Everything is on sale at a Joann’s store just north of New York City.
In the sewing section, some shopping carts have all but disappeared under bolts of cotton, tulle, and fleece. But the mood is hardly festive. The busy atmosphere and steep discounts are signs of a sad ending for a beloved institution. Or, as one dark-haired young shopper puts it: “It’s a bummer.”
Last month, Joann Fabric and Crafts, a fixture of American shopping for generations, 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. The company is in the midst of its second bankruptcy in less than a year.
Joann’s isn’t the only retail chain that has failed lately—Party City and clothing shop Forever 21 have both filed for bankruptcy. But the demise of Joann’s hit a nerve, and an army of devoted staffers and customers have shared their grief in a wave of online tributes.
In heartfelt videos posted on Instagram and Facebook, head office employees choke up recalling the lunch hours spent crocheting with their teams. Customers wax nostalgic about past mother-daughter projects and long Saturday afternoons at Joann, and several fans share intense “last haul” videos, scoring images of empty shelves with melancholy pop songs.
“Joann is f—ing closing,” said one young tear-stained shopper in a TikTok post.
“No shade to Michael’s or Hobby Lobby or anything like that,” she says, referring to the store’s closest competitors. “But Joann feels like home.”
The emotional farewells, however, have been accompanied by murder-mystery-style sleuthing about how the brand reached this point. In the late 1990s, Joann was the largest craft brand in the U.S., and became a Fortune 1000 company for two years during the pandemic, only to lose 99% of its value between 2021 and 2024. “I’m baffled as to how they managed to fail,” says Diana McDonough, a longtime customer and member of the Ohio Valley Quilting Guild.
In a statement published when the company filed for bankruptcy this year, Joann attributed the move to “significant and lasting challenges in the retail environment” and its “financial position and constrained inventory levels.”
Former employees and vendors who spoke to Fortune have theories about what happened. For many, the answer to the question “Who killed Joann?” is simple: Leonard Green. In 2011, the L.A.-based private equity company took Joann private for $1.6 billion in a leveraged buyout that saddled the company with significant debt.
But some say that debt alone doesn’t tell the whole story. They point to long-running cultural headwinds, staffing choices that created a dearth of workers in a customer-service-heavy industry, failure to respond to surprisingly tough competition, a revolving door of CEOs, and overconfidence sparked by a pandemic boom.
Joann Fabrics and Leonard Green & Partners declined to comment for this story.
“They really did this to themselves,” says Alan Porter, a former district manager who worked at Joann for 16 years. “Because the business is there.”
A cultural relic
Joann’s founders—two German immigrant families in Cleveland—likely never imagined their business would become as big as it did.
They launched the specialty store in 1945 as Cleveland Fabric Shop and later renamed it Joann, combining the first names of daughters from both families: Joan and Jacqueline Ann. (For many years, the company went by Jo-Ann Stores.) By 1963, Joann had 18 locations. In 1969, the fabric chain went public.
Virtually everything about our relationship with clothes has changed since Joann’s early days. At one time, sewing machines were a mainstay of American households, and most women learned to sew—but that all changed with the women’s movement, globalization, and the rise of fast fashion. Leaving aside “tradwives” and Etsy shop owners, most people now sew for leisure, not out of necessity. “How many young women are leaving college and their college graduation gift is a sewing machine?” says Lori Kendall, a senior lecturer of management at Ohio State University’s business school.
A larger pivot within the U.S. retail climate to e-commerce and big-box stores has also made it harder for a relatively small company like Joann to compete with behemoths like Amazon and Walmart. Along with the decline in the popularity of sewing, that shift created a “double whammy” for Joann, says Kendall.
New pressures and an unsolicited bid
Joann entered the 21st century as a family-run business, but not always a thriving one.
In 2006, the company hired Darrell Webb, who had been president of grocer Fred Meyer, to take over as the brand’s first non-family CEO. At that time, the company was struggling with uneven sales and too much inventory. “We had stores that weren’t clean, and he came in and brought this tremendous discipline, not only to the corporate culture but to the stores’ culture,” says an executive who worked at Joann at the same time as Webb but asked to remain anonymous to protect his privacy. Webb, he says, brought sparkling restrooms and tight inventory control: “That was a very positive shot in the arm.”
