Ascena Retail Group, parent of iconic women’s apparel brands Lane Bryant and Ann Taylor, has filed for Chapter 11 bankruptcy protection and announced plans to shutter 1,600 of the 2,800 stores across its various chains in an effort to reduce its massive debt by $1 billion.
The company said 95% of its stores have reopened since the pandemic shutdown, which was the final blow for a retail conglomerate negatively impacted by ecommerce, fashion startups and changing consumer tastes.
Ascena said it would close a “significant number” of Justice stores and “a select number” of Ann Taylor, Loft, Lane Bryant and Lou & Grey stores. It will also close all of its stores in Canada, Puerto Rico and Mexico.
In addition, Ascena has entered into a purchase agreement for selling the assets and intellectual property of its Catherines chain to City Chic Collective Limited for an undisclosed sum. The company said City Chic was a “stalking horse bidder,” meaning it made an opening bid for the assets among a group of interested parties.
Ascena said it has received commitments for $150 million in financing from existing lenders, which combined with cash on hand and cash flow “is expected to be sufficient to meet (its) operational and restructuring needs.”
In its bankruptcy filing in Virginia, Ascena listed debt of between $10 billion and $50 billion to more than 100,000 creditors, including a number of major mall operators, according to CNBC: $31.7 million to Simon Property Group, $16.6 million to Brookfield Properties, $8.8 million to Boston Properties and $7.2 million to Tanger Properties.
Ascena began the shuttering of all of its 650 Dressbarn stores in May 2019, a move that had been signaled two years prior.
The growing roll call of major retail bankruptcies in 2020 also includes Brooks Brothers, J.C. Penney, RTW Retailwinds, (New York & Company), Chinos Holdings (J.Crew and Madewell) and Neiman Marcus.
At the end of June, Ascena’s board took heat when they announced plans to pay up to $5.5 million in retention awards and performance bonuses and undo pay cuts to top executives, even as bankruptcy loomed.