Introduction
Michaels has treated the liquidation of Joann and Party City as an opening to grow past its arts-and-crafts roots. Fabric, yarn, balloons and party goods now sit on shelves that once belonged to other chains.
For retail and restructuring professionals, the case is instructive. A rival's bankruptcy releases customers, brands, leases and inventory. Capturing them does not guarantee a turnaround.
This article covers Michaels' strategy, its position against Hobby Lobby and others, and the indicators that will show whether the expansion lasts. Figures are as of October 2026, and company claims are labeled as such.
Key Takeaways
- Michaels is adding fabric, yarn and party concepts in markets vacated by Joann and Party City.
- Hobby Lobby remains the main traditional craft rival.
- Durability depends on execution, retention, store economics and financial flexibility.
- Track the full lifecycle, from distress signals to post-bankruptcy results.
Why the Michaels Rivalry Changed
A mature category and a new owner
Michaels was North America's largest arts-and-crafts specialty retailer by store count. In fiscal 2020 it reported $5.27 billion in net sales and 1,252 stores in the U.S. and Canada, per its 10-K filing. The most recent broad craft-market estimate, from 2016, was about $43 billion. It is dated, so treat it as context only.
In March 2021, Apollo announced a $22 per share tender offer, valued at roughly $5 billion including debt. Private ownership allows faster decisions. It also brings leverage and an eventual exit question. S&P still named Apollo as owner in September 2026, and no sale or IPO has been announced.
The competitive cast
- Hobby Lobby: privately held, with 1,000+ stores by its own description. It is the direct craft and home-decor competitor.
- Joann and Party City: former competitors, now liquidated.
- Adjacent rivals: Walmart, Target, Amazon, Etsy and local creative businesses.
Timeline
| Date | Event |
|---|---|
| Jan–Oct 2023 | Party City files Chapter 11 and emerges |
| Mar–Apr 2024 | Joann completes a prepackaged Chapter 11 with 800+ stores |
| Dec 2024 | Party City files again and winds down about 700 U.S. stores |
| Jan 2025 | Joann files a second Chapter 11 (Case No. 25-10068) |
| Feb 2025 | Joann moves to close all stores; Michaels is backup bidder for Party City assets |
| Jun 2025 | Michaels completes its purchase of Joann IP and private labels |
| Sep 2025 | Michaels launches Knit & Sew Shop and Party Shop chainwide |
Both rivals filed twice. The first restructuring did not hold.
How Michaels Is Using Rival Distress as a Growth Strategy
What Michaels bought and rolled out
Michaels said its Joann acquisition brought 600+ products and brands, including Big Twist yarn. It did not disclose a price. The company then expanded:
- Fabric in 840+ stores, with 250+ more planned
- Fabric-cutting tables planned for 650+ stores
- 700 new party products and a Balloon Bar in every store
- A 25% larger yarn assortment for 2025
These are Michaels' own counts and plans, not sales results.
Michaels did not win the Party City auction. A court notice named New Amscan PC LLC as the successful bidder for non-lease assets ($20 million net bid) and Michaels Stores Procurement Company as backup. Michaels is serving that demand through its own assortment instead.
What IP does and does not transfer
Brands like Big Twist give Michaels instant recognition. Acquired IP does not automatically bring store traffic, supplier relationships, employees or loyalty. Those must be rebuilt.
Operations decide the outcome
Stores are the proof point. Shop-in-shops, cutting tables and balloon pickup only work if they run well. The requirements are heavy:
- Sourcing and inventory planning for unfamiliar categories
- Helium and service logistics
- Trained staff, especially fabric cutters
- Online-to-store integration
Central assortment keeps complexity down, while regional tuning follows local demand. Michaels' reported 77% rise in on-site fabric searches shows interest, but it is the company's own metric.
Comparable cases
Bloomberg described a projected $5 billion opportunity for Amazon and Target after Bed Bath & Beyond's bankruptcy. That was an estimate, not realized share. Longitudinal evidence of durable gains from other retail liquidations is not readily available. Separating a liquidation bump from lasting share transfer requires tracking results well after the going-out-of-business sales end.
Michaels Versus Its Competitors
No reliable craft market-share ranking across Michaels, Hobby Lobby, Walmart, Target, Amazon and Etsy is available. Published figures cover different dates and scopes, so head-to-head share comparisons do not hold up.
Use a framework instead. Score each rival on:
- Customer overlap
- Category strength
- Store footprint
- Digital capabilities
- Pricing position
- Financial condition
- Ability to invest
How the main rivals look:
- Hobby Lobby: wide craft and home-decor range, a large store base, private ownership. No verified craft revenue or share figure is public.
