Ann Taylor Owner Files For Chapter 11 Bankruptcy
NEW YORK (AP) - 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.
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As part of its bankruptcy plan, the company said Thursday that it would close all of its Catherines stores and a "significant number" of Justice stores and a select number of Ann Taylor, Loft, Lane Bryant and Lou & Grey stores.
The company said it has reached an agreement with its creditors to reduce its debt by $1 billion. It received $150 million in new financing to continue operating during its reorganization.
Ascena joins a growing list of retailers that have filed for Chapter 11 in recent weeks, including Brooks Brothers, Neiman Marcus, J.C. Penney, J.Crew and Stage Stores. These retailers were already struggling with weak sales but the forced closure of non-essential stores in March to reduce the spread of the coronavirus put them further in peril.
Ascena furloughed 90% of its workers when it temporarily shuttered its stores while also canceling merchandising orders where possible to preserve cash. It started to reopen its outlets in mid-May and now has about 95% of its stores open.
Prior to the pandemic, Ascena's stores accounted for about 60% of total revenues. Consequently, the pandemic "has significantly reduced our earnings and cash flow," according to a May statement from Carrie Teffner, interim executive chair of Ascena. Total revenues in the third quarter of fiscal 2020, which covered the February through April period, were down 45% compared with the same period a year ago.
The company had revenue of $5.5 billion during its latest fiscal year ended Aug. 3, 2019.
The company said in late May that it ended the fiscal third quarter with outstanding debt of $1.3 billion with interest payments due in the fourth quarter of fiscal 2020 of $20.9 million and its next quarterly loan payment of $22.5 million due in November.
At the time, Ascena said it would continue to evaluate all available options to preserve its ongoing operation.
Copyright 2020 The Associated Press.
