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May 21, 2019

Ascena announces wind down of Dressbarn business

By Beth Wright

Ascena Retail Group has announced its Dressbarn brand is to wind down its retail operations in a move that will include the eventual closure of its 650 stores.

In a statement, Ascena, which owns the Ann Taylor, Loft and Lane Bryant chains, said the decision has no impact on the operations of any of the group’s other brands and will strengthen the company’s overall financial performance. 

“Dressbarn’s wind down is another significant step taken to advance Ascena’s ongoing transformation,” the group said. “This move is in line with the company’s commitment to comprehensively assess and optimise its portfolio by focusing resources on its most profitable brands to position the business for long-term growth and enhance shareholder value.”

In a separate statement, Dressbarn’s said plans for closing individual locations, including information about store closing sales, will be shared during the wind down process. 

At present, all Dressbarn stores are open and conducting business as usual, as is Dressbarn’s e-commerce site. Customers can continue to shop at Dressbarn in-store and online and use Dressbarn-branded credit cards for purchases. There are no current changes to Dressbarn’s return, refund, or gift card policies.

The company added it intends to continue paying its vendors and suppliers in full in the ordinary course for products and services provided to Dressbarn during its wind down process.

Steven Taylor, chief financial officer of Dressbarn, said: “For more than 50 years, Dressbarn has served women’s fashion needs, and we thank all of our dedicated associates for their commitment to Dressbarn and our valued customers. This decision was difficult, but necessary, as the Dressbarn chain has not been operating at an acceptable level of profitability in today’s retail environment. During the wind down process, we will continue to provide our customers with the same great experience both in-store and online, offering them even better deals and value. We will work to assist our associates through the transition and maintain existing relationships with our vendors, suppliers, and other key stakeholders through this process.”

Ascena refused to be drawn into speculation it was mulling the sale of its Dressbarn unit earlier this month, after booking a second-quarter net loss of $72m in February, compared with a loss of $39m a year earlier, which it blamed on “macro-headwinds” impacting the sector.

The announcement follows Ascena’s recently completed sale of its Maurices women’s clothing business for $300m.

Neil Saunders, managing director of GlobalData Retail, notes while the closure of Dressbarn was not inevitable, given the company’s “dire performance” it comes as little surprise that Ascena has decided to head for the exit.  

“Over the past few years, Dressbarn has lost customers, sales and share; it has also been unprofitable. Over recent quarters, those losses have accelerated and have shown no signs of reversing,” he says.

“Aside from a few failed efforts to revive the brand, Ascena really never invested in Dressbarn and let it stagnate to the point where it has become completely out of touch with the needs of modern shoppers. Even the name now feels old fashioned and dull. There is a particular issue with the younger family demographic for whom Dressbarn isn’t even on the radar.”

While Dressbarn stood still, Saunders says other retailers have stepped in with more” exciting propositions”, with off-price players, value retailers like H&M, variety stores like Target, and even department stores such as Kohl’s all taking clothing share from Dressbarn over recent years.

“As a value focused retailer, Dressbarn needs volume to succeed,” he explains. “Yet all of the current trends are eroding volume and therefore undermining its business model. That’s why there appears to be no future for the business, including a lack of potential buyers.”

Yet as much as this is a sensible financial decision for Ascena – a group which was born out of Dressbarn – Saunders says the move does represent a loss of face.

“Ascena has always sold itself on the basis of being a strong operator in the apparel segment, serving a wide range of demographics, occasions and styles. However, the reality is that Ascena is operationally weak and has done a relatively poor job of managing its individual brands for growth.

“Although future moves may not be as dramatic, it is unlikely that the shuttering of Dressbarn will be the last restructuring from Ascena as the group tries to turn around its performance.”

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