The United States Bankruptcy Court for the Eastern District of Virginia granted Ascena its first-day motions related to its July 23 Chapter 11 petitions, including the closure of "1,100 underperforming brick-and-mortar store locations," according to an Ascena press release Friday.
A store closing program under an agreement with SB360 Capital Partners involves 606 locations of its tween Justice brand, out of about 800 in the U.S. and Canada, seven stores run by its "premium" brands (presumably Ann Taylor, Loft and Lou & Grey) and all 264 plus-size Catherine’s locations, according to the filing. A document labeled "closing stores," also lists yet more locations of Ascena's brands.
The court also granted Ascena authority to manage day-to-day operations, including paying employee wages and benefits and honoring certain customer and vendor commitments, and authorized the company to access more than $430 million in cash collateral, according to the release.
Last week when Ascena announced its bankruptcy filing, the company revealed that the footprint of its Catherine's plus-size brand would be wiped out in a sale to online plus retailer City Chic.
Now it seems the company has also lost faith in its tween Justice brand, a business that until recently delivered strong results. Ascena's retreat is some rare good news for Gap Inc., whose Old Navy brand on Monday announced a limited-edition capsule collection partnership with Popsugar aimed at a similar demographic.
In all, more than a thousand locations will close, most of them now run by Justice, and Ascena said in its court documents that more closures may be needed.
Ascena arrived at bankruptcy court with a restructuring support agreement already forged with more than 68% of its secured term lenders. That agreement contemplates agreed-upon terms for a pre-arranged financial restructuring plan that Ascena expects to reduce its debt by about $1 billion.
In its second-day hearing, Ascena said it will seek approval of $150 million in a new money term loan from its existing lenders. The company said it expects that financing, along with cash on hand and cash flow generated by ongoing operations, will be sufficient to meet its operational and restructuring needs.