Joann Store Closures Will Target the Majority of Its Locations

Joann has revealed plans for store closures after the fabrics and crafts retailer filed for bankruptcy earlier this year. The struggling specialty chain will shutter roughly 500 locations as it continues to search for a path to long-term success. The closures will cover stores in all 50 states and result in lost jobs for employees of the locations.

Joann said this effort will help with “right-sizing our store footprint.” This is an action the floundering fabric seller desperately needs to take as its store count has inflated to about 800 locations. With specialty retailers suffering the effects of inflation, it makes sense Joann needs to shrink its operations.

How This Affects the Joann Bankruptcy

Adjusting the size of its footprint also helps Joann with its bankruptcy filing. It alleviates the costs of operating non-profitable locations, making the chain more attractive to prospective buyers. Bankruptcy filings have already revealed that Joann is courting potential acquirers and wants to make itself as presentable as possible.

Joann blames its bankruptcy on inventory issues. The company notes supply chain problems left its shelves bare as some popular products stopped being made and others saw limited supply. These issues are further arguments in favor of the store closures.

Are Retailers Still Worth Investing In?

Specialty retailers offer products to a niche customer base, leaving them more open to the effects of economic turmoil. Many of their clientele are hobbyists, buying their products for fun rather than out of necessity. These activities are the first to suffer when inflation hampers luxury spending.

Department stores, on the other hand, focus on the type of products consumers need. This insulates them from the volatility inflation causes for specialty retailers, leaving them as potential investment candidates for traders. Walmart (WMT) and TJX Companies (TJX) are some of the best picks with Strong Buy ratings. However, TJX offers a better upside potential at 10.96% compared to WMT’s 1.27%.

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