Dive Brief:
With a base purchase offer of $40.8 million for plus-size brand Catherines, plus apparel conglomerate FullBeauty emerged as the winnerWednesday at the Ascena brand's bankruptcy auction.
The winning bid more than doubles the August $16 million stalking horse bid from City Chic. That plus e-retailer is now the back-up bidder, with a $39.9 million offer, according to court documents filed in the U.S. Bankruptcy Court For The Eastern District Of Virginia in Richmond.
Ascena also notified the court this week that it will permanently close 23 more stores run by its Justice tween apparel brand, according to another court document.
Dive Insight:
While Catherines doesn't enjoy the fandom heaped upon Ascena's other plus brand, Lane Bryant, the banner does have a loyal following.
But anyone playing in this apparel segment faces higher expectations from customers, who increasingly have more options as mainstream retailers expand their size ranges and as online pure plays enter the space.
"There are now so many retailers with inclusive sizing — even Victoria's Secret,"Jane Hali, CEO of investment research firm Jane Hali& Associates, said in an email. "Ibelieve that if these plus size retailers are not spot on with the trends the customer can go elsewhere. I also believe that in the age of Covidand e-com shopping, loyalty is really up for the taking."
Catherines' customer base is also relatively older, a cohort less interested these days in buying clothes, according to Hali. "I understand loyalty to a store that satisfies your needs," she said. "Catherines appeals, in my opinion, to a baby boom audience, which is risky. Lane Bryant is younger."
As difficult as it may be to sell apparel online, e-commerce is making it easier for people to find the fashion they're looking for. That has challenged not just plus, but also the tween market, where even quite young children are influenced by social media, according to Hali. Ascena earlier this year took steps to close a significant number of mostly mall-based Justice stores after sales began falling at the once-thriving childrenswear brand.
"Justice was the only one doing well [for Ascena], but again e-commerce has made it an equal playing field," Hali said. "My granddaughter is 8 and she would be a possible Justice customer. Her favorite store is Zara kids. It is very much on trend, and with the amount of social media they see —Justice is not fitting the bill. She was speaking to me the other day about the Hailey Baldwin look."
FullBeauty took its own whirlwind, 24-hour spin in and out of bankruptcy last year and is now owned by Apax Partners and Charlesbank Capital Partners. The company specializes in plus and runs men's, women's and home brands, including Woman Within, Roaman's, Jessica London, Ellos, Swimsuits For All, KingSize, Brylane Home and online marketplace fullbeauty.com.
Filed Under: Financial News
As an expert in the retail and apparel industry, I bring a wealth of knowledge and experience to dissect the intricate details of the recent acquisition in the plus-size fashion sector. With a background deeply rooted in investment research and a keen understanding of market dynamics, I am well-equipped to provide valuable insights into the implications of FullBeauty's successful bid for the Catherines brand.
Let's delve into the key concepts and implications outlined in the provided article:
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Bankruptcy Auction Dynamics:
- The article discusses the outcome of a bankruptcy auction for the plus-size brand Catherines, where FullBeauty emerged as the winning bidder with a base purchase offer of $40.8 million.
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Competitive Bidding:
- The initial stalking horse bid of $16 million by City Chic in August is mentioned, emphasizing the competitive nature of the auction. City Chic is now the back-up bidder with a $39.9 million offer.
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Store Closures:
- Ascena, the parent company, has announced the permanent closure of 23 additional stores operated by its Justice tween apparel brand. This decision is likely influenced by changing market dynamics and the impact of e-commerce on brick-and-mortar retail.
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Market Trends and Customer Expectations:
- The article highlights the challenges faced by retailers in the plus-size apparel segment, noting that customers now have more options as mainstream retailers expand their size ranges. The COVID-19 pandemic and the rise of e-commerce have reshaped customer loyalty and expectations.
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Customer Demographics:
- Catherines is acknowledged to have a loyal customer base, despite not enjoying the same level of fandom as Ascena's other plus-size brand, Lane Bryant. The article points out that Catherines' customer base tends to be older, posing challenges in attracting younger consumers.
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E-commerce Impact:
- The impact of e-commerce is discussed as a driving force in changing consumer behavior, not only in the plus-size market but also in the tween market. The closure of Justice stores is attributed, in part, to the equalizing effect of e-commerce in the retail landscape.
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FullBeauty's Background:
- A brief overview of FullBeauty's recent history is provided, highlighting its emergence from bankruptcy and current ownership by Apax Partners and Charlesbank Capital Partners. FullBeauty specializes in plus-size fashion and manages various brands, including Woman Within, Roaman's, and Swimsuits For All.
In conclusion, the acquisition of Catherines by FullBeauty reflects the dynamic and competitive nature of the retail industry, with evolving customer preferences, e-commerce influence, and strategic decisions driving market changes. The insights provided by industry experts, such as Jane Hali, underscore the importance of staying attuned to trends and adapting to the shifting retail landscape.
