附近上门

The COVID-19 pandemic has no doubt kept people at home. And with people at home and looking for hobbies, crafting has seen a boom that鈥檚 prompted action in the public markets.

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Retail during the COVID-19 pandemic has been a story of 鈥渉eaven or hell,鈥� according to , co-founder and managing partner at retail advisory firm . While some retailers have been hit hard by the pandemic, others like sporting goods stores and crafting stores have rallied because of the increased demand for pandemic-safe activities.

鈥淭he pandemic drove business up for hobbies, not down, because everybody鈥檚 stuck in the house,鈥� Rosenblum said in an interview. 鈥淪o the crafting industry became a big deal.鈥�

, a retailer specializing in crafts and fabrics, and crafting machine-maker both filed for an IPO on the same day in February, with Jo-Ann expected to begin trading on the public markets later this week. Not long after the companies filed for an IPO, publicly traded arts and crafts retailer announced that it is being acquired by private-equity firm in a $5 billion deal.

Companies file to go public because they鈥檙e growing and want access to the capital that public markets provide, while a company like Michaels might file to go private because 鈥渁n investor believes they can pull expenses out and make it more profitable and bring it public again,鈥� Rosenblum said.

Indeed, the growth of companies like Jo-Ann and Cricut is clear, and neither is secretive that the pandemic and the trends accelerated by it gave their businesses a boost.

In its S-1 registration document filed with the Securities and Exchange Commission, Jo-Ann wrote, 鈥�Broader Creative Product sales have accelerated meaningfully as customers spend more time doing DIY activities at home, have an increased desire to learn new skills and take on projects, and engage in personal protective equipment-making activities for personal use, to sell or to share with the community.鈥澛�

The company noted that while it鈥檚 difficult to estimate the exact amount of sales that were the result of people making personal protective equipment, the company noticed changes in usual sales trends that support PPE making, such as greater sales in cotton fabric and certain sewing supplies.聽

Jo-Ann in particular was able to ride the 鈥渕ask boom,鈥� according to , a vice president and principal analyst focusing on retail at . Especially in the early days of the pandemic when there were personal protective equipment shortages and mask mandates were beginning to be instituted, many people sewed their own masks, either for themselves, or to gift or sell.

鈥�(Jo-Ann) had a pretty rocky last few years. It really did seemingly get a lifeline in the pandemic for sure,鈥� Kodali said.聽

Timing

Jo-Ann was a publicly traded company before being taken private in 2011 by private-equity firm . Its CEO resigned in 2014, and another CEO resigned in 2018 to join . Now, Jo-Ann appears to be positioning itself more like a tech company as it goes public again, emphasizing its e-commerce and digital capabilities.

鈥淲hat鈥檚 really interesting is the timing of Michaels because if you look at Jo-Ann and Michaels as comparable, that would not speak well to Jo-Ann,鈥� Kodali said.

Michaels being taken private now isn鈥檛 a good look for Jo-Ann, as both are known as crafting stores.

鈥淲hen it鈥檚 a public company and it鈥檚 being taken off the market, that usually means that it鈥檚 not usually doing that well,鈥� Kodali said. 鈥淚f you鈥檙e at the height of your valuation as a public company, nobody buys you. It鈥檚 rare. It usually happens because somebody thinks there’s something that needs to be changed, or management needs an overhaul.鈥�

Michaels’ stock has gone up over the past year, from $3.59 per share on March 9, 2020, to closing at $21.95 on March 9, 2021.

鈥淚t could also mean that there鈥檚 wishful thinking going on,鈥� Kodali said. 鈥淏ut it鈥檚 rarely a public company being taken off the market because it鈥檚 a hot commodity. This is not an eligible bachelor being taken off the market, it鈥檚 usually a signal that something’s wrong.鈥�

Timing is likely also a big factor prompting Jo-Ann and Cricut to go public now: The IPO market is hot and public markets have been enthusiastic about new companies. Special purpose acquisition companies, or SPACs, have also been on a tear.

For Jo-Ann, at least, it could be a case of now or never. According to Rosenblum, crafting and party supplies is a challenging industry during 鈥渘ormal times鈥� because it鈥檚 鈥渁 lot of cheap stuff,鈥� which makes keeping track of inventory difficult.

Although the business has invested in its e-commerce capabilities, 鈥渋t鈥檚 not like there鈥檚 some great new technology here, it鈥檚 mostly e-commerce,鈥� Kodali said. 鈥淭hey sell fabric stuff, which has been around for a long time. And it鈥檚 mostly feeding the artisan market because most people get their clothes from factories in China anyway … If it was ever going to go public it would have to be at a time like this when there鈥檚 this crazy burst in demand they鈥檝e never seen before and will probably never see again.鈥�

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