Retail Bankruptcy and Closures

Bankrupt retailer JoAnn Fabrics is preparing to wind down operation and liquidate its merchandise with “going out of business” sales at all of its stores.

"Following a comprehensive sale process and auction, GA Group together with the Prepetition Term Loan Agent, has been selected as the winning bidder to acquire substantially all of JoAnn’s assets,” the company said in a statement. 

“In connection with this agreement, subject to Bankruptcy Court approval of the transaction, the winning bidders plan to begin winding down the company's operations and conduct going-out-of-business sales at all store locations.”

But some JoAnn customers are not happy about one particular sale policy. Because the assets are being acquired by another entity, previously-purchased JoAnn Fabrics gift cards are no longer valid and will not be honored.

“PSA to anyone going to Joann Fabric going out of business sale, if you have store gift cards they will not accept them,” Shelly, who operates a charity, posted on Facebook. 

“This is the only place that we have purchased our fabric for Ronnie’s Angels and to date we have made over 500 blankets so, Joann Fabric has received A LOT of my money and gift cards that were donated to the girls from so many of you that have helped us along the way.”

Other customers also took to social media to say they were upset by the move. “Regardless of the fact that you are closing, your business took money and now refuses to give the product in exchange for it,” one person wrote.

In a frequently asked questions post, JoAnn Fabrics disclosed that it would stop accepting gift cards after Feb. 28.

The chain that would become Joann Fabrics was founded in 1943, with a single store in Cleveland. The name was changed to Joann Fabrics in 1963. The company operates 800 stores in 49 states.

Fashion retailer Forever 21 is preparing to close at least 200 stores and lay off more than 350 employees at its corporate office as it struggles to remain viable in a highly competitive retail market, according to press reports.

The chain, which has faced challenges since filing for bankruptcy in 2019, has struggled to keep up with emerging fashion brands and affordable online retailers such as Shein and Fashion Nova. Originally targeting teenage girls when it opened in 1984, Forever 21 has since expanded its product offerings to include apparel and accessories for men and children.

According to Bloomberg News, the company is expected to file for bankruptcy again in an effort to find a buyer for its remaining stores. If a buyer is not found, Forever 21 may be forced to liquidate its remaining 350 locations.

In addition to store closures, the company is also shutting down its downtown Los Angeles corporate headquarters, as stated in a regulatory filing with the California Employment Development Department. A Worker Adjustment and Retraining Notification (WARN), which is required for significant layoffs, indicates that job cuts will begin on April 21.

Among those affected by the layoffs are managers, designers, supply chain directors, as well as the company’s chief financial officer and chief merchandising officer, according to the Los Angeles Daily News. Employees who remain with the company will transition to remote work once the corporate headquarters closes.

The decline of Forever 21 highlights the challenges faced by traditional retailers in an increasingly digital shopping landscape. With shifting consumer preferences and the rise of fast-fashion e-commerce giants, brick-and-mortar stores like Forever 21 continue to face mounting difficulties in staying relevant and profitable.

A month after declaring bankruptcy, crafts retailer JoAnn reports it has not been able to find a buyer and will go out of business, closing all 800 stores. The end came quickly.

“The company is seeking court approval to begin a process for the sale of substantially all of its assets under section 363 of the Bankruptcy Code, pursuant to which Gordon Brothers Retail Partners would serve as the stalking horse bidder,” the company said in a statement on its website on January 15.

A stalking horse bidder is one that would set the floor for bids for the company’s assets. The winning bid would have to equal or be higher than that. In the end, there were no takers, at least none that would continue to operate the business.

JoAnn announced plans to sell off its assets to a buyer group which would likely liquidate everything in order to pay down debt. The company will go to bankruptcy court in Delaware this week to seek approval to move forward.

The chain that would become Joann Fabrics was founded in 1943, with a single store in Cleveland. The name was changed to Joann Fabrics in 1963. The company operates 800 stores in 49 states.

Last year was marked by a large number of retail store closings and it appears that trend will continue in 2025.

JCPenny is the latest retailer to serve notice that its footprint will get smaller – but not by much. The company said it expects to shutter only eight stores in the U.S. – just 2% of the total. However, that may be just the tip of the iceberg.

A report by Coresight Research predicts 15,000 retail stores will close up shop in 2025, roughly double the number that closed in 2024. The report suggests it has less to do with economic conditions and more about changes in consumer behavior.

Consumers have shifted more of their purchases to online retailers such as Amazon, putting a dent in the profits of traditional department stores. Exceptions are retailers that also sell groceries, such as Walmart, Costco and Target.

Competition from Chinese retailers have also taken a larger share of U.S. consumers’ budgets. Coresight points to Shein and Temu, which ship inexpensive products to U.S. consumers, as major headaches for American retailers.

In other words, the shift in the retail landscape is being driven by how a new generation of American consumers shop. Retailers that haven’t adapted are shrinking, or disappearing altogether.

2024 closings

In 2024, these U.S. retailers closed locations:

• Walgreens

• CVS Health

• Big Lots

• Conn's

• Rue21

• 7-Eleven

• Rite Aid

• 99 Cents Only Stores

• American Freight

• Family Dollar

• DK

• LL Flooring

• Footlocker

• Express

• Alimentation Couche-Tard

• Dollar General

• Macy's

• The Body Shop

• Save A Lot

• Bath & Body Works

• Dollar Tree

• Soft Surroundings

• Sam Ash Music

• Sleep Number

• Burlington Stores

• Stop & Shop

• Office Depot

• Ted Baker

• Carter's

Joann Fabrics has once again filed for Chapter 11 bankruptcy protection and said it would try to sell the business.

“The company is seeking court approval to begin a process for the sale of substantially all of its assets under section 363 of the Bankruptcy Code, pursuant to which Gordon Brothers Retail Partners would serve as the stalking horse bidder,” the company said in a statement on its website.

A stalking horse bidder is one that would set the floor for bids for the company’s assets. The winning bid would have to equal or be higher than that.

If the sale to Gordon Brothers is ultimately completed, Gordon Brothers has indicated that it intends to pursue a liquidation of the company’s assets and conduct going-out-of-business sales at all store locations. In the meantime, Joann stores and Joann.com remain open for business.

‘Significant challenges’

“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,” said Michael Prendergast, Joann Fabric’s interim CEO. 

“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.”

Prendergast said the board determined that beginning a court-supervised sale process would be the best route to maximizing shareholder value.

The chain that would become Joann Fabrics was founded in 1943, with a single store in Cleveland. The name was changed to Joann Fabrics in 1963. The company operates 800 stores in 49 states.