Report: ABG May Buy Bankrupt Ann Taylor Parent Firm Ascena

Authentic Brands Group (ABG), the New York-based brand management company, could be the latest potential buyer of Ascena Retail Group, the recently bankrupt parent firm of Ann Taylor, Footwear News reported.

Ascena, also the owner of women’s clothing brands Justice, Lane Bryant, Loft and Catherines, filed for Chapter 11 protection Thursday (July 30). The New Jersey-based company operates about 3,000 stores, mostly at malls. It has suffered from weak sales and has also been hurt by debt.

Under the plan, ABG would complete the deal with buying partners Simon Property Group and Brookfield Property Partners, the report said. Sycamore Partners, the New York-based private equity firm, is also reportedly considering the purchase, FN reported.

ABG has emerged as a major player in retail mergers and acquisitions as the COVID-19 crisis hurts brick-and-mortar stores while fueling online sales.

Last week, bankrupt Brooks Brothers announced SPARC Group LLC,  a venture created by ABG and Simon, bid $305 million to purchase its global operations as a going concern. The group said they would spare at least 125 of its stores, FN reported.

In 2016, ABG and Simon, along with General Growth Properties, now owned by Brookfield, collaborated to save Aéropostale from liquidation. They also purchased Forever 21 in February.

In its Chapter 11 filing, Ascena wrote that it reached a restructuring agreement with 68 percent of its secured term lenders and received $150 million in new loans. The goal, Ascena said, is to eliminate $1 billion of its $12.5 billion debt.

Under a restructuring, the conglomerate would close its Canada, Puerto Rico and Mexico stores and its Catherines shops.

Before the coronavirus, Ascena’s stores accounted for 60 percent of its total revenue. But in a statement issued in May, Carrie Teffner, interim executive chair of Ascena, said the pandemic has significantly reduced earnings and cash flow.

The news came as the number of jobless claims reported by the U.S. Department of Labor (DOL) Thursday (July 30) increased for the second consecutive week, as new cases of COVID-19 continued to surge.

The number of seasonally adjusted initial jobless claims was 1,434,000, up 12,000 from the previous week’s revised level.