JOANN customers criticized the craft retailer's decision to stop accepting gift cards while its stores were still operating going-out-of-business sales, adding another source of frustration during the company's nationwide liquidation.
The dispute came after JOANN announced that all of its remaining stores would wind down following a bankruptcy auction. The retailer had entered Chapter 11 protection for a second time in January 2025 after previously restructuring in 2024.
JOANN's Bankruptcy Ended in a Nationwide Liquidation
Following a sale process and auction, GA Group and JOANN's Prepetition Term Loan Agent were selected as the winning bidders for substantially all of the company's assets. The transaction called for the bidders to wind down operations and conduct going-out-of-business sales across the chain, subject to Bankruptcy Court approval.
The outcome marked a significant escalation from JOANN's earlier plan to close roughly 500 underperforming locations. By February 23, 2025, the company had announced that all remaining stores would ultimately close. Reuters reported that JOANN operated about 800 stores at the time and employed approximately 19,000 people across 49 states.
JOANN said its leadership, board, advisers and legal partners had pursued alternatives that could have kept the business operating but that the winning bid resulted in an orderly wind-down instead.
Gift Cards Became a Flash Point for Customers
However, some customers were taken aback by the policy change that prohibits gift cards, even while stores are still open for the company's last promotions.
Please know how deeply disturbed I am that you disabled our gift card functionality. Your company accepted payment but will not provide the goods promised in exchange, regardless of whether you are shutting down or not. Somebody commented, "Wrong," on the chain's Facebook post.
"So upset you cut off gift cards so quickly and with little notification," a different person said.
"Silently refusing Gift cards all of the sudden while closing permanently is DISGUSTING behavior," a user said.
As the shutdown announcements progressed, Joann's disclosed in a frequently asked questions page that it would cease taking gift cards after February 28. Previous messaging had indicated that gift cards could not be used online and could only be redeemed in-store. The company also made liquidation purchases final, eliminating normal returns.
That February 28 deadline gave customers only a short window after the nationwide wind-down announcement to use remaining balances. "It was ridiculous and unfair to give customers thirteen days to redeem a gift card. I would have spent more than the gift card balance if I hadn't gone out and spent zero dollars," one customer remarked.
Why the Gift-Card Rules Changed During Liquidation
The policy reflected the unusual conditions surrounding a retailer in bankruptcy and liquidation. JOANN's customer guidance later stated that stores could no longer accept or honor gift cards, store credit, coupons, returns, price matching or discounts because of a federal court order.
The company's FAQ also said online purchases had been disabled as of March 5, leaving customers to obtain merchandise directly from local stores while inventory remained available.
For consumers, the important distinction was that a gift card did not function like cash once the bankruptcy process restricted redemption. Customers holding balances after the cutoff therefore faced a different situation from shoppers simply waiting for a larger liquidation discount.
JOANN Was Part of a Broader Retail Restructuring Wave
JOANN's shutdown came during a period in which several major U.S. retailers were reducing their physical footprints, although the circumstances differed from company to company.
Walgreens Boots Alliance disclosed plans to close approximately 900 to 1,000 stores under a footprint-optimization program by the end of fiscal 2027. Including locations already approved for closure under an earlier cost-management program, the company expected total closures of roughly 1,200 to 1,300 stores over the period.
Kohl's separately announced that 27 underperforming stores would close by April 2025. Party City, meanwhile, filed for Chapter 11 bankruptcy in December 2024 and began winding down roughly 700 U.S. stores.
JOANN's case was more sweeping: instead of selectively shrinking its store base, the bankruptcy auction ultimately led to the liquidation of the entire chain. For customers, the short gift-card redemption window became one of the most visible consequences of that transition.
0 Comments