New York (CNN) — Joann, the 81-year-old fabric and craft retailer, has filed for bankruptcy as it struggles with customers cutting back on discretionary spending.

In a statement Monday, the Ohio-based company said it filed for Chapter 11 bankruptcy protection and has secured $132 million in fresh funding that helps reduce its debt in half, which had ballooned to $1 billion. Its roughly 850 stores and website will remain open for business.

Joann’s revenue has been on the decline in recent years, except for a brief pandemic boom during the height of Covid when people stuck at home spent more money on arts and crafts. However, that has since faded, and inflation has soared, prompting customers to spend less on non-essential items.

“This agreement is a significant step forward in addressing Joann’s capital structure needs, and it will provide us with the financial resources and flexibility necessary to continue to deliver best-in-class product assortments and enhance the customer experience wherever they are shopping with us,” said Scott Sekella, the company’s chief financial officer, in the company statement.

Joann’s stock was delisted from the Nasdaq and will become privately owned following the bankruptcy process, which it expects to happen as fast as next month.

“The bankruptcy of Joann has been looming for a long time and was always a matter of when, rather than if,” said Neil Saunders, managing director and retail analyst for GlobalData, in a note Monday. “The bankruptcy process will now allow the arts and crafts chain to receive an infusion of cash at the same time as streamlining its operations and reducing debt levels.”

Saunders said that its customers are increasingly shopping at lower-priced rivals, like Hobby Lobby, because of “weakening store standards and declining customer service levels, partly because of staffing cuts, have made stores less desirable.”

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