Ann Taylor Parent's Bankruptcy Is the Scariest Yet
(Bloomberg Opinion) -- In the latest example of how the world of brick-and-mortar retail is being overwhelmed by the pandemic, specialty apparel conglomerate Ascena Retail Group Inc. — corporate parent of Ann Taylor, Lane Bryant and other chains — filed for Chapter 11 bankruptcy protection. The company said Thursday its restructuring plan will allow it to reduce its debt by $1 billion. It also will close an unspecified number of stores across all of its major banners, including shuttering all of its Catherines plus-size apparel locations.
Ascena may not have the cultural primacy of some of the other prominent names in the industry that have recently filed for bankruptcy. It doesn’t have the long, storied heritage of Brooks Brothers, the preppy clothier that opened its first shop more than 200 years ago. It didn’t define a fashion moment like J. Crew did a decade ago when Michelle Obama was sporting its embellished cardigans. It’s not a household name like J.C. Penney.
But make no mistake: Ascena’s bankruptcy is the scariest yet for the industry in the Covid-19 era, because the company’s collapse has the potential to create more devastating ripple effects than were caused by almost any of the other retail washouts that preceded it.
Ascena had nearly 2,800 stores as of February, a staggeringly large portfolio that includes Loft and kids’ shop Justice. That makes it a highly important tenant for many mall operators. The company accounted for 4.7% of annualized base rent at Tanger Factory Outlet Centers Inc., according to that operator’s latest quarterly filing, a share that makes Ascena its second-largest tenant behind only Gap Inc. For Simon Property Group Inc., only Gap and Victoria’s Secret parent L Brands Inc. account for a greater share of annual base rent than Ascena. It is in the top 10 for Brookfield Property Partners and Acadia Realty Trust.
Customers may have returned to stores at a faster clip than some retailers anticipated, but traffic generally remains at levels the industry was not built to sustain.
Meanwhile, the U.S. is seeing an uptick in Covid-19 cases, which could dissuade some shoppers from stepping foot into a store again anytime soon. The June unemployment rate was 11.1%, and at least for now, no additional stimulus checks are headed to consumers’ bank accounts. That leaves clothing retailers in an especially difficult position – and it almost certainly means more of them will be joining Ascena in bankruptcy.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Sarah Halzack is a Bloomberg Opinion columnist covering the consumer and retail industries. She was previously a national retail reporter for the Washington Post.
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