Joann, a popular fabric retail chain founded in 1943, has had a rough few months.
The company filed for Chapter 11 bankruptcy in January, claiming it had accumulated $615.7 million in debt. This form of bankruptcy allows a company to restructure its finances and assets under court supervision as it explores different options that will help improve its financial standing.
In the bankruptcy filing, Joann said that it has struggled to “adjust to a post-COVID economy” after it faced increased demand during the pandemic when consumers flocked to its stores to purchase supplies for masks and other personal protective equipment.
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Now that the pandemic is over, Joann has since seen a decline in sales, which it said was also exacerbated by “competition from online retailers and increased merchandise costs.”
This is not the first time Joann filed for Chapter 11 bankruptcy. In March last year, it filed for bankruptcy but emerged from it the following month.
Joann customers are outraged over new policy
Shortly after filing for bankruptcy again in January, Joann was sold to a new owner, and as a result, the retailer announced it would close all of its 800 stores across the nation this year.
Joann Fabrics did well during the pandemic era but has struggled afterward.
Image source: Getty Images.
Joann has since been promoting clearance sales on its social media platforms, encouraging customers to shop at its stores before they all permanently shut down, however, some customers are outraged.
When Joann first announced that it was closing all of its stores, it said that customers had until Feb. 28 to use their gift cards.
Now that gift cards are no longer accepted at its stores, customers have taken to social media to air their frustrations with this policy.
since when is Joann’s not going to honor gift cards… got all the way up to check out and apparently they aren’t taking them anymore in store or online 👎🏻👎🏻
— natalie⁷ (@hanjiIuv) March 2, 2025
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@JoAnn_Stores deserves everything it gets for not letting people use their gift cards anymore. There’s no reason to not honor a gift card up until the very last day of business. The money has already been spent by the customer. Worthless piece of crap company can rot in hell.
— elbybeauty (@elbybeauty) March 1, 2025
Some shoppers even raised concerns on whether or not the policy change is legal.
It should be illegal for Joann to stop accepting gift cards. Not only do you already have my money, but you need to get rid of all your inventory anyway!!
— Crista 🍲 | INDY N1!! (@CristaWithNoH) March 8, 2025
Some states have different laws regarding gift card use in stores, however, according to giftcards.com, when a store files for bankruptcy, gift card holders, who are considered creditors, are required to file claims in order to get their funds reimbursed.
The company also has to ask the court for permission to honor gift cards through a certain date.
All Joann locations are expected to close sometime before the end of May or until supplies run out as the company’s going-out-of-business sales are expected to last for 12 weeks.
Joann joins an alarming trend across the country
Joann isn’t the only popular company that recently filed for bankruptcy. Big Lots, Party City, Express and Tupperware also went bankrupt in 2024 as consumers tightened their spending.
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According to recent data from Coresight Research, retailers in the U.S. closed 7,325 stores in 2024, which is the highest number of store closures since 2020. Coresight Research expects store closures in the U.S. this year to escalate to 15,000.
“Inflation and a growing preference among consumers to shop online to find the cheapest deals took a toll on brick-and-mortar retailers in 2024,” said Coresight Research CEO Deborah Weinswig in a Jan. 23 press release. “Last year we saw the highest number of closures since the pandemic. Retailers that were unable to adapt supply chains and implement technology to cut costs were significantly impacted, and we continue to see a trend of consumers opting for the path of least resistance.
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