Many years ago a friend worked for Dillards, we learned that many returns (clothing) were slashed with scissors and sent back to headquarters for disposal. My friend said that all department stores did it rather than donating the items, which could wind up back on the market with their name/tags/brand on it, when it was taken off of their inventory.
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Basically, they did not want anyone making a profit on their inventory write off.
I don't quite understand the JoAnns position, when there couldn't be a market for selling damaged craft products....