Bankruptcy, Store Closures Loom For Ann Taylor, LOFT, Lane Bryant Owner Ascena

Ascena Retail Group (ASNA), the parent company of the Ann Taylor, LOFT and Lane Bryant brands, is nearing bankruptcy and has plans to close at least 1,200 of its almost 3,000 stores.

Through the bankruptcy filing, which is expected to come as soon as this week, Ascena will attempt to eliminate about $700 million of its $1.1 billion debt burden as lenders such as Eaton Vance Corp. take over the company, sources told Bloomberg.

While details of the restructuring plan and are not final, sources told Bloomberg that the bankruptcy filing would allow Ascena to keep some of its brands open. The company is reportedly looking to sell its Catherines and Justice brands.

Ascena's financial woes have mounted in recent years as consumers shift to online purchases. There has also been decreased foot traffic at malls, which represents a bulk of Ascena's locations.

In March, the retailer closed all of its stores amid the COVID-19 crisis, reopening locations as state and local restrictions allowed in May. Ascena said customer traffic at reopened stores was lower than normal due to the impact of COVID-19.

“COVID-19 has significantly disrupted our business,” said Carrie Teffner, interim executive chair at Ascen, in the company’s COVID-19 business update. “Despite aggressive actions to preserve liquidity, the pandemic has significantly reduced our earnings and cash flow, resulting in increased levels of debt and deferred liabilities.

“With retail stores making up the majority of our revenue and cash flow, the uncertainty created by COVID-19 requires us to evaluate all options available to protect the business and its stakeholders,” she added.

Shares of Ascena were trading at $1.02 as of 3:50 p.m. ET, down $0.27 or 20.93%.