Joann Fabrics files for bankruptcy, again; Gordon Brothers is stalking horse bidder

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Re: Joann Fabrics files for bankruptcy, again; Gordon Brothers is stalking horse bidder

Post by storewanderer »

WARN notice filed for their distribution center in Visalia, CA. 209 employees.

It appears their other distribution centers are in Hudson, OH, Opelika, AL, and another smaller one in OH.

Seems to be following a similar pattern to Big Lots closing the stuff out west first...
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Re: Joann Fabrics files for bankruptcy, again; Gordon Brothers is stalking horse bidder

Post by ClownLoach »

storewanderer wrote: February 3rd, 2025, 2:14 pm WARN notice filed for their distribution center in Visalia, CA. 209 employees.

It appears their other distribution centers are in Hudson, OH, Opelika, AL, and another smaller one in OH.

Seems to be following a similar pattern to Big Lots closing the stuff out west first...
Except for the problem that Joann's most productive market was always the West.

They don't have much competition in the West, most Walmart sites are small and don't have room for full fabric and yarn assortment. Hobby Lobby still has only a fraction of the store density they do back East. I do think that Hobby Lobby probably hurts them more when they open in the West than anywhere else.

This sounds more like a supply chain problem they needed to fix than any reflection of their business. I would expect them to close most of the stores back East, not the other way around, in a last ditch attempt to save the business.
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Re: Joann Fabrics files for bankruptcy, again; Gordon Brothers is stalking horse bidder

Post by storewanderer »

ClownLoach wrote: February 7th, 2025, 10:16 pm
storewanderer wrote: February 3rd, 2025, 2:14 pm WARN notice filed for their distribution center in Visalia, CA. 209 employees.

It appears their other distribution centers are in Hudson, OH, Opelika, AL, and another smaller one in OH.

Seems to be following a similar pattern to Big Lots closing the stuff out west first...
Except for the problem that Joann's most productive market was always the West.

They don't have much competition in the West, most Walmart sites are small and don't have room for full fabric and yarn assortment. Hobby Lobby still has only a fraction of the store density they do back East. I do think that Hobby Lobby probably hurts them more when they open in the West than anywhere else.

This sounds more like a supply chain problem they needed to fix than any reflection of their business. I would expect them to close most of the stores back East, not the other way around, in a last ditch attempt to save the business.
Does it make sense to supply the west from a distribution center in Ohio?
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Re: Joann Fabrics files for bankruptcy, again; Gordon Brothers is stalking horse bidder

Post by ClownLoach »

storewanderer wrote: February 7th, 2025, 11:11 pm
ClownLoach wrote: February 7th, 2025, 10:16 pm
storewanderer wrote: February 3rd, 2025, 2:14 pm WARN notice filed for their distribution center in Visalia, CA. 209 employees.

It appears their other distribution centers are in Hudson, OH, Opelika, AL, and another smaller one in OH.

Seems to be following a similar pattern to Big Lots closing the stuff out west first...
Except for the problem that Joann's most productive market was always the West.

They don't have much competition in the West, most Walmart sites are small and don't have room for full fabric and yarn assortment. Hobby Lobby still has only a fraction of the store density they do back East. I do think that Hobby Lobby probably hurts them more when they open in the West than anywhere else.

This sounds more like a supply chain problem they needed to fix than any reflection of their business. I would expect them to close most of the stores back East, not the other way around, in a last ditch attempt to save the business.
Does it make sense to supply the west from a distribution center in Ohio?
They will probably move to 3PL (third party logistics) model distribution and close everything. This is a massive movement for retail. Most new distribution centers you see going up are 3PL, for example that new Sprouts DC in Fullerton is operated by the third party. In this model the retailer only has to leave three or four employees for administrative purposes in the office. The 3PL does everything else. You'll see the retailer name on the sign out front, but the name on the door will be a different company. For a company like Joann that probably has a volatile sales calendar with heavy bulky products selling mostly in the second half of the year they're better off owning and operating no distribution at all and leaving it entirely to a 3PL.
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Re: Joann Fabrics files for bankruptcy, again; Gordon Brothers is stalking horse bidder

Post by storewanderer »

ClownLoach wrote: February 8th, 2025, 2:00 pm
storewanderer wrote: February 7th, 2025, 11:11 pm
ClownLoach wrote: February 7th, 2025, 10:16 pm

Except for the problem that Joann's most productive market was always the West.

