The owner of the Ann Taylor and Lane Bryant apparel chains, Ascena Retail Group Inc., will shutter over half of its shops and hand control to its creditors after the ongoing global health turmoil rendered the struggling retailer bankrupt.
Thursday's court filing is the latest by U.S. retailers driven over the brink by shutdowns related to the pandemic. The Chapter 11 filing helps Ascena to steer clear of permanent closure, slash borrowings, and close poor-performing outlets in order to reduce expenditures.
Ascena Retail Group, which has been debt-laden long before the pandemic struck, disclosed that it would shutter all of its Catherines branches, a significant number of Justice locations, and a smaller number of Ann Taylor, Lane Bryant, LOFT, and Lou & Grey shops.
As of August 3 last year, the end of the group's last fiscal year, Ascena had around 53,000 staff, 40,000 of whom worked on a part-time basis. As of February 1, the company had 2,764 shops spread across its various brands.
For years, Ascena has monopolized a segment of women's fashion that might be called "mallcore" - basic, feminine, low to mid-priced. But their reign of ruffly cardigans and striped maxi outfits could be over soon. Ascena is now looking at closing at least 1,200 of its nearly 3,000 outlets.
With thousands of brick and mortar businesses during its heyday, Ascena was once the largest clothing retailer for women in the U.S., has established a portfolio of popular brands for different age groups. But changing preferences and new platforms like Stitch Fix and Rent the Runway have dealt a heavy blow on its revenues.
According to Ascena chief executive officer Gary Muto in a press release regarding the bankruptcy, the group's restructuring and the actions it is taking to optimize its brand portfolio and store fleet, "mark a new beginning for our company and will allow us to expand our customer-focused strategies across her mobile, online, and store experiences," Madeline Stone of Business Insider quoted Muto as saying in her report.
The Mahwah, New Jersey-based company joins the list of more than 20 other coronavirus retail victims, like Neiman Marcus, J.C. Penney, J. Crew, and MUJI. Ascena sales were down 45 percent in the third quarter thanks to shop closures and falling demand for office clothing with much of the country stuck at home.
The retail group listed around $12.5 billion of liabilities, including $1.6 billion in debt. Over two-thirds of the company's secured term lenders support its restructuring program, and they will wind up owning most of the new equity, Ascena disclosed in a court document.
