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.
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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.