The proprietor of Ann Taylor and Lane Bryant, which only a few years in the past was one of many nation’s largest clothes retailers for girls and women, filed for chapter on Thursday, after declining gross sales and excessive debt have been exacerbated by retailer closures mandated by coronavirus lockdowns.
The corporate, Ascena Retail Group, will shut “a choose quantity” of Ann Taylor, Lane Bryant, LOFT and Lou & Gray shops in addition to all of its Catherines places, the corporate stated in a Chapter 11 submitting in U.S. Chapter Court docket within the Jap District of Virginia.
The pandemic has taken a heavy toll on retailers, particularly attire sellers and different mall-based chains that may have in any other case stayed afloat, even perhaps for a brief interval, with out turning to chapter court docket. Ascena, based mostly in Mahwah, N.J., is at the least the ninth outstanding retailer to file for chapter since early Could, proper on the heels of Brooks Brothers and Sur La Desk this month, and within the wake of J. Crew, Neiman Marcus Group, J.C. Penney, Fortunate Model, Stage Shops and GNC.
Ascena was identified for many years as Costume Barn, the clothes chain based in 1962 by Roslyn S. Jaffe, who seen that there have been few choices for fashionable and inexpensive girls’s work apparel at the same time as extra girls have been getting into the work drive. Costume Barn went public in 1983, across the time that the “energy swimsuit” got here into vogue, exemplifying girls’s want to tackle the predominantly male company world.
“Ladies in America have been climbing the company ladder in conventional companies for the primary time,” stated Shawn Grain Carter, a specialist in style retail enterprise administration on the Trend Institute of Know-how. “Due to this fact, clothes needed to regulate.”
It adopted the Ascena identify in 2011 after buying manufacturers like Maurices and the tween chain Justice, saying on the time that the enterprise had “ascended to new heights.” Ascena went on to purchase Lane Bryant and the proprietor of Ann Taylor, which incorporates LOFT, and by 2016 it had practically 5,000 shops in malls, retailers and strip malls throughout its manufacturers.
However Ascena’s fortunes and gross sales have soured in recent times. It has struggled to compete with the rise of quick style and the recognition of the net buying in addition to with direct-to-consumer clothes providers akin to Lease the Runway and Sew Repair. It offloaded the chain Maurices and its practically 950 shops in 2019, the identical yr Ascena closed all 650 Costume Barns. The corporate was shedding cash, posting a internet lack of at the least $600 million in 2019, in contrast with a lack of $9 million in 2016.
Ascena’s chapter might have a big effect on buying facilities and malls, which have been already below stress earlier than the pandemic and can’t afford to lose tenants. Gary Muto, Ascena’s chief govt, stated on a March earnings name that 34 p.c of its shops have been in malls.
Even outdoors of malls, the Ascena manufacturers are closely reliant on shops. Earlier than its closures in mid-March, in-store gross sales accounted for about 60 p.c of Ascena’s income, in keeping with a preliminary earnings report in Could. General gross sales fell 45 p.c within the three months that ended Could 2.
In an effort to protect money, the corporate furloughed greater than 90 p.c of its workers and lower salaries for remaining workers.
With thousands and thousands of girls unemployed or working from residence because of coronavirus restrictions, the demand for girls’s skilled clothes — Ascena’s core product — has taken a nosedive.
However the firm’s monetary troubles preceded the pandemic.
As foot visitors in malls slowed over the previous decade and halted altogether throughout the coronavirus pandemic, Ascena has remained saddled with the in depth actual property and working prices of sustaining its shops throughout the nation.
Ascena’s troubles started in 2009, when malls have been nonetheless of their heyday. The corporate got down to seize a bigger share of the marketplace for specialty shops in malls. Below the Ascena umbrella, the corporate acquired manufacturers specializing in premium style (Ann Taylor and LOFT), plus-size garments (Lane Bryant and Catherines) and women’ garments (Justice).
The acquisition of Ann Taylor and LOFT in 2015 was supposed to bolster income by attracting clients prepared to pay increased costs. Ann Taylor and LOFT had loyal followings up to now, however Ascena acquired them when younger feminine clients have been turning to on-line retailers and cheap quick style manufacturers akin to Zara or H&M, the place they may pay $30 for a piece costume as an alternative of $100.
The acquisition caught the corporate with greater than $1 billion in debt with out growing gross sales, stated Anthony Campagna, international director of elementary analysis at ISS EVA, an analytics agency. The corporate’s diversification technique backfired, he stated, and Ascena ended up with a big portfolio of mall manufacturers when the retail trade was shifting virtually totally on-line. It was this miscalculation that led Ascena down the street to chapter.
“The corporate was by no means capable of get out of that gap,” Mr. Campagna stated. “It was a sluggish bleed after that.”