Shopper enters a Ann Taylor LOFT clothing store located on Madison Avenue in New York City.
Adam Rountree | Bloomberg | Getty Images
The parent company of Ann Taylor and Loft, Ascena Retail Group, filed for Chapter 11 bankruptcy protection Thursday morning, marking the latest apparel maker to be pushed to the brink during the coronavirus pandemic.
The company said in a press release that its restructuring agreement is supported by more than 68% of its secured term lenders, and it plans to close a number of stores and sell the rights to one of its brands.
The Mahwah, New Jersey-based company, which also owns Lane Bryant and Lou & Grey, said it expects to reduce its debts by about $1 billion in its pre-arranged restructuring, providing Ascena with increased financial flexibility to reach profitability.
“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,” interim Executive Chair Carrie Teffner said in a statement.
In total, Ascena has 2,800 stores across the U.S. and Canada, many of them in shopping malls and outlet centers.
Ascena said Thursday it plans to permanently close a “significant” number of Justice stores, along with certain Ann Taylor, Loft, Lane Bryant and Lou & Grey stores during its restructuring. It added that it will be permanently closing all of its stores, across brands, in Canada, Puerto Rico and Mexico.
The final number of store closings, it said, will be determined based on “the ability of Ascena and its landlords to reach agreement on sustainable lease structures.” It said it is hopeful it will be able to “keep as many stores open as possible.”
It is, meantime, shutting down its plus-size brand Catherines entirely and plans to sell those intellectual property assets to a stalking-horse bidder, City Chic Collective Limited. That is still subject to better offers, it said, not disclosing the amount City Chic is looking to pay.
Last year, in a bid to cut costs, Ascena winded down its Dressbarn business, shuttering more than 600 stores.
Ascena said Thursday it has received $150 million in funding from existing lenders, and expects to have enough liquidity to meet its needs.
This story is developing. Please check back for updates.