Alan Porter, who worked at Joann for 16 years, beginning as a store manager around 2004 and leaving as a Florida district manager in 2020, agrees. He credits Webb with setting Joann on what could have been a sustainable path. Webb and his leadership team did that largely by “getting back to basics,” Porter tells Fortune, and right-sizing the stores’ overgrown retail footprint. The CEO talked to store staff across the country, too, Porter says, learning how to make Joann a mecca for its core audience: sewers.
Fortune could not reach Webb for comment.
But Webb stepped down from his role in 2011 and took a seat on the board after Joann accepted an unsolicited bid from Leonard Green & Partners to take the company private. That $1.6 billion leveraged deal left the company with a mountain of debt—the remnants of which would bog it down for years—and meant Joann would pay steep annual management fees.
In the best-case scenario, private equity firms provide an injection of cash that allows a company to grow and create jobs before the firm finds an exit—like a sale or an IPO—and cashes out with a decent return. But timing, market conditions, and interest rates don’t always cooperate. Making matters worse, buyouts are made with funds borrowed against the company’s assets, meaning a company like Joann—which had no debt in 2010 and hit a record-high stock price that year—can find itself severely overleveraged and forced to raise prices or cut costs, including labor, to survive. If the market turns, or a company is poorly managed, and refinancing becomes harder, paying down debt can prove impossible.
“It may make the individuals rich at the time,” Chad Zipfel, a finance lecturer at Ohio State University’s Fisher School of Business, says of leveraged buyouts. “But it often portends future hurt.”
The Joann experience changes
Leonard Green initially looked like the right answer, according to the former executive who remembers discussions from that time. As private equity firms went, this person says, the PE firm was known for being hands-off, which was appealing.
Joann initially maintained the close-knit culture instilled by the family-run firm even after its PE acquisition, the former executive recalls. However, that eroded with time. One major culture shock came when then-CEO Jill Soltau, who had not previously worked in craft retail, hired consultants from McKinsey to analyze the workforce, which led to layoffs, he recalls. (Soltau did not respond to Fortune’s request for comment.) Between 2011 and 2023, nine executives rotated through the CEO office, including Webb and two sets of interim co-chiefs.
Porter also says that the company began reducing headcount inside stores in the 2010s to save on payroll costs, which led to a cascade of issues.
Unlike cans of soup that get restocked by the caseload, fabric often must be measured by employees at a cutting counter. One customer might need half a yard from six different heavy bolts, and the next person could have an even more complicated sewing project, Porter explains. When his stores didn’t have enough staff on hand, fabric bolts piled up at the cutting counter, and customers faced 45-minute-long wait times.
Elizabeth Caven, an Ohio-based crafts business investor who is also a vendor at Joann, adds that the sewing-obsessed staff were “one of the reasons why originally you would want to go into the store.”
“Usually, while the cutting process is happening, there’s a conversation: ‘What are you making?’ ‘What else do you need to go with this?’” Joann’s associates could make invaluable suggestions, she explains. But finding those helpful employees became “hit or miss,” she says.
Caven noticed staffing issues of another kind as well. In the process of pitching a handheld pattern projector to the company, she was stunned to discover that a head buyer had never seen paper patterns outside of their packaging. “The higher up in the company that you would go, the less there was an understanding of what the customer actually wanted to do,” she says.
Meanwhile, in the late 2010s, Hobby Lobby began expanding across the country, offering craft supplies and a limited selection of fabric. The chain had started in Oklahoma City in the 1970s and was a regional competitor for decades.
Hobby Lobby’s rise as a national rival was the tipping point for Joann’s decline, according to the former executive. The retailer was family-owned, he notes, so it wasn’t facing the same financial pressures as Joann. It didn’t have hundreds of millions in debt to worry about, or management fees. Meanwhile, it had less emphasis on labor-intensive sewing requests, and its goods were often cheaper. The famously Christian and mission-driven store quickly stole market share from Joann, which responded with more cost-cutting, further impacting the customer experience, which created a self-perpetuating cycle.
Pandemic boom and bust
After a rough few years, Joann’s fortunes changed again.
Entering 2020, the chain was still in debt to the tune of $900 million, which Moody’s flagged as distressed. But in the first nine months of that year, revenue reached $1.9 billion, representing nearly 25% year-over-year growth, according to its subsequent IPO filing. COVID-19 lockdowns that kept people indoors had sparked a crafting renaissance.
