Ann Taylor parent Ascena Retail Group is said to be in the process of closing stores ahead of probable. bankruptcy filing.
Sources said Ascena, which also owns nameplates including Lane Byant and Ann Taylor Loft, has already started closing stores or elected not to reopen locations that temporarily shut down in March to curb the COVID-19 outbreak. It wasn’t immediately known how many stores are currently on the chopping block. A company spokesman did not respond to a request for comment on Wednesday.
The retailer last filed a quarterly report in March for the second quarter ended Feb. 2. Ascena’s third quarter ended May 2, but COVID-19 has delayed the quarterly report. The upcoming fourth quarter and full year, or fiscal 2020, will end on Aug. 1, close to when the company might be getting ready to file a Chapter 11 bankruptcy petition.
Ascena has begun trying to line up debtor-in-possession financing, Bloomberg reported earlier this week, noting that the company is in talks with creditors on a restructuring plan that involves replacing board members. Last week, word surfaced that the company could close up to 1,200 stores.
Though speculation about an Ascena bankruptcy surfaced in March, the company quickly denied any plans to file, though it has long been on credit watch lists by financial firms tracking its debt load. There’s always the possibility that Ascena might not be able to refinance its debt, despite reporting on May 28 that it’s exploring all available options. The company recently approved $5.5 million in executive retention bonus payouts last month, a controversial move designed to keep key executives on board for the post-bankruptcy journey ahead.
As for store closures, it seems that the company has already started that process. At the end of the second quarter, the company reported a total of 2,764 stores, comprised of 820 Justice locations, 688 for Lane Bryant, 666 for Ann Taylor Loft, 291 for Ann Taylor and 299 for Catherines. A search on Wednesday at the store directories for each brand shows that 101 stores have already been closed, bringing new total to 2,663 overall locations. The new store count is 811 for Justice, 666 for Lane Bryant, 639 for Ann Taylor Loft and its Loft Outlet locations, 281 Ann Taylor and its Ann Taylor Factory doors and 266 sites for Catherines.
More doors are expected to close shortly, with many before the end of this month, sources said. The store closures are expected to cut across all of the retailer’s nameplates. What isn’t yet known is how many store associates, and even those at corporate headquarters, would be impacted by the closures. Macy’s and Nordstrom have already permanently laid off workers, while bankruptcy J. C. Penney is shedding 1,000 jobs. As retailers furloughed store staff during the initial coronavirus outbreak, many workers had hoped to return once the stores reopen. But with retailers rethinking their store base, it appears that the retail sector is destined to shrink even further instead.