They don't have much competition in the West, most Walmart sites are small and don't have room for full fabric and yarn assortment. Hobby Lobby still has only a fraction of the store density they do back East. I do think that Hobby Lobby probably hurts them more when they open in the West than anywhere else.

This sounds more like a supply chain problem they needed to fix than any reflection of their business. I would expect them to close most of the stores back East, not the other way around, in a last ditch attempt to save the business.
Does it make sense to supply the west from a distribution center in Ohio?
They will probably move to 3PL (third party logistics) model distribution and close everything. This is a massive movement for retail. Most new distribution centers you see going up are 3PL, for example that new Sprouts DC in Fullerton is operated by the third party. In this model the retailer only has to leave three or four employees for administrative purposes in the office. The 3PL does everything else. You'll see the retailer name on the sign out front, but the name on the door will be a different company. For a company like Joann that probably has a volatile sales calendar with heavy bulky products selling mostly in the second half of the year they're better off owning and operating no distribution at all and leaving it entirely to a 3PL.
Grocers have gone back and forth on that type of a model for years.

So you are thinking Jo Ann will just shift this Visalia warehouse to 3PL, or set up a new warehouse somewhere else?

This newspaper supposedly in Visalia seems to think the warehouse is closing outright. https://www.visaliatimesdelta.com/story ... 097605007/
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Re: Joann Fabrics files for bankruptcy, again; Gordon Brothers is stalking horse bidder

Post by ClownLoach »

storewanderer wrote: February 9th, 2025, 1:49 am
ClownLoach wrote: February 8th, 2025, 2:00 pm
storewanderer wrote: February 7th, 2025, 11:11 pm

Does it make sense to supply the west from a distribution center in Ohio?
They will probably move to 3PL (third party logistics) model distribution and close everything. This is a massive movement for retail. Most new distribution centers you see going up are 3PL, for example that new Sprouts DC in Fullerton is operated by the third party. In this model the retailer only has to leave three or four employees for administrative purposes in the office. The 3PL does everything else. You'll see the retailer name on the sign out front, but the name on the door will be a different company. For a company like Joann that probably has a volatile sales calendar with heavy bulky products selling mostly in the second half of the year they're better off owning and operating no distribution at all and leaving it entirely to a 3PL.
Grocers have gone back and forth on that type of a model for years.

So you are thinking Jo Ann will just shift this Visalia warehouse to 3PL, or set up a new warehouse somewhere else?

This newspaper supposedly in Visalia seems to think the warehouse is closing outright. https://www.visaliatimesdelta.com/story ... 097605007/
I would expect they'll just use a 3PL service elsewhere in a building the 3PL partners own. They'll get part of that shared building and eliminate fixed overhead. They'll now have costs based on what they buy and sell but that is variable so if they experience a slowdown their expenses will slow down too. These 3PL companies can charge by the pallet, box, etc. if the business wants to. Or the retailer owns and builds the warehouse but turns it over to a 3PL service to staff and operate.

All of this of course is contingent on Joann funding a buyer that wants an ongoing concern... I don't think there is such a buyer.
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Re: Joann Fabrics files for bankruptcy, again; Gordon Brothers is stalking horse bidder

Post by storewanderer »

ClownLoach wrote: February 9th, 2025, 9:28 am
storewanderer wrote: February 9th, 2025, 1:49 am
ClownLoach wrote: February 8th, 2025, 2:00 pm

They will probably move to 3PL (third party logistics) model distribution and close everything. This is a massive movement for retail. Most new distribution centers you see going up are 3PL, for example that new Sprouts DC in Fullerton is operated by the third party. In this model the retailer only has to leave three or four employees for administrative purposes in the office. The 3PL does everything else. You'll see the retailer name on the sign out front, but the name on the door will be a different company. For a company like Joann that probably has a volatile sales calendar with heavy bulky products selling mostly in the second half of the year they're better off owning and operating no distribution at all and leaving it entirely to a 3PL.
Grocers have gone back and forth on that type of a model for years.

