Clothing Store Giant Ascena Retail Group Files for Bankruptcy, Plans to Close ‘Significant’ Number of Stores
MAHWAH, N.J. — Ascena Retail Group (NASDAQ: ASNA), the parent company of clothing brands Ann Taylor, Justice, Loft, Lane Bryant, Catherines and Lou & Grey, has filed for voluntary Chapter 11 bankruptcy in the United States Bankruptcy Court for the Eastern District of Virginia.
The Mahwah-based company has reopened 95 percent of its stores since the COVID-19 outbreak, though Ascena cited the pandemic as “severely” disrupting the company’s financial foundation. The exact number of permanent store closings was not disclosed, but the company said it will close a “significant” number of Justice stores, as well as a select number of Ann Taylor, Loft, Lane Bryant and Lou & Grey stores. Additionally, the company will permanently close all stores across all brands in Puerto Rico, Mexico and Canada.
“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,” says Carrie Teffner, interim executive chair of Ascena. “As a result, we took a strategic step forward today to protect the future of the business for all of our stakeholders.”
Ascena also announced it will close all Catherines stores and has entered into an agreement with City Chic Collective to sell the Catherines intellectual property assets and to transition its e-commerce business to a subsidiary of City Chic. Details of the sale were not disclosed, though City Chic will serve as the stalking horse bidder.
Ascena has reached a restricting support agreement with 68 percent of its lenders to reduce Ascena’s debt by approximately $1 billion. As part of the restructuring agreement, Ascena received $150 million from its lenders. The new cash, mixed with cash-on-hand, is expected to be sufficient to meet Ascena’s operational and restructuring needs, according to the company.
“This comprehensive restructuring, as well as the actions we are taking to optimize our brand portfolio and store fleet, mark a new start for our company and will allow us to expand our customer-focused strategies across her mobile, online and store experiences,” says Gary Muto, CEO of Ascena.
Ascena’s stock price closed Thursday at 59 cents per share, down from $9.20 per share a year ago.
— Alex Tostado