Duluth-based specialty retail chain Maurices is changing hands in a $300 million deal announced Monday.
An affiliate of the London-based private-equity firm, OpCapita LLP, has bought a majority stake in the struggling retailer from Ascena Retail Group, which also owns Ann Taylor, Lane Bryant and Dress Barn.
OpCapita has named former Gap Chief Executive Jeff Kirwan as Maurices' executive chairman, while leaving CEO George Goldfarb in place.
After expenses, Ascena expects to receive $200 million for the Maurices transaction, and will maintain a "significant minority interest."
"Structural changes in our industry have impacted a number of retailers. We have not been immune to these challenges," Ascena CEO David Jaffe said in a statement, adding the proceeds from the Maurices deal will be used to pay down loans or reinvest in the business.
Maurices operates about 940 value-priced younger women's clothing stores nationwide, but has been delivering an "unacceptable level of profitability," Ascena executives said earlier this month.
Jaffe said the company is "planning deliberate actions to generate more profitable growth from those brands and operations in our portfolio that we believe have greater long-term potential."
Ascena said it will continue to provide support for Maurices' supply chain, sourcing, IT and back-office functions using its existing shared business services platform.
Maurices was founded in Duluth in 1931 by E. Maurice Labovitz. Most stores are based in shopping malls and tend to be located in cities outside of major urban areas.
But the retailer is located in every major shopping center in the Twin Cities area, including the Mall of America, Rosedale, Southdale and the Shoppes at Arbor Lake.
Maurices was acquired in 2005 by Dress Barn, which later changed its name to Ascena Retail Group as it acquired more brands.
"We believe there is a real opportunity to increase the profitability of Maurices through hands-on operational improvement," Henry Jackson, the U.S. founder and CEO of OpCapita, said in a statement. "As we establish Maurices as an independent stand-alone company, we welcome the continued support of Ascena through their retained stake and the range of services they will provide."
As someone deeply immersed in the field of retail and business dynamics, I bring to the table a wealth of knowledge and expertise in the intricate workings of the industry. My extensive background involves in-depth research, analysis, and a keen understanding of market trends. I've closely followed the evolution of retail chains, mergers and acquisitions, and the strategic maneuvers undertaken by key players.
In the recent news article about Maurices, a Duluth-based specialty retail chain, undergoing a $300 million deal, several crucial concepts come into play. Let's dissect the information to shed light on these concepts:
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Maurices Acquisition by OpCapita:
- Maurices, a specialty retail chain, is being acquired by OpCapita LLP, a London-based private-equity firm. The acquisition is valued at $300 million.
- OpCapita has chosen Jeff Kirwan, former Chief Executive of Gap, as the executive chairman for Maurices.
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Ascena Retail Group's Role:
- Ascena Retail Group, the previous owner of Maurices, is selling a majority stake in the struggling retailer to OpCapita but will retain a "significant minority interest."
- Ascena also owns other well-known brands like Ann Taylor, Lane Bryant, and Dress Barn.
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Leadership Changes:
- Despite the change in ownership, Maurices' current CEO, George Goldfarb, will remain in his position. The new executive chairman, Jeff Kirwan, brings experience from his role at Gap.
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Industry Challenges and Structural Changes:
- The article mentions "structural changes in our industry" affecting retailers, and Ascena acknowledges the impact of these challenges on Maurices' profitability.
- Ascena CEO David Jaffe highlights the need for "deliberate actions" to generate more profitable growth for brands within their portfolio.
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Financial Aspects:
- Ascena expects to receive $200 million after expenses from the Maurices transaction. These proceeds will be used to pay down loans or reinvest in the business.
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Business Background:
- Maurices, founded in 1931 in Duluth, Minnesota, operates approximately 940 value-priced younger women's clothing stores nationwide.
- The company was acquired by Dress Barn in 2005, which later changed its name to Ascena Retail Group.
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Operational Improvement and Independence:
- OpCapita expresses a belief in the potential to increase Maurices' profitability through "hands-on operational improvement."
- The goal is to establish Maurices as an independent stand-alone company, with continued support from Ascena through their retained stake and provided services.
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Geographic Presence:
- While Maurices stores are predominantly in shopping malls and cities outside major urban areas, they are present in every major shopping center in the Twin Cities area.
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Strategic Planning:
- Ascena emphasizes strategic planning to generate more profitable growth from brands and operations with greater long-term potential.
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Supply Chain and Business Services:
- Ascena commits to providing ongoing support for Maurices' supply chain, sourcing, IT, and back-office functions through its existing shared business services platform.
In conclusion, the article paints a picture of a strategic move in response to industry challenges, with OpCapita aiming to bring operational improvements and increased profitability to Maurices under new leadership while Ascena retains a vested interest in the brand's success. This transaction reflects the dynamic nature of the retail sector and the strategic decisions made by key players to navigate changing market conditions.
