Ascena completes $300 million sale of Maurices
today May 8, 2019
American womenswear retail conglomerate Ascena Retail Group, Inc. announced on Monday that it has completed the sale of value fashion brand Maurices to an affiliate of OpCapita LLP, the latest step in the company’s ongoing transformation plan.
The transaction is valued at around $300 million and Ascena has received approximately $210 million in cash before expenses, as well as 49.6% interest in the OpCapita affiliate that purchased the brand.
When the deal was first announced in March, the company explained that it will be putting cash proceeds from the transaction towards paying down its existing term loan balance and will also be using them for reinvestment in its business, in accordance with the terms of its credit facilities.
Ascena has also stated that, following the sale, it will continue to support Maurices on its shared business services platform through a managed services agreement which covers IT, supply chain, sourcing and certain back office functions.
Despite the Mahwah, New Jersey-based company’s efforts to turn its business around, Ascena announced a net loss of $72 million for the third quarter of 2019 in March, as tightening margins offset slight improvements in the retail group’s comparable sales.
The disappointing results prompted David Jaffe, who stepped down from his position as chairman and CEO on May 1, to state that the company needed “to accelerate plans that were already in development to take much more fundamental action to address [its] cost structure.”
Jaffe has since been replaced by Gary Muto as CEO, while Carrie Teffner has taken over as interim executive chair of the board of directors.
Thus far, aside from the sale of Maurices, Acena's turnaround plans have involved widespread store closures, which saw the shuttering of 110 of the company's retail locations in the second quarter.
Ascena, whose remaining brands include Dressbarn, Ann Taylor and Lane Bryant, currently expects to report net sales of between $1.43 billion and $1.46 billion in the third quarter.
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