After months of rumors that its parent company — Ann Inc. — was looking for a buyer, Ann Taylor, Loft and Lou & Grey have been sold for more than $2.1 billion to Ascena Retail Group, whose holdings including plus-size clothier Lane Bryant and Dressbarn.
Mahwah, N.J.-based Ascena “may be the biggest name in women’s clothing that no one has heard of,” writes Lisa Fickenscher for the New York Post. “Already the No. 3 U.S. specialty apparel company (behind Gap and L Brands), [it now] will control eight retail brands across 4,930 retail stores.”
“Its other brands are lower to moderately priced and appeal to women between the coasts, while Ann clearly has coast-to-coast appeal,” BlueFin Research analyst Rebecca Duval tells Fickenscher. Ascena’s three other brands are Catherines, Maurices and Justice.
“The transaction will make us part of a larger organization with a diversified portfolio of brands focused on the women’s apparel market, a strong operating platform and a powerful financial base,” Ann CEO Kay Krill says in the statement announcing the deal. It is expected to close in the second half of 2015. A conference call is scheduled for 8:30 a.m. ET today at 1-888-469-3144 (Passcode: 8888702).
Bloomberg’s Kevin Orland and Craig Giammona point out that the retailer has “struggled” as “workplace attire has become more casual, giving women have less need to buy the business suits that had been Ann Taylor’s calling card. And Millennials have largely shunned stores that cater to older professional women.
“In an effort to adjust, Ann added the Loft chain in the 1990s to sell more laid-back looks. More recently, it hired actress Kate Hudson as a brand ambassador and began using its Lou & Grey nameplate to offer clothing with a more athletic vibe.”
Ascena CEO David Jaffe’s parents started Dressbarn in 1962 after his “father, Elliot, noticed there weren’t many chains selling bargain clothes for women. Mr. Jaffe’s mother, Roslyn, told her husband not to quit his day job, because they needed his income to support their three children, and started the business on her own,” Suzanne Kapner writes for the Wall Street Journal.
Jaffe, 59, has a degree from Wharton and an M.B.A. from Stanford and worked on Wall Street and with a private equity firm before joining the family business in 1992, Kapner reports.
“He has since converted Ascena into a holding company that handles back-end operations like sourcing and distribution for a growing stable of brands. He has focused on chains in underserved but growing markets such as plus sizes. He says some 40% of American women wear size 14 and above.”
The deal is “a sign of how tough it is” in the highly competitive retail business right now, Paul R. La Monica points out on CNNMoney, listing recent deals such as Staples’ acquisition of Office Depot and Family Dollar’s purchase of Dollar Tree. With some “disappointing” quarterlies last week and consumer spending “sluggish,” analysts “expect the buying trend to continue.”
For example, “both Chico's and Express have been cited as possible takeover targets in reports during the past few months,” La Monica says. “Each is said to be in talks with private equity firm Sycamore Partners but discussions have since ended.”
The Los Angeles Times’ Samantha Masunaga says “some analysts questioned whether the combined company would be any more able to compete against fast-fashion retailers that turn over inventories quickly. Ascena and Ann Inc. already struggle to distinguish themselves from competitors like H&M.”
“I wouldn't call it a blockbuster deal by any stretch,” Retail Systems Research analyst Paula Rosenblum tells Masunaga. “Just because you put a bunch of things together doesn't mean you get synergies.”
“This is a good move in that Ascena will be by far the most dominant retailer in women’s apparel,” Craig Johnson, president of retail research and consulting firm Customer Growth Partners, tells the New York Times’ Hiroko Tabuchi. “The problem is that traditional women’s apparel is flatlining, if not shrinking. The whole landscape is littered with names that have gone dark or gone out of business altogether.”
Ascena’s aspirations are in the other direction, of course.
“The introduction of ‘ascena’” as a holding company in January 2011 “led to the questions: What's in a name? And, what does ascena stand for?” according to its website. “Ascena is about ascending to new heights.”
A new word for a changing world.