So you are thinking Jo Ann will just shift this Visalia warehouse to 3PL, or set up a new warehouse somewhere else?

This newspaper supposedly in Visalia seems to think the warehouse is closing outright. https://www.visaliatimesdelta.com/story ... 097605007/
I would expect they'll just use a 3PL service elsewhere in a building the 3PL partners own. They'll get part of that shared building and eliminate fixed overhead. They'll now have costs based on what they buy and sell but that is variable so if they experience a slowdown their expenses will slow down too. These 3PL companies can charge by the pallet, box, etc. if the business wants to. Or the retailer owns and builds the warehouse but turns it over to a 3PL service to staff and operate.

All of this of course is contingent on Joann funding a buyer that wants an ongoing concern... I don't think there is such a buyer.
I think this is a sign of no buyer...
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Re: Joann Fabrics files for bankruptcy, again; Gordon Brothers is stalking horse bidder

Post by ClownLoach »

storewanderer wrote: February 9th, 2025, 9:57 am
ClownLoach wrote: February 9th, 2025, 9:28 am
storewanderer wrote: February 9th, 2025, 1:49 am

Grocers have gone back and forth on that type of a model for years.

So you are thinking Jo Ann will just shift this Visalia warehouse to 3PL, or set up a new warehouse somewhere else?

This newspaper supposedly in Visalia seems to think the warehouse is closing outright. https://www.visaliatimesdelta.com/story ... 097605007/
I would expect they'll just use a 3PL service elsewhere in a building the 3PL partners own. They'll get part of that shared building and eliminate fixed overhead. They'll now have costs based on what they buy and sell but that is variable so if they experience a slowdown their expenses will slow down too. These 3PL companies can charge by the pallet, box, etc. if the business wants to. Or the retailer owns and builds the warehouse but turns it over to a 3PL service to staff and operate.

All of this of course is contingent on Joann funding a buyer that wants an ongoing concern... I don't think there is such a buyer.
I think this is a sign of no buyer...
I think there is a good core of stores that are the right size and decent format that could make a viable chain. However there are all those old clunkers that are surely a turn-off to any legitimate buyer. Those old House of Fabrics and other buildings are probably only profitable because of the endless deferred maintenance, repair and upgrades that have been a hallmark of Joann. If they were spending the money they needed to, those stores would have been rendered unprofitable and closed.

At the same time, there is something suspicious here. We have seen these other chains in recent times go into "Chapter 22" second bankruptcy and usually the liquidation has already started on filing day. Not at Joann where it is mostly business as usual except they're not selling gift cards.

This tells me they are negotiating with a buyer or buyers but they are not interested in the entire chain or company and would rather piece it out. The only logical deal I see is Apollo making a deal for part of the chain, newer viable stores, and merging it into their Michael's unit as we have speculated before. The question becomes if the price they'll pay and commitment attached exceeds what Gordon Brothers will get from a straight liquidation.

The problem I see is that there are plenty of situations where they wouldn't need both stores and maybe the Michael's should not be kept because it is too old or small. So you start to get some flavors of Sears-Kmart in here with troubled and different businesses combining then failing to integrate (remember the short lived combo concept Sears Grand...)

