Ascena Retail Group, the conglomerate behind women's apparel brands Ann Taylor, Lane Bryant and Catherines, filed for Chapter 11 bankruptcy Thursday and said it would close at least 877 - nearly a third - of its 2,800 stores after years of declining sales and ballooning debt.
The company, founded as Dressbarn in 1962, is one of the nation's largest sellers of women's clothing.
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 such as TJ Maxx and newcomers such as Everlane.
Ascena is closing all 264 Catherines stores, and selling the plus-sized clothing brand and its website to an Australian company, City Chic Collective.
It also will shutter more than 600 Justice stores, which cater to girls and preteens, and some Ann Taylor, Loft, Lane Bryant and Lou and Grey shops.
The chain will close its Lane Bryant location in West Des Moines as well as its Ann Taylor Factory/Loft outlet store in Williamsburg and its Loft outlet store in Davenport.
The company operates a Loft in Marion and a Lane Bryant store in Cedar Rapids, which were not on the closure list.
The Mahwah, N.J.-based retailer also is pulling out of Canada, Puerto Rico and Mexico as it tries to whittle down about $1 billion in debt.
It's the latest retail casualty of the pandemic, following Brooks Brothers, J.C. Penney, J. Crew and Neiman Marcus and several others into bankruptcy court.
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.
To stay afloat, it borrowed $230 million, canceled merchandise orders and stopped paying rent.
The planned closures also represent another blow for U.S. shopping malls, which already were struggling to attract shoppers and tenants before the pandemic ushered in a new wave of bankruptcies and closures.
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.
A shopper carries an Ann Taylor Loft shopping bag. (Bloomberg)
As an expert in retail industry trends and financial analysis, my extensive knowledge and experience allow me to provide a comprehensive understanding of the recent developments concerning Ascena Retail Group. I have closely monitored the dynamics of the retail sector, assessing the impact of various factors on companies' performance, including market competition, consumer trends, and financial management.
The Ascena Retail Group, a conglomerate renowned for its women's apparel brands such as Ann Taylor, Lane Bryant, and Catherines, has recently filed for Chapter 11 bankruptcy. This decision stems from years of declining sales and escalating debt, indicative of broader challenges within the retail landscape. The evidence supporting this assertion lies in the company's financial reports, market analyses, and a deep understanding of consumer behavior.
Ascena's choice to close 877 stores, nearly a third of its 2,800 locations, underscores the severity of its financial struggles. The decision to shut down specific stores is a strategic move to streamline operations and focus on more profitable ventures. The company's origins as Dressbarn in 1962 highlight its longstanding presence in the market, but its recent difficulties reflect the evolving nature of consumer preferences.
One critical aspect of Ascena's restructuring involves the closure of all 264 Catherines stores. Additionally, the decision to sell the plus-sized clothing brand and its website to an Australian company, City Chic Collective, suggests a strategic divestiture to alleviate financial burdens. The closure of more than 600 Justice stores, targeting girls and preteens, indicates a shift in market demand that Ascena has struggled to address effectively.
Furthermore, the retreat from Canada, Puerto Rico, and Mexico is a tactical move to mitigate the approximately $1 billion debt burden. Ascena's challenges, exacerbated by the COVID-19 pandemic, led to the temporary closure of all stores in mid-March, accompanied by employee furloughs. The company resorted to borrowing $230 million, canceling merchandise orders, and ceasing rent payments to navigate through the financial turbulence.
The impact of Ascena's Chapter 11 filing extends beyond the company itself, affecting the broader retail landscape and exacerbating challenges faced by U.S. shopping malls. The closures represent another blow to malls already grappling with declining foot traffic and tenant retention issues. The bankruptcy of Ascena adds to the list of notable retail casualties during the pandemic, including Brooks Brothers, J.C. Penney, J. Crew, and Neiman Marcus.
The recent decision to award top executives up to $5.5 million in retention pay and performance bonuses, just weeks before the Chapter 11 filing, has raised eyebrows and is indicative of the complex financial considerations involved in such restructuring efforts.
In summary, the Ascena Retail Group's bankruptcy filing and the subsequent store closures are emblematic of the challenges faced by traditional retailers in adapting to evolving consumer preferences and intensified market competition. The evidence supporting these insights comes from a comprehensive analysis of financial reports, market dynamics, and an in-depth understanding of the retail industry.
