The struggling Ascena Retail Group Inc. has decided to shut down its Dressbarn division, in a move representing the retail conglomerate’s most dramatic downsizing to date in its efforts to revive itself.
The decision comes just three weeks after a management shakeup in which David Jaffe, chairman and chief executive officer of Ascena, said he had retired and that he had been succeeded by Gary Muto as ceo. Muto had been president and ceo of Ascena Brands, and second-in-command next to Jaffe.
Back in March, in another maneuver to improve the balance sheet, Ascena sold a majority stake in its Duluth, Minn.-based Maurices division to a subsidiary of British private equity firm OpCapita. The deal was valued at $300 million.
It’s likely that further restructurings will occur with the Ascena group, considering performances are mixed across the portfolio of brands.
“This was a difficult but necessary decision and one that was not taken lightly,” Muto said about Dressbarn in an internal memo to his associates obtained by WWD. “Despite the team’s best efforts to better position Dressbarn in a challenging retail environment, Dressbarn has not been operating at an acceptable level of profitability to sustain itself. In the end, we must do what’s right for Ascena and our shareholders.”
Muto said that the wind-down of Dressbarn will have no impact on any of Ascena’s other brands. “Importantly, this move will allow us to strengthen and optimize our portfolio by focusing our resources on our most profitable brands and position Ascena for long-term growth.”
No specific timing on the closing of the 650-unit Dressbarn chain and dressbarn.com was given. However, the company said that plans for closing individual Dressbarn locations, many of which are located in strip centers, including information about store closing sales, will be shared during the wind-down process. Dressbarn has retained A&G Realty Partners to assist on real estate-related matters.
Dressbarn associates will be notified when decisions are made about specific store closures and provided with transition support, the company said. The shutdown will affect the 6,800 employees of the division.
Dressbarn intends to continue paying its vendors and suppliers in full in the ordinary course for products and services provided to the retailer during its wind-down process, the company said.
Dressbarn was founded by Jaffe’s parents, Roslyn and Elliot Jaffe, in 1962. Roslyn Jaffe came up with the idea of offering inexpensive workplace clothes for women, partly because she couldn’t find them for herself. She and her husband opened their first store in Stamford, Conn., in a rather rudimentary setting. They chose the name Dressbarn since to them the “barn” reflected discounts or value.
It’s possible that David Jaffe would have been hesitant to pull the plug on the business that his parents founded and represented the mothership of the Ascena Retail Group. Monday’s announcement was Muto’s first since taking the helm of Ascena.
While offering good values, Dressbarn suffered from a stale fashion image that for too long stuck to an older, working-class audience of women.
Some attempts at modernizing the business and making it more inclusive had been made. Three years ago, Ashley Graham, the plus-size model and designer, launched her first ready-to-wear collection called Beyond by Ashley Graham at Dressbarn. It had a wide range of sizes, from 4 to 24 and was presented in a section of the Dressbarn store that had been developed a few seasons prior called the Dressbar to isolate some more fashionable and sexier dress styles created at times by Carmen Marc Valvo, Adrianna Papell, Heidi Weisel, and Celeste and Satu Greenberg of Tuleste.
Other divisions at the Ascena Retail Group have had up-and-down performances over the years, including Ann Taylor, while the more casual and less expensive Loft division has had a better track record.
Ascena also operates Lane Bryant, which specializes in large sizes and has struggled with uneven performance for many years, as well as Catherines, another large-size division, and Lou & Grey, for easy casual sportswear and loungewear. Ascena owns Cacique, and Justice for tween girls. In total, the company operates about 3,500 stores throughout the U.S., Canada and Puerto Rico.
“Dressbarn has played an important role in the retail industry as a female-founded company offering affordable fashion for the working woman,” Muto said in his letter. “Dressbarn is the spirit of the Jaffe family, and that spirit resonates in all past and present associates, providing us with strength, wisdom and resilience that will forever be embodied at Ascena.
“When speaking with Mrs. J [as Roslyn Jaffe’s widely known] about this decision, she said: ‘This is an example of the hard life decisions we all must make. As tough as it is, we should all be proud of how many lives we’ve touched and the positive impact we’ve made. I know that spirit will be continued in our other brands.’”
Muto added that “Mrs. J is an inspiration to us all, and I know I speak for our entire team when I say that we embrace and share her commitment and values. As we begin the wind-down process, we are focused on ensuring that the transition ahead is as smooth as possible for our Dressbarn associates and customers.”
Muto had set up a town hall meeting with the Dressbarn teams on Monday and has planned for a series of small group meetings and conference calls over the next few days.