How Joann Fabrics went from a cult-favorite retail darling to a bankruptcy disaster 

Everything is on sale at a Joann's store just north of New York City.

In the sewing section, some shopping carts have all but disappeared under bolts of cotton, tulle, and fleece. But the mood is hardly festive. The busy atmosphere and steep discounts are signs of a sad ending for a beloved institution. Or, as one dark-haired young shopper puts it: "It's a bummer.” 

Last month, Joann Fabric and Crafts, a fixture of American shopping for generations, announced it would close all...