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Better tell Michaels and Hobby Lobby then, because I don't think they got your memo. Joann's won the industry consolidation phase in the 80s-90s, but took on a

Better tell Michaels and Hobby Lobby then, because I don't think they got your memo. Joann's won the industry consolidation phase in the 80s-90s, but took on a lot of debt to buy out House of Fabrics, So-Fro and others. They had almost completely retired that debt by the mid 2000s and would be sitting pretty today, but sold out to private equity in 2010. The PE did the usual LBO shit of borrowing a the purchase money and then transferring the debt to the company. Boom, one billion in the hole, buyers strip anything of value, no coming back from that. I'll miss them because touching fabric is important. fabric ain't like resistors, one 100ohm feels pretty much like the next, and Joanns covered quilters, apparel sewers and upholstery/decor sewers pretty well.

alephnerd 2y ago
> Better tell Michaels and Hobby Lobby then, because I don't think they got your memo. Michael's is owned by Apollo Group. Hobby Lobby is family owned, but unlike Joann's and Michael's they wouldn't take long term leases or purchase the stores themselves, and concentrate on higher margin furniture. > The PE did the usual LBO shit of borrowing a the purchase money and then transferring the debt to the company Yep, but who else was interested in investing in Joann's in the 2010s? There were way better asset classes like Pharma, Finance, and Tech that you could invest in and get better returns. LBOs are basically investors of last resort - this is where zombie companies (which Joann's absolutely was) go to die. > I'll miss them because touching fabric is important And we're lucky that local hobbyist shops still exist along with local fabrics shops. They can provide a better customer experience than a big box like Joann's, Michael's, or Hobby Lobby with decent margins.
- Blackthorn 2y ago
  > Yep, but who else was interested in investing in Joann's in the 2010s? This is begging the question. At no point did Joann's require investment.
  - alephnerd 2y ago
    > At no point did Joann's require investment. Inventory, salaries, rent, mortgages on stores, ERP, expansion, etc all cost money. Yet if revenue remains flat or grows at a rate that is lower than the above inputs, you absolutely need capital.
    - Blackthorn 2y ago
      That's just restating the thesis. It's still begging the question.
  - hollerith 2y ago
    How do you know? Have you gone over their financial statements?
    - shitecoin 2y ago
      [flagged]
      - lotsofpulp 2y ago
        Anyone who owns equity might want to sell it at any point in time for myriad reasons, regardless of what is on financial statements or “need for investment”.
        hollerith 2y ago
        That argument does not apply in the current case, though, because Joann was being publicly traded [1] when it got bought by private equity in 2011. The management of the publicly-traded company explained, >“We are excited about the prospect of working with Leonard Green & Partners [a private-equity firm] as we further capitalize on opportunities to accelerate the expansion and upgrade of our stores and pursue market share gains,” Darrell Webb, chairman and chief executive of Jo-Ann Stores, said in a statement [1]. [1] https://archive.nytimes.com/dealbook.nytimes.com/2010/12/23/leonard-green-offers-1-6-billion-for-jo-ann-stores/ https://archive.nytimes.com/dealbook.nytimes.com/2010/12/23/...

alephnerd 2y ago

> Better tell Michaels and Hobby Lobby then, because I don't think they got your memo. Michael's is owned by Apollo Group. Hobby Lobby is family owned, but unlike Joann's and Michael's they wouldn't take long term leases or purchase the stores themselves, and concentrate on higher margin furniture. > The PE did the usual LBO shit of borrowing a the purchase money and then transferring the debt to the company Yep, but who else was interested in investing in Joann's in the 2010s? There were way better asset classes like Pharma, Finance, and Tech that you could invest in and get better returns. LBOs are basically investors of last resort - this is where zombie companies (which Joann's absolutely was) go to die. > I'll miss them because touching fabric is important And we're lucky that local hobbyist shops still exist along with local fabrics shops. They can provide a better customer experience than a big box like Joann's, Michael's, or Hobby Lobby with decent margins.

Blackthorn 2y ago
> Yep, but who else was interested in investing in Joann's in the 2010s? This is begging the question. At no point did Joann's require investment.
- alephnerd 2y ago
  > At no point did Joann's require investment. Inventory, salaries, rent, mortgages on stores, ERP, expansion, etc all cost money. Yet if revenue remains flat or grows at a rate that is lower than the above inputs, you absolutely need capital.
  - Blackthorn 2y ago
    That's just restating the thesis. It's still begging the question.
- hollerith 2y ago
  How do you know? Have you gone over their financial statements?
  - shitecoin 2y ago
    [flagged]
    - lotsofpulp 2y ago
      Anyone who owns equity might want to sell it at any point in time for myriad reasons, regardless of what is on financial statements or “need for investment”.
      - hollerith 2y ago
        That argument does not apply in the current case, though, because Joann was being publicly traded [1] when it got bought by private equity in 2011. The management of the publicly-traded company explained, >“We are excited about the prospect of working with Leonard Green & Partners [a private-equity firm] as we further capitalize on opportunities to accelerate the expansion and upgrade of our stores and pursue market share gains,” Darrell Webb, chairman and chief executive of Jo-Ann Stores, said in a statement [1]. [1] https://archive.nytimes.com/dealbook.nytimes.com/2010/12/23/leonard-green-offers-1-6-billion-for-jo-ann-stores/ https://archive.nytimes.com/dealbook.nytimes.com/2010/12/23/...