Northwest Arkansas Democrat-Gazette
Women’s fashions retailer bankrupt
The owner of Ann Taylor and Lane Bryant, which just a few years ago was one of the country’s largest clothing retailers for women and girls, filed for bankruptcy Thursday, after declining sales and high debt were exacerbated by store closures mandated by coronavirus lockdowns.
The company, Ascena Retail Group, will close 1,600 of its approximately 2,800 stores and hopes to shed $1 billion of its $1.1 billion in debt, the company said in a Chapter 11 filing in U.S. Bankruptcy Court in the Eastern District of Virginia.
The closings will include “a select number” of Ann Taylor, Lane Bryant, Loft and Lou & Grey stores, as well as all of its Catherines locations. Ascena had 53,000 employees last year, among them 40,000 parttime workers, according to recent government filings.
The company also is pulling out of Canada, Puerto Rico and Mexico.
“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,” Carrie Teffner, the interim executive chairwoman of Ascena, said in a statement. “As a result, we took a strategic step forward today to protect the future of the business for all of our stakeholders.”
The pandemic has taken a heavy toll on retailers, especially apparel sellers and other mall-based chains that might have otherwise stayed afloat, perhaps even for a short period, without turning to bankruptcy court. Ascena, based in Mahwah, N.J., is at least the ninth prominent retailer to file for bankruptcy since early May, right on the heels of Brooks Brothers and Sur La Table this month, and in the wake of J. Crew, Neiman Marcus Group, J.C. Penney Co., Lucky Brand, Stage Stores and GNC.
DRESS BARN
Ascena was known for decades as Dress Barn, the clothing chain founded in 1962 by Roslyn S. Jaffe, who noticed that there were few options for stylish and affordable women’s work attire even as more women were entering the workforce. Dress Barn went public in 1983, around the time the “power suit” came into vogue in women’s fashion.
“Women in America were climbing the corporate ladder in traditional businesses for the first time,” said Shawn Grain Carter, a specialist in fashion retail business management at the Fashion Institute of Technology.
“Therefore, clothing had to adjust.”
The company adopted the Ascena name in 2011 after acquiring brands like Maurices and the girls clothing chain Justice, saying at the time that the business had “ascended to new heights.”
Ascena went on to buy Lane Bryant and the owner of Ann Taylor, which includes Loft, and by 2016 it had nearly 5,000 stores in malls, outlets and strip malls across its brands.
But Ascena’s fortunes and sales have soured in recent years. It has struggled to compete with the rise of fast fashion and the popularity of the online shopping as well as with direct-to-consumer clothing services such as Rent the Runway and Stitch Fix.
It offloaded the chain Maurices and its nearly 950 stores last year and closed all 650 Dress Barns in December. The company was losing money, posting a net loss of at least $600 million in 2019, compared with a loss of $9 million in 2016.
ADDING TO WOES
Ascena temporarily shuttered all of its stores, furloughed more than 90% of its employees in mid-March and cut salaries for the remaining staff as stayat-home orders took effect. It also borrowed $230 million, canceled merchandise orders and stopped paying rent.
The company began gradually reopening stores in May but says customers have been slow to return.
The Chapter 11 filing comes a few weeks after the company said it would give top executives as much as $5.5 million in retention pay and performance bonuses.
Ascena’s bankruptcy may be a big blow to shopping centers and malls, which were already under pressure before the pandemic and cannot afford to lose tenants.
Even outside of malls, the Ascena brands are heavily reliant on stores. Before the pandemic, in-store sales accounted for about 60% of Ascena’s revenue, according to a preliminary earnings report in May. Overall sales fell 45% in the three months that ended May 2.
In its bankruptcy filing, Ascena said it owes between $10 billion and $50 billion to more than 100,000 creditors. Its largest debts are related to rent: Ascena owes $31.7 million to mall operator Simon Property Group, $16.6 million to Brookfield Properties, $8.8 million to Boston Properties and $7.2 million to Tanger Properties.
With millions of women unemployed or working from home as a result of coronavirus restrictions, the demand for women’s professional clothing — Ascena’s core product — has taken a nosedive.
But the company’s financial troubles preceded the pandemic.
As foot traffic in malls slowed over the past decade and halted altogether during the coronavirus pandemic, Ascena has remained saddled with the extensive real estate and operating costs of maintaining its stores across the country. Information for this article was contributed by Gillian Friedman and Sapna Maheshwari of The New York Times; and by Abha Bhattarai of The Washington Post.