THE NEUTRAL ZONE
Ascena Retail Group, the parent company of Ann Taylor and Lane Bryant, filed for Chapter 11 bankruptcy protection Thursday. The move is another blow to the clothing retail sector, which was already struggling prior to the coronavirus pandemic.
The total reported amount of Ascena’s 2,800 stores closing varies, from 877 to 1,100 to 1,600. Whatever the final total is, anywhere from one- to two-thirds of its stores will shutter, including all of its Catherine’s locations and a “select number” of Ann Taylor, Lane Bryant, Loft, and Justice stores. All stores in Canada, Puerto Rico, and Mexico will permanently close. Through an agreement with creditors, the company will bring its debt to $1 billion by eliminating a large portion of it while restructuring to provide an online experience to customers.
Ascena closed all of its stores temporarily on March 18 due to health concerns surrounding the coronavirus, furloughing 90% of its staff, withholding rent payments on closed stores, and delaying payments to vendors. Since Ascena began reopening in May, 95% of its stores are now open. Multiple clothing companies have also filed for bankruptcy through the pandemic, including Brooks Brothers, Neiman Marcus, J.C. Penney, and J. Crew.
Ascena was, at one point, the largest women’s clothing retailer in the country because of its various offerings in sizes and demographics. However, online shopping platforms and changing styles have impacted the company since the Great Recession. Ascena closed 650 of its Dressbarn stores last year, along with selling Maurice’s.
Ann Taylor Parent’s Bankruptcy Is the Scariest Yet – Bloomberg – 7/23/2020
Ascena may not have the cultural primacy of some of the other prominent names in the industry that have recently filed for bankruptcy. […] But make no mistake: Ascena’s bankruptcy is the scariest yet for the industry in the Covid-19 era, because the company’s collapse has the potential to create more devastating ripple effects than were caused by almost any of the other retail washouts that preceded it.
How Ascena went bankrupt – Retail Dive – 7/23/2020
But its troubled story is less about the pandemic and more about how it decided to go big in the last decade as clothing sales growth steadily declined. Well before COVID-19 shook the retail industry, sales at all of Ascena’s banners steadily tumbled. […] “They built their own coffin,” Lee Peterson, executive vice president of thought leadership and marketing at WD Partners, told Retail Dive in an interview.
Ann Taylor Owner Files for Bankruptcy, Plans to Close Up to 1,600 Stores – Wall Street Journal – 7/23/2020
The retail company tried several steps to soften the pandemic’s financial impact, including temporarily closing all its stores in March, reducing capital expenditures and assessing vendor-payment terms. In late March, Ascena, which has nearly 40,000 employees, furloughed its workers. The company has since reopened most of its stores.
Coronavirus forces Lane Bryant, Ann Taylor owner to file for bankruptcy protection, close stores – Fox Business – 7/23/2020
Ascena has become the latest retailer seeking relief in bankruptcy court after the pandemic hobbled the industry. The announcement comes just weeks after the over 200-year-old retailer Brooks Brothers announced it was seeking financial relief, joining companies including Neiman Marcus Group Inc., J.Crew Group Inc. and J.C. Penney Co.
Crain’s New York on Twitter, 7/23/2020: Ann Taylor owner files for bankruptcy after paying bonuses to top executives #CrainsNY
Lisa Abramowicz on Twitter, 7/23/2020: Ascena’s bankruptcy pushes the retail trailing 12-month loan default rate to a record 17% from 15.1% at the end of June. “Retail has accounted for $9.2 billion of the year-to-date default volume, the most of any sector:” Fitch Ratings
Sapna Maheshwari on Twitter, 7/23/2020: disappointment in Ann Taylor (and the struggle to find consistent black work pants) abounds in our comments section:
Laurel Wamsley on Twitter, 7/23/2020: I knew this day would come.Once women no longer had to buy work tops, they sure as hell didn’t buy any more work tops.