Ascena Retail Group has reached a deal to sell Columbus, Ohio-based Justice for $90 million, with a wind-down of all its remaining stores expected to conclude next year.
New Jersey-based Ascena (OTCMKTS: ASNAQ) will sell the tween brand's intellectual property and other assets to Justice Brand Holdings LLC, which is an entity formed by private New York City brant management company Bluestar Alliance LLC, following a competitive bidding process. Bluestar won out over the previously announced stalking horse bidder, New York City conglomerate IHL Group, for Justice's assets.
The deal is subject to approval of the U.S. Bankruptcy Court for the Eastern District of Virginia, where Ascena is navigating a financial restructuring. If approved Nov. 12, the transaction could close by the end of the month.
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“The conclusion of the sale process for our Justice brand is a significant step forward in our efforts to complete our restructuring process and maximize value for all our stakeholders," Ascena CEO Gary Muto said in a statement.
The sale “better positions Ascena for long-term success and supports our vision for the future," Muto said.
Also as a part of the deal, the company announced all Justice locations would close by early 2021. Those stores that haven't already closed will continue through the holidays. Customers will still be able to shop online.
Bluestar Alliance said in its own statement that Justice will complement its other brands, which include Hurley, bebe, Brookstone, KensieGirl and Limited Too. The company says it will examine the current social demographic and following of the brand to determine how to take it forward.
While it said Justice has "years of growth ahead," the company didn't elaborate on what its real estate plan would be for the brand. Justice had 826 stores and $1.08 billion in sales in the 2019 fiscal year, but Ascena closed hundreds of locations following its bankruptcy starting in July. Of the 606 Justice stores listed for closure at the time, 11 were in the Houston area.
"Justice is the world's best-known tween brand, yet it still has the capacity to grow, particularly in categories and distribution," said Ralph Gindi, co-founder of Bluestar Alliance. "Our goal is to create even deeper connections with our consumers and the brand, while expanding Justice's reach and footprint."
Kirkland & Ellis LLP is serving as legal counsel, Alvarez and Marsal Holdings LLC is serving as restructuring adviser, and Guggenheim Securities LLC is serving as financial adviser to Ascena in the bankruptcy and sales.
