Ascena Retail Group has completed the sale of its Ann Taylor, Loft, Lou & Grey, and Lane Bryant brands to the Sycamore Partners private equity firm.
The $540 million deal, approved earlier this month by the Virginia Eastern District Bankruptcy court, was done through Premium Apparel LLC, an affiliate of Sycamore.
The deal represents a significant expansion of Sycamore’s portfolio, including Belk, CommerceHub, Hot Topic, MGF Sourcing, NBG Home, Pure Fishing, Staples North American Delivery, Staples United States Retail, Staples Canada, Talbots, The Limited and Torrid.
Sycamore’s MGF Sourcing arm will benefit by supplying the group’s expanded stable of retailers. MGF is a large, 40-plus-year-old sourcing, manufacturing and supply chain company with more than 700 associates worldwide.
“We’re pleased to have completed our purchase of these four highly respected apparel brands and are excited by the opportunity to unlock their full potential as part of our portfolio,” Stefan Kaluzny, managing director of Sycamore Partners, said Wednesday.
Ascena filed for Chapter 11 bankruptcy last July after piling up debt through a string of acquisitions over the years and being pushed over the edge by the coronavirus. Ascena’s woes weave a tale of how management failed to execute on a vision to grow through aggressive acquisition and lead the midtier women’s specialty sector, which for years has been among the most troubled and competitive in retailing.
The deal with Sycamore follows other dispositions by Ascena during and before its bankruptcy. Previously, FullBeauty Brands Operations LLC bought Catherines’ intellectual property assets and e-commerce business. Justice Brand Holdings LLC, an entity formed by Bluestar Alliance LLC, completed its acquisition of the intellectual property of Justice. And prior to the coronavirus outbreak, Ascena liquidated Dressbarn and sold off the Maurices chain.
Sycamore and Ascena disclosed this latest deal in November, notching an agreement that would preserve some 900 stores and thousands of jobs, advisers said in bankruptcy court. The proceeds of the sale will go toward paying off the bankrupt Ascena’s debtor-in-possession financing, as well as to make distributions to term loan lenders.
The company also plans to hold roughly $400 million in cash reserves as it works to address claims in the case as it heads toward a hearing to confirm its restructuring plan, and emerge from bankruptcy.
In its announcement Wednesday, Ascena affirmed that Sycamore’s Premium Apparel affiliate has committed to retaining “a substantial portion of the retail stores, associates and corporate operations.”
Sycamore, based in New York, specializes in consumer, distribution and retail-related investments. In its company profile, Sycamore indicates that it “partners with management teams to improve the operating profitability and strategic value of their business.” Sycamore also indicates that it has raised about $10 billion in capital since its inception in 2011. Investors include endowments, financial institutions, family offices, pension plans and sovereign wealth funds.
Gary Muto, chief executive officer of Ascena, said the deal with Sycamore “secures a path for the long-term success of Ann Taylor, Loft, Lou & Grey, and Lane Bryant.…We have worked diligently to maximize the value of our brands, and we are confident they will thrive under Sycamore’s ownership.
“I would like to thank our associates, who have remained focused on meeting our customers’ needs throughout our financial restructuring process,” Muto said in his statement.
Ascena, which has been slashing costs, consolidating and closing stores for months, operates e-commerce sites and about 1,500 stores.
“While we have certainly faced obstacles in the challenging retail landscape brought on by the global pandemic, our associates have consistently demonstrated leadership, professionalism and dedication to our customers and to each other,” Muto said.