staying home more often anyway.

01:06There was a sense during the pandemic that the store would be able to hang on to all of these new customers.

01:12However, that didn't happen. In a short period of time, Joanne lost like 98% of its value.

01:19It declared bankruptcy for the first time in the spring of 2024 and then again in January of this year.

01:27So it is this cautionary tale about private equity. And it's also about the decisions you make under pressure.

01:33Joanne does have such a large following and its employees are shortly going to be out of work.

01:39We're talking about 19,000 people and a lot of people felt like there was an alternate ending here.

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