Episode 41: The Private Equity Playbook — Joann Fabrics
JOANN (forever “Joann Fabrics” in our hearts) didn’t just “go out of business,” it was engineered to collapse. In this episode of our series The Private Equity Playbook, host Manpreet Kaur Kalra is joined by collaborator Anna Canning to trace how a beloved craft-store chain went from being a hub for makers to a debt-loaded financial instrument.
This isn’t a story about changing consumer tastes or “retail trends.” It’s actually about debt, extraction, and what happens when the logic of Wall Street collides with the fabric of daily life.
From JOANN’s origins in Cleveland’s garment-manufacturing era to its pandemic boom and rapid collapse, we break down what happens when private equity enters the picture: a leveraged buyout that loads a company with debt, management fees that drain resources, and cost-cutting that hollows out the very labor and expertise the business depends on. Along the way, we connect JOANN’s downfall to the rise of fast fashion, the history of DIY economics, and the way private equity continues to enter our lives.
“This global race to the bottom didn’t happen by accident, it was the predictable outcome of an economic model that treats labor as a cost to be minimized.” – Manpreet Kaur Kalra
In this episode, we explore:
How Joann Fabrics went from zero debt to total collapse after a private equity-led leveraged buyout loaded the company with over a billion dollars in obligations and ongoing management fees.
What a leveraged buyout actually is, and how private equity firms use company debt, not their own money, to finance acquisitions and extract returns.
The history of U.S. garment manufacturing, from unionized apparel hubs like Cleveland to offshoring, fast fashion, and the shift of sewing from necessity to hobby.
How private equity hollowed out JOANN’s core strengths (the expertise of its employees) while using a brief boom during the pandemic to obscure deep structural damage, and how JOANN’s collapse rippled outward to destabilize adjacent industries.
The bipartisan political support underpinning private equity’s takeover of our lives and why consumer choice can’t solve this.
“Private equity bosses love to gamble with other people’s money. And one of the biggest sources of that money is public pension funds.” – Anna Canning
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JOANN, Our Lady of Crafts (and Private Equity)
JOANN (formerly Joann Fabrics) was acquired by private equity firm Leonard Green & Partners in 2010 through a leveraged buyout, meaning the purchase was largely financed with debt placed onto JOANN’s own balance sheet. Overnight, the company went from having no debt to carrying more than a billion dollars in obligations, along with millions in annual management fees owed to its new owners. From that point on, JOANN wasn’t just selling fabric and craft supplies, it was also servicing massive loans.
“When you look at what happened with JOANN, it becomes clear that we’re not just talking about one struggling retailer or one bad investment strategy. We’re talking about a shift in how business is done.” – Manpreet Kaur Kalra
That debt burden reshaped every decision the company made – driving cost-cutting, layoffs, understaffed stores, and a focus on short-term financial performance over the labor and expertise that made JOANN work. This ultimately left the company far more vulnerable to economic shocks. Even strong sales during the pandemic couldn’t offset the weight of the debt. After a brief IPO in 2021 that left private equity in control, declining sales and rising interest rates pushed JOANN into back-to-back bankruptcies, ultimately ending in the closure of all stores and the loss of thousands of jobs.
“The race to the bottom is a defining feature of capitalism, corners have been cut in business ages before the concept of private equity was ever dreamed up. In the case of private equity, what we see is everything just getting reduced to the financial variables.” – Anna Canning
Private Equity, Bankruptcies, and Job Loss
According to findings from the Private Equity Stakeholder Project (PESP), “private equity firms played a role in 70% of large U.S. corporate bankruptcies in the first quarter of 2025 alone despite private equity making up just a fraction of the overall economy,” with the closure of Joann Fabrics resulting in 19,000 job losses. PESP has created a bankruptcy tracker that also lists the number of layoffs accompanying each. See here.
“Large bankruptcies, which are overrepresented among private equity-owned companies, disproportionately affect workers and local economies.” – Private Equity Stakeholder Project
The Leveraged Buyout
Private equity firms favor leveraged buyouts because they allow them to control large companies with relatively little of their own capital, magnifying potential returns if the investment succeeds. At the same time, much of the financial risk is shifted onto the acquired company, its workers, operations, and long-term stability, rather than the investors themselves.
“It’s not like we can just opt out of private equity’s takeover of our economy and our society. This isn’t an issue where consumer choice can solve the problem. These massive companies are so intertwined with our lives and the infrastructure on which we rely, that there’s really not an option to opt out.”
– Manpreet Kaur Kalra
Related Listens
Art of Citizenry Episode 39: The Private Equity Playbook – Philz Coffee
Art of Citizenry Episode 34: Big Beautiful Bill – How Private Equity is Profiting from Immigrant Detention
Art of Citizenry Episode 27: The Growing Role of Private Equity in Fashion
Select Articles Referenced in this Episode:
Can We Blame Private Equity for Everything? - The Nation
How Joann Fabrics went from a cult-favorite retail darling to a bankruptcy disaster - Fortune
Joann store closures among many Leonard Green and Partners bankruptcies - Private Equity Stakeholder Project PESP
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