It wasn’t just amateurs who had found Joann’s, then-CEO Wade Miquelon told Fortune in 2021. The brand also attracted side-hustle sellers and small businesses. “Fundamentally there has been a shift for people who want to do more do-it-yourself projects,” he said.
With sales soaring, Leonard Green saw an opportunity to exit. The private equity firm put the company back on the market that year in a public offering that raised $131 million, with Leonard Green remaining the majority shareholder.
But just a year later, it was clear that what looked like a new era for the crafting store was in fact more of a “blip,” the executive who asked to remain anonymous said. Joann’s pandemic boom went bust, and the store once again belonged solely to its most dedicated hobbyists. With sales in the now-public company plummeting year over year, Joann’s share price dropped below a dollar in 2024, triggering a Nasdaq delisting and its first bankruptcy last April.
Miquelon, who resigned in 2023, did not respond to Fortune’s request for comment.
To outsiders, says OSU professor Zipfel, it appears that Joann’s CEO fell victim to a common psychological trap. “When times are good, we think they’ll always be good,” he says. “It’s hard as a finance leader to say: ‘Hey everyone, let’s pull back a little bit. Let’s not go so heavy into hiring and assuming these spending trends will continue.’”
The store also failed to take measures such as adding subscriptions or creative services, for example, that may have helped it to retain its pandemic-rush customers.
Last year, Joann struggled to keep its shelves stocked, which is not uncommon after a bankruptcy. Suppliers often worry about sending more products to a shaky business, unsure whether they will get paid. In November of 2024, news broke that Joann was looking for rebates from vendors.
Two months later, the store declared a second Chapter 11 bankruptcy, and was eventually bought by a liquidator.
“It’s quite sad,” says Caven. “They were clearly the category leader.”
South Korea’s Constitutional Court on Friday upheld President Yoon Suk Yeol’s impeachment over his disastrous martial law declaration, voting unanimously to strip him of office for violating the constitution.
Yoon, 64, was suspended by lawmakers over his Dec. 3 attempt to subvert civilian rule, which saw armed soldiers deployed to parliament. He was also arrested on insurrection charges as part of a separate criminal case.
His removal triggers fresh presidential elections, which must be held within 60 days.
“Given the serious negative impact and far-reaching consequences of the respondent’s constitutional violations… (We) dismiss respondent President Yoon Suk Yeol,” said acting court President Moon Hyung-bae.
The decision was unanimous by all eight of the court’s judges, who have been given additional security protection by police with tensions high and pro-Yoon supporters rallying in the streets.
Yoon’s actions “violate the core principles of the rule of law and democratic governance, thereby undermining the constitutional order itself and posing a grave threat to the stability of the democratic republic,” the judges said in their ruling.
Yoon’s decision to send armed soldiers to parliament in a bid to prevent lawmakers from voting down his decree “violated the political neutrality of the armed forces and the duty of supreme command.”
He deployed troops for “political purposes”, the judges said, which “caused soldiers who had served the country with the mission of ensuring national security and defending the country to confront ordinary citizens.”
“In the end, the respondent’s unconstitutional and illegal acts are a betrayal of the people’s trust and constitute a serious violation of the law that cannot be tolerated from the perspective of protecting the Constitution,” the judges ruled.
Impeached
Yoon is the second South Korean leader to be impeached by the court after Park Geun-hye in 2017.
After weeks of tense hearings, judges spent more than a month deliberating the case, all while public unrest swelled.
Police raised the alert to the highest possible level Friday, enabling the deployment of their entire force. Officers encircled the courthouse with a ring of vehicles and stationed special operations teams in the vicinity.
Anti-Yoon protesters cried, cheered and screamed as the verdict was announced. Some jumped and shook each other’s hands in joy, while others hugged people and cried.
Outside Yoon’s residence, his supporters shouted and swore, with some bursting into tears as the verdict was announced.
Yoon, who defended his attempt to subvert civilian rule as necessary to root out “anti-state forces”, still commands the backing of extreme supporters.
At least two staunch Yoon supporters—one in his 70s and the other in his 50s—have died after self-immolating in protest of the controversial leader’s impeachment.
