News Feature | May 19, 2015

Ascena Retail Group To Buy Ann Taylor

By Brianna Ahearn, contributing writer

Ascena Retail Group To Buy Ann Taylor

Ascena Retail Group, the parent company of Lane Bryant and several other women's apparel brands, will buy Ann Taylor and LOFT for $2 billion from Ann Inc. The deal was announced Monday, and will bring Ascena Retail Group's apparel empire to a combined 4,900 stores located throughout the world. Previously Ascena Retail Group had 3,900 stores. Dubbed by the press as a move towards “clothing powerhouse,” Ascena Retail Group's acquisition of Ann Taylor and LOFT includes each brand's discount offerings, Ann Taylor Factory Store and LOFT Outlet. The purchase also includes a relatively new brand in the Ann Inc portfolio: Lifewear brand Lou & Grey, an active and casual-wear apparel brand, which has five locations in the United States.

Ascena Retail Group's mission speaks to the value the purchase should provide their customers. As their website states, “ Through an engaging store experience, convenient locations, and of course offering fashion at great value, we dress her from her tween years into adulthood, and help her look and feel her very best every step of the way.”

With the addition of Ann Taylor and LOFT to their portfolio, Ascena Retail Group will have a collection of brands that focus exclusively on women's apparel retail. Besides Lane Bryant, the company also owns plus-size brands Dress Barn, Catherine's, Maurices, the tween fashion company, Justice, and the lingerie company Cacique. The deal is estimated to generate more than $7.3 billion in sales.

“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,” says Kay Krill, the chief executive officer of Ann, the company that owns Ann Taylor and Loft.

Ann Inc had seen a sluggish sales year and was considering their options prior to the Ascena purchase. In August 2014, shareholder Engine Capital LP, who controlled more than 1% of Ann Inc.'s stock had urged the company to put itself up for sale to a buyer, according to The Wall Street Journal. Profits were down significantly in 2014 and the retailer had adjusted their predicted earnings for the year. Ascena Retail Group had a reported $4.3 billion in sales for 2014, while Ann Inc earned $2.5 billion.

On May 18, Forbes reported that Ascena Retail Group is receiving a $1.8 billion loan from Goldman Sachs and Guggenheim. The loan is a seven-year B covenant-lite leveraged loan. The agreement also includes $600 million five-year asset-based revolving credit backing. Ascena Retail Group will do a stock-and-cash deal, paying near $47 a share for Ann Inc.

David Jaffe, Ascena Retail Group's President and Chief Executive Officer says, “This powerful transaction joins two strong and highly complementary organizations and management teams and dramatically reinforces our leadership position in women's specialty apparel retailing. We are excited to further leverage our uniquely capable operating platform and exceptional combined talent to drive immediate, significant and ongoing value for our stockholders. With the addition of the Ann Taylor and LOFT brands, Ascena will become one of largest and most diversified specialty apparel retailers, with a tremendous set of opportunities to continue to expand its leadership position in the women's apparel market.”