Ann Taylor Parent Ascena will close 1,200 bankrupt stores

  • Ascena, which owns specialty retail brands Ann Taylor and Lane Bryant, plans to close at least 1,200 stores through bankruptcy proceedings this week, according to a Bloomberg report.
  • Under its Chapter 11 agreement, Ascena would write off about $700 million of its $1.1 billion debt, and its lenders would assume ownership.
  • The New Jersey-based company has been fighting consumers’ shift to online shopping for years. The coronavirus pandemic has accelerated his troubles.
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Ascena Retail, owner of clothing brands including Ann Taylor and Lane Bryant, plans to close at least 1,200 stores as it prepares to file for bankruptcy, Bloomberg reported.

Ascena could begin bankruptcy proceedings within the week, with a credit deal allowing it to get rid of $700 million of its $1.1 billion debt, according to the report.

Once the process is finalized, the proceeds will go to lenders, including Eaton Vance Corp, which will then assume ownership of the company, Bloomberg said, citing sources with knowledge of the plan.

Ascena has approximately 3,000 stores in the United States. Filing for bankruptcy would allow some of its stores to continue operating under new ownership.

The company’s growing debt stems from consumers’ shift to e-commerce platforms, which has reduced footfall in malls and retail stores.

The New Jersey-based group closed its physical stores in March in response to the coronavirus pandemic. Although some of its stores reopened in May, the company said its consumer traffic was “significantly down” from the same time last year.

To preserve some capital, Ascena has laid off employees, cut advertising, slashed base salaries, halted rent payments and slashed senior executive pay by up to 50%, according to multiple reports.

“Despite aggressive actions to preserve cash, the pandemic has significantly reduced our earnings and cash flow, which has resulted in increased debt levels and deferred liabilities,” said Carrie Teffner, Acting Executive Chairman of Ascena. statement.

“With retail stores making up the majority of our revenue and cash flow, the uncertainty created by COVID-19 forces us to evaluate all available options to protect the business and its stakeholders.”

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