Embassies—including the American, French, Russian and Chinese—have warned citizens to avoid mass gatherings in connection with Friday’s verdict.
The decision shows “first and foremost the resilience of South Korean democracy,” Byunghwan Son, professor at George Mason University, told AFP.
“The very fact that the system did not collapse suggests that the Korean democracy can survive even the worst challenge against it—a coup attempt.”
‘Highly unlikely’ to reinstate
South Korea has spent the four months since Yoon declared martial law without an effective head of state, as the opposition impeached Yoon’s stand-in—only for him to be later reinstated by a court ruling.
The leadership vacuum came during a series of crises and headwinds, including an aviation disaster and the deadliest wildfires in the country’s history.
This week, South Korea was slammed with 25 percent tariffs on exports to key ally the United States after President Donald Trump unveiled global, so-called reciprocal levies.
Since December, South Korea has been “partially paralysed—it has been without a legitimate president and has been challenged by natural disasters and the political disaster called Trump,” Vladimir Tikhonov, Korean Studies professor at the University of Oslo, told AFP.
Yoon also faces a separate criminal trial on charges of insurrection over the martial law bid.
U.S. stocks tumbled to one of their worst days of the year after the Federal Reserve hinted Wednesday it may deliver fewer shots of adrenaline for the U.S. economy in 2025 than earlier thought.
The S&P 500 fell 2.9%, just shy of its biggest loss for the year, to pull further from its all-time high set a couple weeks ago. The Dow Jones Industrial Average lost 1,123 points, or 2.6%, and the Nasdaq composite dropped 3.6%.
The Fed said Wednesday it’s cutting its main interest rate for a third time this year, continuing the sharp turnaround begun in September when it started lowering rates from a two-decade high to support the job market. Wall Street loves easier interest rates, but that cut was already widely expected.
The bigger question centers on how much more the Fed will cut next year. A lot is riding on it, particularly after expectations for a series of cuts in 2025 helped the U.S. stock market set an all-time high 57 times so far in 2024.
Fed officials released projections on Wednesday showing the median expectation among them is for two more cuts to the federal funds rate in 2025, or half a percentage point’s worth. That’s down from the four cuts expected just three months ago.
“We are in a new phase of the process,” Fed Chair Jerome Powell said. The central bank has already quickly eased its main interest rate by a full percentage point to a range of 4.25% to 4.50% since September.
Asked why Fed officials are looking to slow their cuts, Powell pointed to how the job market looks to be performing well overall and how recent inflation readings have picked up. He also cited uncertainties that will require policy makers to react to upcoming, to-be-determined changes in the economy.
While lower rates can goose the economy by making it cheaper to borrow and boosting prices for investments, they can also offer more fuel for inflation.
Powell said some Fed officials, but not all, are also already trying to incorporate uncertainties inherent in a new administration coming into the White House. Worries are rising on Wall Street that President-elect Donald Trump’s preference for tariffs and other policies could further juice inflation, along with economic growth.
“When the path is uncertain, you go a little slower,” Powell said. It’s “not unlike driving on a foggy night or walking into a dark room full of furniture. You just slow down.”
One official, Cleveland Fed President Beth Hammack, thought the central bank should not have even cut rates this time around. She was the lone vote against Wednesday’s rate cut.
The reduced expectations for 2025 rate cuts sent Treasury yields rising in the bond market, squeezing the stock market.
The yield on the 10-year Treasury rose to 4.51% from 4.40% late Tuesday, which is a notable move for the bond market. The two-year yield, which more closely tracks expectations for Fed action, climbed to 4.35% from 4.25%.
On Wall Street, stocks of companies that can feel the most pressure from higher interest rates fell to some of the worst losses.
Stocks of smaller companies did particularly poorly, for example. Many need to borrow to fuel their growth, meaning they can feel more pain when having to pay higher interest rates for loans. The Russell 2000 index of small-cap stocks tumbled 4.4%.
Elsewhere on Wall Street, General Mills dropped 3.1% despite reporting a stronger profit for the latest quarter than expected. The maker of Progresso soups and Cheerios said it will increase its investments in brands to help them grow, which pushed it to cut its forecast for profit this fiscal year.
Nvidia, the superstar stock responsible for a chunk of Wall Street’s rally to records in recent years, fell 1.1% to extend its weekslong funk. It has dropped more than 13% from its record set last month and fallen in nine of the last 10 days as its big momentum slows.
