Dive Brief:

• The board for craft and arts retailer Joann approved a one-time $400,000 cash retention bonus for its CFO Scott Sekella as it faces speculation of a looming bankruptcy, according to a Thursday filing with the Securities and Exchange Commission. Last May, Sekella was also named co-lead of the interim office of the CEO upon the retirement of Wade Miquelon, the company’s former president and CEO.
• The Hudson, Ohio-based company also expanded its board of directors from six members to seven, appointing Pamela Corrie as a director effective March 13. In association with her appointment as an independent director, Corrie will receive a fixed monthly cash fee of $30,000, according to the filing.
• Sekella’s bonus is subject to repayment if he voluntarily terminates his employment or if his employment is terminated for cause, within six months of the bonus, the company said.

Dive Insight:

A veteran retail executive who has worked at such companies as Under Armour and Crocs as well as Henkel, Pfizer and Ford Motor Company, Sekella joined the arts and crafts provider as its CFO in September 2022, according to a company press release. In taking Joann’s CFO seat, Sekella received an annual base salary of $425,000 as well as a sign-on bonus of $235,085, according to the company’s most recent proxy statement.

The changes to the company’s board and Sekella’s bonus follow a rough patch for Joann. In May, the retailer announced the resignation of Miquelon, who departed after seven years in the company’s top seat following a “challenging” fiscal year, Industry Dive sister publication Retail Dive reported. Joann appointed Sekella as well as Chief Customer Officer Chris DiTullio to lead the interim office of the CEO during the hunt for a permanent successor.

Joann has faced cash flow and liquidity as well as inventory challenges throughout the past year as it juggled a tough consumer environment, leading to speculations that the retailer may soon file for bankruptcy, according to a Bloomberg report citing people familiar with the matter.

While the retailer saw a year-over-year improvement in e-commerce sales as well as a bump in gross profit, net sales declined 4.1% to $539.8 million YoY in the third fiscal quarter ended Oct. 28, according to its most recent earnings report.

“In light of the uncertain consumer environment, we are working to manage all aspects of the business prudently while leveraging our read and react capabilities through advanced data analytics to control what we can control and capitalize on new opportunities as they arise,” Sekella said in a statement included in the earnings release.

The company also continued to execute on its cost improvement initiatives, he said, identifying $200 million of targeted annual cost savings across its supply chain, product and SG&A expenses — a target it has increased to $225 million, he said. Joann also completed a sale and leaseback transaction for its Hudson, Ohio facility for the price of $34.5 million, according to the earnings report.

However, the retailer’s cash flow worries have continued, with Joann beginning confidential talks with lenders in February for a deal that would reportedly help to boost its cash reserves and would include a Chapter 11 bankruptcy filing on the part of Joann, Bloomberg reported. Negotiations are still ongoing, but the retailer is reportedly seeking support from lenders that would enable it to quickly exist from Chapter 11 in a pre-pack filing, people familiar with the matter told Bloomberg.

Joann did not immediately respond to requests for comment.