Ann Taylor parent company Ascena will reportedly close 1,200 stores across its brands as it prepares for bankruptcy

• Ascena, which owns specialty retail brands Ann Taylor and Lane Bryant, plans to shut at least 1,200 stores as part of bankruptcy proceedings this week, according to a Bloomberg report.
• Under its Chapter 11 arrangement, Ascena would do away with around $700 million from its $1.1 billon debt load, and its lenders will assume ownership.
• The New Jersey-based company has been battling the consumer shift to online shopping for years. The coronavirus pandemic accelerated its troubles.

Ascena Retail, owner of clothing brands such as Ann Taylor and Lane Bryant, plans to shut at least 1,200 stores as it prepares to file for bankruptcy, Bloomberg reported.

Ascena may enter bankruptcy proceedings within the week, with a credit arrangement allowing it to shed $700 million from its $1.1 billion debt load, the report said.

Once the process is finalized, proceeds will go to lenders including Eaton Vance Corp, who will then assume ownership of the company, Bloomberg said, citing sources with knowledge of the plan.

Ascena owns around 3,000 stores in the US. Filing for bankruptcy would allow some of its stores to continue operating under new ownership.

The company's growing debt arises from the consumer shift to e-commerce platforms, which has reduced footfall in malls and retail stores.

The New-Jersey based group shut its brick-and-mortar stores in March after the government imposed national lockdown. Although some of its stores reopened in May, the company said its consumer traffic had "significantly reduced" compared to the same period last year.

To preserve some capital, Ascena furloughed employees, cut back on advertising, reduced base salaries, stopped rent payments, and trimmed senior staff pay by as much as 50%, according to multiple reports.

"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," Carrie Teffner, interim executive chair of Ascena, said in a statement.

"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."