On the winning end of Wall Street, Jabil jumped 7.3% to help lead the market after reporting stronger profit and revenue for the latest quarter than analysts expected. The electronics company also raised its forecast for revenue for its full fiscal year.
All told, the S&P 500 fell 178.45 points to 5,872.16. The Dow Jones Industrial Average dropped 1,123.03 to 42,326.87, and the Nasdaq composite skidded 716.37 to 19,392.69.
In stock markets abroad, London’s FTSE 100 edged up by less than 0.1% after data showed inflation accelerated to 2.6% in November, its highest level in eight months. The Bank of England is also meeting on interest rates this week and will announce its decision on Thursday.
In Japan, where the Bank of Japan will wrap up its own policy meeting on Friday, the Nikkei 225 slipped 0.7%. That was despite a 23.7% jump for Nissan Motor Corp., which said it was in talks on closer collaboration with Honda Motor Co., though no decision had been made on a possible merger. Honda Motor’s stock lost 3%.
Nissan, Honda and Nissan alliance member Mitsubishi Motors Corp. agreed in August to share components for electric vehicles like batteries and to jointly research software for autonomous driving to adapt better to dramatic changes in the auto industry.
U.S. President Donald Trump fired the “opening salvo” of his second trade war on Tuesday as a new 10% levy on Chinese goods came into effect.
Beijing retaliated soon after. China will impose a 15% tariff on imports of U.S. coal and liquefied natural gas, and a 10% tariff on crude oil, agricultural machinery, large engine cars, and pickup trucks, according to a statement from the Ministry of Finance.
Separately, China’s State Administration for Market Regulation said it would launch an investigation into Google for alleged anticompetitive practices. The SAMR’s statement did not elaborate on how Google may have violated the law.
Google withdrew its search product from China in 2010 because of concerns over censorship, yet it still maintains offices in the country for its advertising business.
China is increasingly flexing its antitrust muscles against non-Chinese tech companies. In 2023, the SAMR scuttled a deal between Intel and Tower Semiconductor by failing to give timely approval for the merger. Then, last December, China announced it was launching an anti-monopoly probe into Nvidia over its acquisition of Mellanox Technologies.
Finally, China designated Calvin Klein owner PVH Corp. and biotech company Illumina as “unreliable entities,” a designation that could lead to punitive actions by Beijing. Last September, Beijing said it would investigate PVH for allegedly boycotting cotton grown in Xinjiang.
How are markets reacting to new tariffs?
On Monday, the U.S. delayed the imposition of new tariffs on China and Mexico by 30 days. Trump said he held off on the new taxes after both countries agreed to deploy troops to reinforce their respective borders with the U.S.
Trump also said that he could speak to Chinese President Xi Jinping as soon as this week. The two leaders last spoke via phone on Jan. 17, days before Trump took office.
Asian markets rose on Tuesday, though gains were pared back slightly as both U.S. tariffs came into effect, followed by China’s announced retaliation. Investors were particularly optimistic about Chinese tech companies, with the Hang Seng Tech Index rising by almost 4.5%.
The CSI 300 index, which tracks the top 300 companies traded in Shanghai and Shenzhen, dipped by 0.28% in early trading on Wednesday. Markets in mainland China have been closed since Jan. 28 owing to the Chinese New Year holiday.
Why is Trump imposing new tariffs on China?
Trump has suggested that the new 10% tariff is the result of China not doing enough to control the flow of fentanyl into the U.S. Beijing and Washington have had some cooperation over fentanyl in recent years, including a counter-narcotics working group that was launched in January last year.
On Tuesday, China’s Ministry of Finance accused the U.S. of violating the rules of the World Trade Organization, and said new tariffs wouldn’t help the U.S. resolve its own problems.
The new Trump tariff could subtract 0.4 percentage points from China’s 2025 GDP growth, Larry Hu, Macquarie’s chief China economist, estimated in a note published Monday. Hu calculated that new stimulus of 500 billion yuan ($70 billion) could offset the drag on growth.
Correction Feb. 5, 2025: This piece has been updated with the latest CSI 300 benchmark movements as an earlier version incorrectly stated that mainland Chinese markets opened on Feb. 4
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