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The list of 2020 retail bankruptcies just got longer.
Ascena Retail Group, the operator of clothing chains Ann Taylor and Lane Bryant, filed for Chapter 11 bankruptcy on Thursday, as a business slowdown stemming from the coronavirus pandemic exacerbated existing problems for the retailer.
The Mahwah, New Jersey-based company operates nearly 3,000 stores, primarily at malls, and has been hurt by debt stemming from acquisitions and declining sales. Customers have lost interest in brands like Ann Taylor, which had long been popular with young women building an office wardrobe.
In 2015, Ascena had sought to turn itself into an apparel retail conglomerate buying Ann Inc, parent of Ann Taylor and Loft, for $2 billion. The bet being that economies of scale and more clout with mall landlords could improve their financial performance. But the company ultimately doubled down on an area of retail that went on to shrivel: malls.
“Ascena has suffered more than some other apparel brands because too much of its business is in the murky middle ground of fashion. It delivers neither great value nor great fashionability,” Neil Saunders, managing director of GlobalData Retail, wrote in a research note. “That was a slow killer before the pandemic hit.”
As part of its bankruptcy plan, Ascena plans to close all of its Catherines stores and “a significant number” of Justice stores, but only ax a “select” number of Ann Taylor, Loft, Lane Bryant and Lou & Grey stores. Ascena will exit Canada and Mexico altogether. Earlier this year, it shut down its Dress Barn chain.
The company’s agreement with its creditors, subject to bankruptcy court approval, eliminate a big chunk of its debt and bring it down to $1 billion.
Ascena joins a growing list of retailers that have filed for bankruptcy protection this year: Brooks Brothers, Neiman Marcus, J.C. Penney, J.Crew and Stage Stores, among many others.
In Ascena’s fiscal third quarter, at the peak of the COVID-19 shutdowns, revenues fell 45%. In its most recent full fiscal year, Ascena had revenue of $5.5 billion.
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