Joann bankruptcy claims next victim as another company out of business and 1,400 jobs at risk

The collapse of beloved crafts store Joann has pushed one of its major suppliers into bankruptcy.

The gift-wrap maker Design Group Americas (DGA) filed for bankruptcy on Sunday after tariff uncertainty and a pullback in consumer spending pushed it close to the edge.

The bankruptcy of its major customer Joann then crippled the vulnerable business, the company said in filings made to the US Bankruptcy Court in Houston. 

DGA said it had been worn down by a tough economic climate for years, as American consumers have cut back spending on discretionary items such as ribbons and wrapping paper in response to the rising cost of essentials. 

The crafts supplier has around $106 million in unsecured debts, court documents show.   

The company said it plans to sell its assets, including its wrapping paper and sewing-related businesses, as a going concern but wind down its ribbon manufacturing.

In January Joann filed its second bankruptcy in less than a year and shut all of its stores. Orders from Joann made up around $27.4 million, or 5 percent, of DGA’s revenue last year. 

The bankruptcy puts DGA’s more than 1,400 employees across North America, India, Honk Kong, China, the UK and Australia at risk of losing their jobs. 

Design Group Americas has around $106 million in unsecured debts

DGA said the uncertainty of President Trump’s whipsawing tariff policies made it hard to predict import costs.

This hit its profit margins as the business relied on importing materials from a range of international markets. 

DGA’s parent company, IG Design Group, which is based in the UK, sold its stake to financial services firm Hilco Global in May as part of restructuring efforts. 

Hilco has in turn agreed to finance the bankruptcy process with $53 million.

Joann, which operated around 800 stores in almost every state, refused to close stores and consolidate after its first bankruptcy filing last March. 

The blunder plunged them further in to the red, ending in more than $600 million of debt by January. 

‘You must reject leases from unprofitable locations and downsize. They didn’t, and now they are going to liquidate,’ John Bringardner, Head of Debtwire, told DailyMail.com at the time. 

Joann has closed its more than 800 stores following bankruptcy 

The gift-wrap maker Design Group Americas’ CEO Sue Buchta

Joann’s shoppers mourned the loss of the ‘happy place’ following its bankruptcy 

Joann is among a host of retailers to face headwinds after experiencing a pandemic-era sales boom.

Stuck at home Americans bought craft supplies to indulge new or old hobbies in their increased free time.

However, in the years that followed, the surge in home crafting declined and Joann bled revenue.  

Home organization specialist The Container Store suffered the same fate, filing for bankruptcy in December.