Maybe another PE firm would make a go at it in a similar way, maybe only keeping 500 or so stores that are a consistent format and profitable.
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Re: Joann Fabrics files for bankruptcy, again; Gordon Brothers is stalking horse bidder

Post by storewanderer »

ClownLoach wrote: February 9th, 2025, 11:23 am
storewanderer wrote: February 9th, 2025, 9:57 am
ClownLoach wrote: February 9th, 2025, 9:28 am

I would expect they'll just use a 3PL service elsewhere in a building the 3PL partners own. They'll get part of that shared building and eliminate fixed overhead. They'll now have costs based on what they buy and sell but that is variable so if they experience a slowdown their expenses will slow down too. These 3PL companies can charge by the pallet, box, etc. if the business wants to. Or the retailer owns and builds the warehouse but turns it over to a 3PL service to staff and operate.

All of this of course is contingent on Joann funding a buyer that wants an ongoing concern... I don't think there is such a buyer.
I think this is a sign of no buyer...
I think there is a good core of stores that are the right size and decent format that could make a viable chain. However there are all those old clunkers that are surely a turn-off to any legitimate buyer. Those old House of Fabrics and other buildings are probably only profitable because of the endless deferred maintenance, repair and upgrades that have been a hallmark of Joann. If they were spending the money they needed to, those stores would have been rendered unprofitable and closed.

At the same time, there is something suspicious here. We have seen these other chains in recent times go into "Chapter 22" second bankruptcy and usually the liquidation has already started on filing day. Not at Joann where it is mostly business as usual except they're not selling gift cards.

This tells me they are negotiating with a buyer or buyers but they are not interested in the entire chain or company and would rather piece it out. The only logical deal I see is Apollo making a deal for part of the chain, newer viable stores, and merging it into their Michael's unit as we have speculated before. The question becomes if the price they'll pay and commitment attached exceeds what Gordon Brothers will get from a straight liquidation.

The problem I see is that there are plenty of situations where they wouldn't need both stores and maybe the Michael's should not be kept because it is too old or small. So you start to get some flavors of Sears-Kmart in here with troubled and different businesses combining then failing to integrate (remember the short lived combo concept Sears Grand...)

Maybe another PE firm would make a go at it in a similar way, maybe only keeping 500 or so stores that are a consistent format and profitable.
If they were to merge part with Michael's, they wouldn't need the California distribution center.

I also wonder if they close some of the lousy stores, will those customers drive further to a staying open store? I tend to think a number will.
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Re: Joann Fabrics files for bankruptcy, again; Gordon Brothers is stalking horse bidder

Post by pseudo3d »

ClownLoach wrote: February 9th, 2025, 11:23 am
storewanderer wrote: February 9th, 2025, 9:57 am
ClownLoach wrote: February 9th, 2025, 9:28 am

I would expect they'll just use a 3PL service elsewhere in a building the 3PL partners own. They'll get part of that shared building and eliminate fixed overhead. They'll now have costs based on what they buy and sell but that is variable so if they experience a slowdown their expenses will slow down too. These 3PL companies can charge by the pallet, box, etc. if the business wants to. Or the retailer owns and builds the warehouse but turns it over to a 3PL service to staff and operate.

All of this of course is contingent on Joann funding a buyer that wants an ongoing concern... I don't think there is such a buyer.
I think this is a sign of no buyer...

The problem I see is that there are plenty of situations where they wouldn't need both stores and maybe the Michael's should not be kept because it is too old or small. So you start to get some flavors of Sears-Kmart in here with troubled and different businesses combining then failing to integrate (remember the short lived combo concept Sears Grand...)

Maybe another PE firm would make a go at it in a similar way, maybe only keeping 500 or so stores that are a consistent format and profitable.
Sears Grand was a concept by Sears Roebuck to try to make off-mall stores; even stuff like introducing a food department was all Sears' idea. With the merger that kind lost focus (Sears Essentials was SHLD, though) and in the end robbing the chain blind was what killed it. But enough on that...

My local Jo-Ann Fabrics is an older store with the 1990s-era logo and has been there since the early 1990s (Cloth World) but in an old building. If they were to merge with Michaels, there's one not TOO far away, but there's no other hobby/craft/fabric stores in that part of town.
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