Ann Taylor parent company files for bankruptcy

Daniel Fowler
July 25, 2020

In the USA, where Ascena has most of its stores, a "significant" number will close, but the company will try to continue operating an undisclosed number of locations.

New Jersey-based Ascena Retail Group says the move is part of a broader "restructuring" that also involves shutting down their shops in Mexico and Puerto Rico.

The conglomerate said it plans to close "a significant number" of locations for the young girls' brand Justice and "a select number" of Ann Taylor, Loft, Lane Bryant and Lou & Grey stores. But in recent years, its lineups of no-frills workwear and other basics have lost ground to a growing crop of competitors, including off-price retailers like TJ Maxx and newcomers like Everlane. About two dozen of them have sought bankruptcy protection since the pandemic started.

Mary Ann Domuracki, managing director of MMG Advisors, an investment bank that advises companies on restructuring, said she expects a second wave of bankruptcies in the fall.

"They put all of their eggs in one basket, which was high-traffic malls with a diminishing customer base, " said Bob Phibbs, chief executive of the consulting firm the Retail Doctor. Ascena temporarily shuttered all of its stores and furloughed more than 90 percent of its employees in mid-March as stay-at-home orders took effect.

The company began gradually reopening stores in May, but says customers have been slow to return.

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Ascena permanently closed all 650 Dressbarn stores in December to cut costs.

Even outside of malls, the Ascena brands are heavily reliant on stores. Total revenue in the third quarter of fiscal 2020, which covered the February through April period, was down 45% compared with the same period past year.

"The meaningful progress we have made driving sustainable growth, improving our operating margins and strengthening our financial foundation has been severely disrupted by the Covid-19 pandemic", Ms Carrie Teffner, the interim executive chair of Ascena, said in a statement on Thursday (July 23).

The company had revenue of $5.5 billion during its latest fiscal year, which ended August 3, 2019. It expects to reduce its debt by about $1 billion in its pre-arranged restructuring.

At the time, Ascena said it would continue to evaluate all available options to preserve its ongoing operations.

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