Ascena Retail Group (ASNA) - Get Report, the parent company of the Ann Taylor and Loft retail chains, filed for bankruptcy protection, the latest retail operator to succumb to the coronavirus pandemic and consumers’ shift away from non-essential gear.
The Mahwah, New Jersey-based company, which also owns operates Justice, Lane Bryant and Catherines store brands, filed for voluntary Chapter 11 bankruptcy on Thursday, with a restructuring agreement supported by more than 68% of its secured term lenders.
"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.
"As a result, we took a strategic step forward today to protect the future of the business for all of our stakeholders," Teffner added.
The company said it expects to reduce debt by about $1 billion in its pre-arranged restructuring, giving it more financial flexibility to focus on returning to profitability. It has $150 million in funding from existing lenders, which combined with its current cash flow from ongoing operations will fund it through the bankruptcy process.
Ann Taylor, Loft, Lane Bryant and other chains will continue to operate through the restructuring with about 95% of stores open, the company said. However, the company will close a “significant” number of Justice stores and certain Ann Taylor, LOFT, Lane Bryant and Lou & Grey stores.
"This includes the exit of all stores across brands in Canada, Puerto Rico and Mexico and the closure of all Catherines stores," the company said.
Shares of Ascena were trading at 65 cents at last check.