Ann Taylor parent company files for bankruptcy

The former Ann Taylor storefront at 97 Main St. in Westport is slated to become the new Sundance. (AP Photo/Gene J. Puskar, File)

The former Ann Taylor storefront at 97 Main St. in Westport is slated to become the new Sundance. (AP Photo/Gene J. Puskar, File)

Gene J. Puskar / Associated Press

Ascena Retail Group, the conglomerate behind women's apparel brands Ann Taylor, Lane Bryant and Catherines, filed for bankruptcy Thursday and said it would close at least 877, or nearly a third, of its 2,800 stores after years of declining sales and ballooning debt.

The company, founded as Dressbarn in 1962, is one of the nation's largest sellers of women's clothing. But in recent years, its lineups of no-frills workwear and other basics have lost ground to a growing crop of competitors, including off-price retailers like TJ Maxx and newcomers like Everlane.

Ascena is closing all 264 Catherines stores, and selling the plus-size clothing brand and its website to an Australian company, City Chic Collective. It also will shutter more than 600 Justice stores, which cater to girls and preteens, and some Ann Taylor, Loft, Lane Bryant and Lou & Grey shops.

The Mahwah, N.J.-based retailer also is pulling out of Canada, Puerto Rico and Mexico as it tries to whittle down about $1 billion in debt.

It's the latest retail casualty of the pandemic, following Brooks Brothers, J.C. Penney, J. Crew and Neiman Marcus and several others into bankruptcy court. Ascena temporarily shuttered all of its stores and furloughed more than 90% of its employees in mid-March as stay-at-home orders took effect. To stay afloat, it borrowed $230 million, canceled merchandise orders and stopped paying rent.

The planned closures also represent another blow for U.S. shopping malls, which already were struggling to attract shoppers and tenants before the pandemic ushered in a new wave of bankruptcies and closures.

The Chapter 11 filing comes a few weeks after the company said it would give top executives as much as $5.5 million in retention pay and performance bonuses.

The company got its start in the early 1960s when Roslyn Jaffe opened the first Dressbarn to sell ready-to-wear business dresses and separates as women were entering the workforce in droves.

In 2009, it began a period of rapid expansion, snapping up tween chain Justice, then Lane Bryant, Catherines, and Ann Inc., the parent company of Ann Taylor, Loft and Lou & Grey. But analysts say the buying spree was shortsighted and ill-timed.

"They put all of their eggs in one basket, which was high-traffic malls with a diminishing customer base," said Bob Phibbs, chief executive of the consulting firm the Retail Doctor. "It was a spectacularly bad decision to focus only on women's apparel at the same time that younger women were flocking to fast-fashion brands like H&M and Zara."

Ascena permanently closed all 650 Dressbarn stores in December to cut costs. But the pandemic brought in new difficulties, leading to double-digit drops in apparel sales. Analysts say chains that cater primarily to office workers - especially those like J. Crew and Ann Taylor, which sell relatively affordable pieces - are particularly vulnerable to the long-term effects of store closures and work-from-home orders.

In its bankruptcy filing, Ascena said it owes between $10 billion and $50 billion to more than 100,000 creditors. Its largest debts are related to rent: Ascena owes $31.7 million to mall operator Simon Property Group, $16.6 million to Brookfield Properties, $8.8 million to Boston Properties and $7.2 million to Tanger Properties.

The company began gradually reopening stores in May, but says customers have been slow to return. From March to May, quarterly revenue fell 45% from a year earlier.

Covid-19 "has significantly disrupted our business," Carrie Teffner, Ascena's interim executive chair, said in May. "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."

The company had $5.5 billion in sales in fiscal year 2019, versus nearly $7 billion in 2016.

Ascena shares plunged more than 26% after the filing, and are down more than 90% year to date.