As Troubles at Ann Taylor Owner Grow, 13,000 Jobs at Stake
Ascena Retail Group Inc. (NASDAQ: ASNA) may file for Chapter 11 as soon as next month, according to Bloomberg. This puts 13,000 more retail jobs at stake at a time when tens of thousands of retailer workers already have lost their jobs since the start of the year.
Investors in Ascena would take huge losses as well. In Chapter 11, the share price will push toward zero. The stock is down over 60% so far this year to $2.76 a share. If competitor J.C. Penney’s share price is any indication, the stock will drop to the point where it is worth pennies.
Retailers that go into Chapter 11 often keep some stores open. With most of their debt gone, parent companies can operate the locations that are profitable. Ascena does not break out per-location profit numbers. It owns Ann Taylor, Loft, Lou & Grey, Lane Bryant, Catherines, Cacique and Justice.
Ascena put a large number of its workers out of jobs at the end of March. It announced “a furlough program across its business, including all store associates and close to half of its corporate associates.”
More recently, the company announced it was operating successfully online. It has opened 450 of its 2,800 stores and will open more as local regulations allow it to do so.
Ascena said in its most recently reported quarter that revenue fell 45%. Carrie Teffner, interim executive chair, signaled bad news was coming:
COVID-19 has significantly disrupted our business. 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.
Will some of Ascena stores stay open? It is too early to say. What can be said is that 13,000 people are at risk of losing their jobs.