Michaels buys Joann brand, plans to expand crafting supply to meet demand

Michaels has acquired the intellectual property and private label brands of bankrupt craft and fabric retailer Joann, including Big Twist yarns, to expand its product offerings and customer base. The acquisition will add over 600 products across categories like fabric, sewing supplies, and sewing machines, with Michaels already increasing fabric selections in stores and online to meet rising demand, as website searches for fabric have increased 77% in the last year. This move aims to solidify Michaels' position as a leading destination for crafting supplies in North America following Joann's closure of all 790 stores after filing for bankruptcy in January.

Analysis

Michaels is strategically expanding its market presence and product assortment through the acquisition of Joann's intellectual property and private label brands, including popular lines like Big Twist yarns. This transaction, announced Thursday, will integrate over 600 products across key crafting categories such as fabric, quilting, sewing supplies, sewing machines, and yarn into Michaels' offerings. The move is a direct response to rising consumer demand, evidenced by a significant 77% year-over-year increase in searches for fabric on Michaels' website. Michaels is proactively enhancing its inventory, already boosting fabric selections in over 680 stores with plans for an additional 280 stores this year, and adding new Brother and Singer sewing machines. This acquisition positions Michaels to absorb the customer base of Joann, a long-standing retailer which, after 80 years, filed for bankruptcy in January and subsequently announced the closure of all 790 of its stores. By redirecting Joann's online traffic and offering a curated product assortment, Michaels aims to solidify its status as the leading destination for crafting supplies in North America, capitalizing on the void left by a major competitor.

Key Decisions for Investors

• Investors should recognize this acquisition as a significant opportunity for Michaels to capture substantial market share and benefit from Joann's established brand loyalty, particularly in the fabric and sewing segments where demand appears robust.
• Monitor Michaels' execution on integrating Joann's product lines and scaling its expanded offerings across its store network, as success here is pivotal to realizing the full financial benefits of the acquisition and the reported 77% surge in fabric search interest.
• Assess the competitive landscape post-consolidation; while Michaels strengthens its position, the long-term impact will also depend on its ability to retain Joann's customer base and manage the operational expansion effectively.