The parent company of Ann Taylor, LOFT, Lane Bryant, Justice, Catherines, and Lou & Grey -- ascena retail group, inc. -- is the latest retailer to take a fall from the COVID-19 pandemic and file for Chapter 11 bankruptcy protection.
Those stores aren’t going away, however. Chapter 11 simply allows ascena to restructure its agreements with its lenders. Currently, the company is operating with close to 95 percent of its 2,764 stores reopened and serving customers in those stores and through its e-commerce brand websites. Ascena says it will use the safety and well-being of its associates and customers as a benchmark for the future of its operations.
“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. As a result, we took a strategic step forward today to protect the future of the business for all of our stakeholders,” said Carrie Teffner, Interim Executive Chair of ascena.
What changes and what stays the same
As part of the restructuring, ascena says two major steps will be taken. Firstly, it will optimize its brand portfolio. Secondly, it will reduce its footprint by closing a “significant number” of Justice stores and a “select number” of Ann Taylor, LOFT, Lane Bryant, and Lou & Grey stores.
The company said in its announcement that it is getting completely out of Canada, Puerto Rico, Mexico, and will be getting out of the plus-size business altogether by closing all of its Catherines stores.
Another one bites the dust
The coronavirus has thrown quite the bankruptcy pity party. Besides ascena, the pandemic is also playing host to other major apparel retailers like J.Crew, JCPenney, Neiman Marcus, and Brooks Brothers which, collectively, account for thousands of shuttered stores.
“It will take more than store closures to ensure the long-term survival of these brands,” GlobalData Retail Managing Director Neil Saunders said in a note to clients about Ascena. “In our view, a label like Ann Taylor does not have a very clear sense of identity. Its proposition lacks both clarity and relevance and, as a result, it is all too easy to overlook.”