- Joann's customers: sewing, quilting and apparel-making shoppers are specialists who want deep inventory and knowledgeable staff. Michaels' expanded fabric offer must meet that bar, not just carry the brand.
- Party City's customers: selling party goods is different from delivering a celebration with balloons, themes, pickup and events. Michaels' Balloon Bar targets the second.
- Mass merchants and marketplaces: they win on convenience, price transparency and delivery speed. Michaels' edge is specialist depth and in-person help.
Any store count, revenue estimate or transaction value should be checked against filings, court records and official releases before it is relied on.
What Michaels' Strategy Means for Retail and Restructuring Stakeholders
Who benefits from rival distress
- Investors: spot customer migration, asset sales and targets.
- Suppliers and trade creditors: reassess exposure when a major customer or competitor files. Aggregate trade-claim figures are not readily available for either case, so check the dockets.
- Law firms, advisors and lenders: follow closures, asset sales, claims and milestones.
- Competing retailers: watch for warning signs before a filing.
Risks to the expansion
- Overestimating how many customers transfer
- Underperforming leases
- Unfamiliar categories and tied-up working capital
- Margin erosion from promotions
- Growing faster than store teams can execute
What the financials show
S&P upgraded Michaels from B- to B in September 2026, citing adjusted leverage of 4.3x, down from 5.4x a year earlier. It reported first-half sales growth of 7.7% and Q2 growth of 4.8%. Risks include tariffs, China import exposure and discretionary demand.
Private ownership speeds decisions but limits disclosure. Current sales, category margins and lender reporting are not public. Outsiders must rely on company releases and rating agencies.
The tests that matter:
- Comparable and category-level sales
- Inventory turns and gross margin
- Store productivity and online conversion
- Retention and lease commitments
- Debt and cash generation
Using BankruptcyData
BankruptcyData tracks U.S. corporate filings, docket activity, advisor involvement, Section 363 asset sales, stalking-horse bids, restructuring timelines and historical outcomes. Its platform covers 600k+ records across 45+ years. Professionals can benchmark current cases against past ones and connect early distress signals to later outcomes, rather than relying on headlines. Joann and Party City show why: both emerged or restructured once, then filed again.
How to Research the Michaels Competitive Landscape
Source hierarchy
- SEC filings and company reports where available
- Petitions, dockets and claims-agent sites such as Kroll
- Auction notices and creditor documents
- Official company releases and earnings commentary
- Reputable retail and financial reporting
Court orders establish approved relief. A docket notice shows what a bid said, not necessarily a closed sale. Company releases are claims, and Hobby Lobby's and Michaels' "largest" language is self-description.
Checklist for each company
- Ownership and debt
- Liquidity and lease strategy
- Store footprint and core categories
- Customer overlap
- Bankruptcy history and asset transactions
- Post-restructuring performance
Build a timeline
Line up events in order so cause and effect stay clear:
- Distress signal
- Filing
- Liquidation
- Asset sale
- Store closure
- Customer migration
- Competitor response
Label every figure with an "as of" date. Private-company estimates, store counts and expansion plans change quickly.
What the Rivalry Signals About the Future of Craft Retail
Michaels may be becoming a broader creativity-and-celebrations retailer, or it may be adding categories that last only as long as competitors' absence. Current evidence shows rollout and improved leverage, not proven retention.
Durable growth needs:
- A differentiated store experience
- Reliable specialist inventory
- Competitive prices
- Efficient stores
- Strong digital fulfillment
- Disciplined capital allocation
Near-term signals will show whether those pieces are falling into place:
- More store conversions
- Deeper private-label integration
- Changes in Apollo's plans
- Renewed consolidation and distress at adjacent retailers
Michaels has a strategic opening. Execution and measurable post-bankruptcy results, not the size of the opportunity, will decide the winner.
FAQ
Did Michaels buy Joann?
No. It acquired Joann's intellectual property and private-label brands in June 2025. Joann's stores were liquidated.
Did Michaels buy Party City?
No. A court notice named New Amscan PC LLC the successful bidder for non-lease assets, with Michaels' procurement unit as backup.
Who owns Michaels?
Apollo, which took the company private in 2021. S&P still listed Apollo as owner in September 2026.
Is Hobby Lobby still Michaels' biggest rival?
It is the largest traditional craft competitor. It is privately held and reports 1,000+ stores.
Where can I verify bankruptcy details?
Use SEC EDGAR, claims-agent sites like Kroll, and PACER. Tools such as BankruptcyData consolidate filings, dockets and outcomes.
