A popular retailer now faces unexpected bankruptcy as the company has its FRISK score lowered to 1.
Based on past history, companies that get a 1 have between a 10% and 50% chance of filing for bankruptcy.
Popular retailer Joann is now at risk of Chapter 11 bankruptcy due to the company’s financial struggles.
“Joann is in a financial mess. Not only does it have a huge debt pile and associated interest, it is not profitable at operating level,” GlobalData Managing Director Neil Saunders posted on Retailwire.
CFO Scott Sekella, who is currently one of the company’s two interim CEOs, made the usual upbeat remarks about the company’s strategic turnaround efforts.
“In addition to stabilizing our topline, we remain focused on operating as efficiently as possible,” he said.
“With another quarter of execution of our Focus, Simplify and Grow initiative, we continue to drive operational excellence with our cost cutting initiatives leading to an over delivery on the targeted $200 million of annual cost reductions.”
“The company has only $19.1 million in cash and cash equivalents. Inventory has also dropped by 14.4% which could be the company managing it more carefully and/or Joann having to make choices based on its bank account,” reports TheStreet.
Mark Self, CEO of Vector Textiles stated the following:
“A specialty store specializing in crafts and sewing whose customer base is dwindling, no CEO and $1B in debt…sounds like liquidation time to me,” he added.
Aptos Vice President believes that Joann needs to make changes quickly and that it can look at a key rival for ideas, stating that “Joann would definitely benefit, and potentially quickly, by taking a look at their promotional strategy.”
Other Economy News Today
More massive bank branches in Florida are now closing as more advisories of closures are listed by the OCC.
The following six bank branches are now scheduled to shutter in Florida in the coming weeks:
- Trustco Bank. 1084 Lee Rd, Orlando
- Bank of America. 126 East Olympia Ave, Punta Gorda
- Wells Fargo. 3131 West Hallandale Beach Blvd, Hallandale
- Wells Fargo. 10191 Cleary Blvd, Plantation
- Wells Fargo. 113 South Tennessee Ave, Lakeland
- Wells Fargo. 4901 Tamiami Trail, South Naples
Wells Fargo is also closing additional branches in California soon.
In July, Wells Fargo laid off over 100 employees in the consumer and small business banking division in Orlando.
“Between 2017 and 2021, nine percent of all branches — almost 7,000 locations— shut their doors. Florida had the fourth most closures of any state,” reports Ash Jurberg.
CNBC reports that this trend of bank closures may lead to “banking deserts”, where communities are left without access to a bank or credit union within 10 miles.
“Several studies have shown these communities are more likely to use non-traditional and high-fee lending options such as payday loans and check-cashing services, which increases financial inequities and ends up widening the wealth gap.”
This trend has grown nationwide as traditional banks pivot towards an ever growing digital world.
“Data from S&P Global Market Intelligence shows a total of 1,144 national and regional banks were closed between January 1 and July 31 across 49 states – and firms are pulling out of some areas faster than others,” reports the DailyMail.
“Branches continue to play an important role in the way we serve our customers, and customers continue to value the experiences they have in our branches,” Saul Van Beurden, the bank’s CEO of consumer, small and business banking, said in a statement.
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