The Ascena Retail Group, the parent company behind several prominent clothing stores, has filed for bankruptcy, according to a report by CNN Business. Ascena owns Ann Taylor, LOFT, Lane Bryant and Lou & Grey stores, all of which are now in danger of shutting down. The bankruptcy is reportedly a direct result of the economic recession caused by the coronavirus pandemic.
Ascena's various stores have been steadily closing locations and laying off employees since at least 2017, judging by the company's public disclosures. Like most retailers, it closed all of its stores in March to prevent the spread of COVID-19. During that time, about 90 percent of its staff was furloughed, and it withheld rent payments on its spaces and delayed payments to vendors. The company reportedly borrowed about $230 million to stay afloat through the pandemic, but it did not work out.
At the end of May, Ascena's balance sheet reportedly showed about $439 million in cash and about $1.3 billion in debt. Even then, the company seemed likely to shut down. Ascena claimed that it had reached agreements with its lenders to reduce its debt by $1 billion, and had also received $150 million in new capital to continue operations.
However, staying open presents its own challenges during the coronavirus pandemic, when so many Americans are out of work, and public spaces are unsafe even if they are open. On Thursday, Ascena said that 95 percent of its stores are now open, yet it is still failing to make up its lost profits.
"The meaningful progress we have made driving sustainable growth, improving our operating margins and strengthening our financial foundation has been severely disrupted by the Covid-19 pandemic," said Carrie Teffner, interim executive chair of Ascena, in a statement. "As a result, we took a strategic step forward today to protect the future of the business for all of our stakeholders."
As of last August, Ascena counted about 53,000 employees in total, 40,000 of whom were part-time workers. They are spread across 2,764 stores, counting all of the company's brands.
Those workers are now in danger of joining the millions of Americans out of work during this unprecedented crisis. According to a report by Forbes, about 30 million people are currently receiving unemployment benefits in the U.S. — about 20 percent of the U.S. workforce. Lawmakers are expected to unveil a new economic stimulus plan this week.