NEW YORK (NYTIMES, BLOOMBERG) - The owner of Ann Taylor and Lane Bryant, which just a few years ago was one of the country's largest clothing retailers for women and girls, has filed for bankruptcy after declining sales and high debt were exacerbated by store closures mandated by coronavirus lockdowns.
The company, Ascena Retail Group, will close 1,600 of its approximately 2,800 stores and hopes to shed US$1 billion (S$1.39 billion) of its US$1.1 billion in debt. The closings will include "a select number" of Ann Taylor, Lane Bryant, Loft and Lou & Grey stores, as well as all of its Catherines locations. Ascena had 53,000 employees last year, among them, 40,000 part-time workers, according to recent government filings.
"The meaningful progress we have made driving sustainable growth, improving our operating margins and strengthening our financial foundation has been severely disrupted by the Covid-19 pandemic," Ms Carrie Teffner, the interim executive chair of Ascena, said in a statement on Thursday (July 23). "As a result, we took a strategic step forward today to protect the future of the business for all of our stakeholders."
Ascena's bankruptcy may have a big impact on shopping centres and malls, which were already under pressure before the pandemic. Mr Gary Muto, Ascena's chief executive, said on a March earnings call that 34 per cent of its stores were in malls.
Overall sales fell 45 per cent in the three months that ended May 2. In an effort to preserve cash, the company furloughed more than 90 per cent of its employees and cut salaries for remaining staff.
Ascena is at least the ninth prominent retailer to file for bankruptcy since early May, right on the heels of Brooks Brothers and Sur La Table this month, and in the wake of J Crew, Neiman Marcus Group, J C Penney, Lucky Brand, Stage Stores and GNC.
Brooks Brothers on Friday said it received a bid backed by Authentic Brands Group, the owner of Barneys New York, and mall owner Simon Property Group to buy the bankrupt men's clothing chain and keep it in business.
Sparc Group, which is backed by Authentic and Simon, agreed to a US$305 million bid in a court-supervised auction for the company's global business operations, according to a statement.
The group has committed to take on at least 125 stores in its so-called stalking-horse bid, which sets a minimum price for the auction. A higher bid could still emerge before an Aug 5 deadline.
Authentic specialises in reviving beaten-down brands, including Aéropostale and Nautica. Sparc runs more than 2,600 retail stores, shop-in-shops and an e-commerce platform, the company said.
Brooks Brothers said on July 8 when it filed for bankruptcy that it plans to permanently shut 51 Brooks Brothers stores in the US. It has 500 worldwide in 45 countries, with 200 in North America.
Bloomberg reported earlier that Authentic and Simon were positioning themselves to own the 200-year-old chain. WHP Global, another brand manager that owns the Joseph Abboud and Anne Klein nameplates, had already shown interest by offering a bankruptcy loan.