How Joann Fabrics Rose from the Ashes of the Pandemic

America’s go-to craft stores, Joann Fabrics came into the year with stride – ending the setbacks of 2020 with eight million new customers and sweeping a net worth of $174 million from profits within a spam of 9 months. As artists stay cooped in their rooms with crafts on their minds, art lovers come crawling in packs to Joann’s door. And with investors clambering to e-commerce sites like Etsy and Shopify, where vendors frequently pursue the chain for material, Joann sees a promising future in light of the company’s opening for public trade. The key to Joann Fabrics’ sudden resurgence: the onslaught of demand for chic, homemade face masks.

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“While JOAN lost $546.6M in its fiscal year ended Feb. 1, 2020 (i.e., before the pandemic began),” Seeking Alpha reports, “preliminary numbers show that the chain made $210.9M to $212.9M in the fiscal year ended Jan. 30, 2021.”

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When Covid-19 began and the nation’s mandate made masks mandatory, online retailers saw a huge market for producing unique, stylish masks for the masses.

Fundamentally there has been a shift for people who want to do more do-it-yourself projects,” Wade Miquelon explains to Fortune in regards to the influx of DIY projects in households due to the pandemic.

Etsy to the Rescue

Face masks soon became a prominent selling point for stores like Etsy, where they made up 14% of total gross merchandise in 2020. In a recent article, Forbes highlighted Michigan retailer, Kimberly Hamlin who sells masks for brides on her Etsy store KimsVintageDesigns. In the piece, she expresses her devotion to the chain saying, “I spent thousands of dollars last year on supplies at Joann.”

The seven decade old fabric chain can equate its comeback almost solely to e-commerce retail sites. With the pandemic closing the doors of countless shops around the globe, retailers turn to Etsy to distribute their goods. According to Forbes, “Etsy jumped 62% last year to 4.3 million, driving sales on the platform to more than double to $10.2 billion.”

The online merchandiser, which first hit the web in 2005, reported to have sold over stunning 60 million products by 2018. Some investors share the same enthusiasm as company who expects a revenue of anywhere from ‏$513 to $536 million, other question whether or not the boost in sales from the pandemic will last.

“While Etsy’s growth in 2021 is likely to decelerate off of last year’s high levels along with the rest of e-commerce,” the site’s CEO Josh Silverman tells CNBC, “we have more conviction than ever to invest in our business for the long-term

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“I think we’re going to see Etsy do a whole lot more growing through acquisition,” says co host of the Motley Fool podcast Fool Live, Matthew Frankel, “The more people that join, I’d say the more buyers and sellers that are in their ecosystem, the more valuable their brand gets.”

The Future of Joann

Prior to 2011, Joann Fabrics was up for public trade. But a $1.6 billion deal put the company in the hands of private-equity firm Leonard Green & Partners. This deal, although, left the company is landmine of debt. After the company’s recent resurgence, the firm saw a golden opportunity to cut ties with Joann and pursue other options in the jungle of the NYSTE.

Joann Fabrics recently made ‏local headlines as an employee joined efforts with a South Florida educator to better student safety. Determined to provide a safe learning environment for the students of her Cutler Bay county school, educator Charlene Garcia-Ponce took to her local Joann’s for get materials to sew mask. She was greeted by Vanessa Fuller who was more than happy to make the mask, free of charge.

As these shops begin to see more business than ever before, Joann racks in the dough as the premium crafts provider. While the company’s presence on Wall Street was rather quiet last Friday – with public offerings starting from $12 – a statement provided by after its IPO ­spoke of the hopes for Joann’s future,

“We believe that the growth of online marketplaces, such as Etsy, eBay, Shopify and other platforms, is driving the expansion of our customer base, and the success of online marketplaces is directly linked to our growth.”

With the sales of the chain’s 867 stores growing a sizable 38%, Joann Fabrics continues to ascend the ladder of worth. Though it’s stay at the New York Stock Exchange was less climactic than the company may have expected, it’s the movers and shakers of online retail that keep the store afloat.

Sources: Market Watch, Motley Fool, CNBC, Forbes, Seeking Alpha

 

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