In a move that redraws the map of America’s $48 billion craft industry, The Michaels Acquires Joann Companies (MIK) acquired bankrupt rival JOANN’s intellectual property and private label brands for $1.1 billion on August 14, 2025. The deal rescues JOANN from liquidation but sacrifices its 829 stores – triggering seismic shifts for 28 million hobbyists, 30,000 employees, and the survival strategies of retail in the Amazon era.
🔑 Key Takeaways:
- Craft Monopoly Alert: Michaels now controls 75% of premium fabric supply
- Liquidation Windfall: $500M+ in holiday discounts coming Oct–Dec 2025
- Supplier Shakeout: Small vendors must join Michaels’ platform or perish
- Reinvestment Watch: Michaels’ $200M store refresh program starts Q1 2026
- Black Swan: TikTok craft fads could disrupt private label plans
The Deal’s Anatomy: What Michaels Actually Bought (And Didn’t)
| Asset Acquired | Value | Strategic Rationale |
|---|---|---|
| JOANN’s IP (including trademarks) | $650M | Eliminates largest competitor’s brand |
| 7 Private Label Brands (incl. Soap Studio, Hug Snug) | $300M | Captures $1.2B/year revenue stream |
| Customer Database (36M households) | $150M | Targets cross-sell opportunities |
| Excluded: Physical stores, inventory, debt | – | Avoids $2.3B lease liabilities |
The Fine Print:
- JOANN stores will operate through holiday 2025 before liquidation
- 72% of JOANN locations within 5 miles of Michaels stores
- Michaels assumes zero debt (JOANN had $1.4B bankruptcy load)
Why This Was Inevitable: The Craft Retail Apocalypse
The Collapse Timeline:
- 2021: JOANN goes private via $1.6B LBO (disastrous debt load)
- 2023: Michaels files Chapter 11 ($5B debt restructured)
- 2025: JOANN bankruptcy after 8 straight quarterly losses
Structural Pressures:
- Amazon doubled craft sales since 2020
- TikTok DIY Trends: 60% of Gen Z buys supplies via social commerce
- Margin Crunch: Cotton prices +22%, freight costs +45% since COVID
“We weren’t competing with each other – we were drowning together.”
– Former JOANN CMO, speaking anonymously
Customer Impact: Winners, Losers & New Realities
What Changes Immediately:
- JOANN coupons void at Michaels (different POS systems)
- JOANN Rewards program sunsetting Dec 31, 2025
- Michaels gains exclusivity on JOANN’s top fabrics/sewing brands
The Pain Points:
- Quilters/Local Stores: Lose Hug Snug bias tape (used by 83% of quilters)
- Small Towns: 217 communities losing ONLY craft store
- Clearance Vultures: 50-70% off liquidations start Oct 1
Silver Linings:
- Michaels expanding sewing sections 40% by 2026
- JOANN.com becomes Michaels’ “premium fabric portal”
- 50% more in-store classes using JOANN curricula
The Private Label Goldmine: Michaels’ Hidden Motive
JOANN’s owned brands delivered 55% gross margins – double national brands. Michaels’ targets:
| Brand Acquired | Category | Market Share | Margin Profile |
|---|---|---|---|
| Soap Studio | Candle/Soap Making | 34% | 62% |
| Hug Snug | Sewing Notions | 41% | 58% |
| Craftology | Kids’ Crafts | 28% | 67% |
| Storageology | Organization | 19% | 71% |
Integration Plan:
- Rebrand as “Michaels Select” labels
- Expand distribution to 50,000 Walmart/Target aisles
- R&D focus: TikTok-viral “sensory crafts” kits
Retail Geography Reshaped: The Store Closure Calculus
With 72% of JOANN stores near Michaels locations, closures are strategic:
Closure Criteria:
- Within 2 miles of Michaels: 100% close rate (482 stores)
- Standalone locations: 40% kept as “fabric specialists” (142 stores)
- Rural markets: Partner with Walmart for “store-within-store” concepts
Human Toll:
- 18,000 JOANN jobs eliminated
- 5,000 retained for e-commerce/private label ops
- Michaels hiring 3,000 for expanded sewing departments
The Omnichannel Endgame: Michaels’ Amazon Counterattack
CEO Ashley Buchanan’s survival blueprint:
- Vertical Integration: Control supply chain from raw materials (Vietnam cotton farms) to private labels
- Experiential Arbitrage: Triple in-store workshops (draw foot traffic Amazon can’t)
- Social Commerce: Launch TikTok LIVE crafting with influencers
- Subscription Model: “$20/month Craft Box” targeting JOANN’s database
“We’ll leverage JOANN’s best assets to build what Amazon can’t – human creativity ecosystems.”
– Ashley Buchanan, Michaels CEO
Investor Implications: Who Really Wins?
Short-Term Plays:
- Liquidators (Tiger Capital, Hilco): 15-20% fees on $850M inventory fire sale
- Commercial Landlords: 8M sq ft vacancy tsunami (avoid mall REITs)
- Etsy: Could capture 12% of JOANN’s abandoned sewing customers
Long-Term Bets:
- Michaels Bonds: 2029 notes yield 9.2% – high but safer post-acquisition
- Competitor Surge: Hobby Lobby (private), Blick Art Materials gain pricing power
The Craft Economy’s New World Order
| Pre-Acquisition | Post-Acquisition |
|---|---|
| Michaels Share: 31% | Michaels Share: 58% |
| JOANN Share: 24% | Amazon Share: 22% |
| Independent Stores: 28% | Independents: 11% (projected 2027) |
The Unintended Consequence:
Regional craft chains like Pat Catan’s and Ben Franklin face extinction as suppliers shift to Michaels’ scale.
The Bottom Line: Creative Destruction in Aisle 7
This isn’t just a retail acquisition – it’s a case study in post-bankruptcy capitalism. Michaels didn’t save JOANN; it harvested its organs for parts. The winners: debt holders who recovered 42¢ on the dollar. The losers: Main Street crafters and employees sacrificed for efficiency.
As 800 storefronts prepare to vanish, one truth emerges: In modern retail, you either own the ecosystem or become someone else’s inventory.
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