Ascena Retail Group Closing 250 to 650 Stores
The owner of women’s apparel brands including “Lane Bryant,” “Justice,” “Ann Taylor,” and “Dressbarn” is planning to shutter hundreds of stores in efforts to cut costs. This will, no doubt, result in many job cuts.
The parent company, Ascena Retail Group, has announced that as many as 650 stores at various locations may close down. These 650 shops account for 25% of the company’s stores that have leases maturing within the next two years.
The company has not yet given a final number of store closings. CEO David Jaffe, however, has confirmed that at least 250 stores will certainly be closed by July 2017. The fate of the remaining 400 stores with leases expiring will be decided based upon the outcome of negotiations with landlords. The company will be requesting rent reductions.
The announcement about store closings followed the company’s latest quarterly earnings release, which projected disappointing numbers. The company reported a decline in comparable store sales by eight percent, blaming it on a decline in foot traffic. Management also guided that this factor would remain a significant headwind for the company in the foreseeable future.
Ascena, like most brick-and-mortar American retailers, owes the decline in its store traffic to the rise of online retailers. Brick-and-mortar stores across the board are facing lower foot traffic as more Americans switch to online shopping.
Amazon.com, Inc., in particular, has emerged as the biggest threat to traditional brick-and-mortar retailers. At the same time, America’s oversaturated fashion apparel industry is undercutting profits and causing many retailers to close stores, lay off their workforce and, worse yet, go out of business. Apparel and footwear retailers Rue21, Inc., The Gymboree Corporation, and Payless ShoeSource, Inc. are some of the retail companies to have filed for bankruptcy in last few months.
Management has confirmed that no particular brands within the Ascena Retail Group will be specifically targeted. The store closings will be based on the performance of individual stores. Chief Operating Officer Brian Lynch said, “The store closings are determined by individual stores, not by the brand.” He reiterated, “It’s literally the economics of the individual stores.” (Source: Ibid.)
The Ascena Retail Group has over 4,800 stores under various brand names across the U.S., Canada, and Puerto Rico.
“Apparel giant in store closing move amid sales drop”, Chain Store Age, June 9, 2017.