Wednesday, August 5, 2020

Ascena Retail Group, parent of Ann Taylor, Lane Bryant, and other chains, filed for bankruptcy, a tale of the Retail Apocalypse and pandemic

I concluded Executives at JCPenney and Hertz scored bonuses before declaring bankruptcy, tales of the Retail Apocalypse and pandemic with a teaser for today's post.
Stay tuned as I plan on making good on the other promise I made at the conclusion of yesterday's post.
Before I go, ABC News also reported that Ascena Retail Group, parent company of Ann Taylor, LOFT, Lane Bryant, Lou & Grey, Catherines, Cacique, Justice, and Dressbarn filed for bankruptcy recently. I'll have to report on that as well.
This story barely made a splash in news reports on YouTube, as the best one I found was from CBS Philly, Ann Taylor Owner Files For Chapter 11 Bankruptcy.

The operator of Ann Taylor and Lane Bryant filed for Chapter 11 bankruptcy on Thursday, the latest retailer to do so during the pandemic. Mahwah, New Jersey-based Ascena Retail Group Inc., which operates nearly 3,000 stores mostly at malls, had been dragged down by debt and weak sales for years. Katie Johnston reports.
I found the local television coverage disappointing, especially since I've had my eye on Ascena Retail Group since I wrote Business Insider on stores closing in the Retail Apocalypse more than two years ago, when I wrote "The third company closing lots of stores is Ascena Retail Group. I didn't know who they were, but I did know some of the chains they own, including Ann Taylor, Dress Barn, Lane Bryant, and Loft." I was hoping for something more after two years, but the news media let me down. Considering that the bankruptcies of Brooks Brothers and Tailored Brands, parent of Men's Wearhouse and Jos. A. Bank got more coverage, I wonder if there isn't some subtle sexism to blame for this, as Ascena Group sells women's wear, while the other two chains sold men's business apparel. It's that, or it doesn't fit the news angle in my quip "I guess no one needs a business suit when they work from home and conduct business over Zoom." Even that doesn't hold water, as Ann Taylor sells clothes for professionals. I have two reactions — oink and sigh.

On the other hand, print media took the bankruptcy more seriously, as the New York Times, Wall Street Journal, Business Insider, and Yahoo! Finance all ran stories on it. Follow over the jump for coverage from Business Insider, and Yahoo! Finance, since the first two sources are behind partial paywalls.

I begin with Business Insider's Ann Taylor parent company Ascena has filed for bankruptcy and plans to close hundreds of stores.
Ascena Retail Group, owner of Ann Taylor, LOFT, Lou & Grey, Lane Bryant, Catherines, Cacique, and Justice, has filed for Chapter 11 bankruptcy.

It plans to close an undisclosed number of stores, including "a significant number" of Justice stores and all of its Catherines stores.

It also plans to close some Ann Taylor, Loft, Lou & Grey, and Lane Bryant stores and will exit Puerto Rico, Canada, and Mexico.
While the pandemic was the last straw, the women's fashion conglomerate had been in trouble for several years before it hit, as I noted above.
The retailer's sales have struggled for years, as its stores are primarily located in malls, which saw declining foot traffic even before the pandemic hit. Bloomberg reported that in September the company was looking to sell Catherines and Lane Bryant — both of which sell plus-size women's apparel — but was unsuccessful in doing so.

At the beginning of 2020, Ascena completed its liquidation of its Dressbarn business, which included more than 650 stores. It also sold off its Maurices brand in March 2019.
Yahoo! Finance reprinted a Women's Wear Daily article with a headline that summarized the issue, Ascena Tackled a Tough Market and Fell Short.
Ascena’s woes weave a tale of how management failed to execute on a vision to grow through aggressive acquisition and lead the mid-tier women’s specialty sector, which for years has been among the most troubled and competitive in retailing.

Originally, there was just Dress Barn, founded in 1962 by Elliot and Roslyn Jaffe in Stamford, Conn., around when women started entering the workforce in bigger numbers.
The founders’ son, David, a Stanford University MBA and former general partner at J.P. Morgan Chase Capital Partners, eventually joined his family’s business, bringing a different perspective on growing the company.
In 2002, David rose to ceo, succeeding his father. Seeing limited growth ahead for Dress Barn, and battling sluggish sales trends and tougher competition from the likes of Kohl’s, Target and Walmart, he orchestrated a buying spree, first with the acquisition of the Duluth, Minn.-based Maurices women’s sportswear chain in 2005, then the New Albany, Ohio-based Justice girls chain in 2009.
In 2011, the company changed its name to Ascena Retail Group to reflect its transformation from owning a single brand to owning several. A year later, Ascena purchased Charming Shoppes, the holding company for Lane Bryant, Cacique and Catherines Plus. Three years later, the company bought Ann Inc., the parent of Ann Taylor, Loft and Lou & Grey, becoming a $5 billion retail conglomerate.

It was one acquisition after another, aimed at achieving economies of scale and pursuing a goal to become an industry force.

But instead of achieving dominance, the company mostly plodded through seasons of uneven performance across its divisions, as they catered to different demographics. Ascena was hampered by execution missteps, fashion misses and insufficient earnings to both support the debt and adequately update the apparel chains.

In May 2019, in a clear sign that the strategy had failed, Jaffe, under pressure, stepped down as ceo and chairman. He was succeeded by [Gary] Muto, who was president and second-in-command, and earlier ran Ann Taylor and Loft. In the management upheaval, chief operating officer Brian Lynch also stepped down.
“It was all good intentions, but at the end of the day there were too many brands and leadership that didn’t fully understand what it takes to manage that kind of portfolio,” said one retail expert who has been close to the business.
I highly recommend reading the entire article. Local television news may not have done the story justice, but Women's Wear Daily certainly did. It even includes an outline of what the company will look like when it comes out of bankruptcy with Ann Taylor, Lane Bryant, and Loft remaining and the other stores sold off or closed. It reminds me of the much reduced General Motors after its bankruptcy, which retained Chevrolet, GMC, Buick, and Cadillac, while relegating Oldsmobile, Pontiac, and Saturn to extinction. So far, that seems to be working for the car company. May a similar strategy work for Ascena.

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