Lenders Fear Ascena with 3,519 Stores May File for Bankruptcy: Source

Cash running low. Brick & mortar meltdown for landlords. Shares annihilated. 

Ascena Retail Group – which operated 3,519 stores of the brands Dressbarn, Ann Taylor, Loft, Lou & Grey, Lane Bryant, Cacique, Catherines, and Justice – may soon file for bankruptcy. That is the fear of a group of about 40 lenders that Ascena owes over $1.4 billion.

The lender group, which includes Franklin Resources (Franklin Templeton Investments), Eaton Vance, Lord Abbett, and Greywolf Capital, has retained Milbank as legal counsel “because of all the uncertainty over what the company might do next,” the New York Post reported today, citing a “source with knowledge of the situation.”

The lender group is fretting because “Ascena has not returned the lenders’ calls and e-mails for at least a month,” which is raising concerns that the company may be preparing to file for bankruptcy protection, according to the New York Post, citing the source.

Ascena has already interviewed two bankruptcy law firms – Weil Gotshal & Manges and Kirkland & Ellis – the source told the paper. At this point, Ascena has not missed any payments to the lenders, according to the source.

Ascena’s shares [ASNA] closed at 28 cents today – after having become a penny stock in May this year. Back in 2012 through 2014, shares were bouncing around between $17 to $22. At the current share price, the stock market has already written off its stake, figuring that a restructuring in bankruptcy court, where stockholders are wiped out, would be the endgame.

The company started out as Dress Barn in 1962. A decade ago, it embarked on an acquisition binge

  • 2009: Tween Brands, which operates the Justice stores
  • 2012, Lane Bryant and Catherines.
  • 2015: Ann Inc., parent of Ann Taylor, Loft, and Lou & Grey, for $2.16 billion

In 2011, the company reorganized its structure and renamed itself Ascena Retail Group. All its store brands became subsidiaries. Dressbarn Inc., instead of being the parent company, became a subsidiary of Ascena.

This suddenly became an important issue for landlords on May 20 when Ascena announced that it would close all its 661 Dressbarn stores. To get out of the leases, it dangled the possibility of a bankruptcy filing by its Dressbarn Inc. subsidiary in front of the landlords if they didn’t agree with one of the two options: Dressbarn stays open through August and pays rent through October, or stays open through December and pays rent through December.

On July 18, Ascena announced that it had obtained “overwhelming landlord support” for its plan, that “provides the best recovery for our landlords.”  It said that Dressbarn stores were being closed and that the last stores would be closed by the end of 2019. And it made a special effort to point out in the press release: “Further, we are current, and expect to remain so, with our vendors and suppliers.”

But that was the last thing the frazzled lenders had heard from the company. Now they fear that Ascena, the parent company, is considering filing for bankruptcy.

In its Q3 earnings report, released in June, the company reported revenues of $1.27 billion. It also reported that at the end of Q3, it was operating 3,519 stores:

  • Justice: 831 stores
  • Lane Bryant: 731 stores
  • LOFT: 670 stores
  • Dressbarn: 661 stores
  • Catherines: 332 stores
  • Ann Taylor: 294 stores.

The company also reported a net loss in Q3 of $238 million. Unless a miracle happens, this will mark the fifth year in a row of losses.

And its cash balance plunged from $344 million a year earlier to only $100 million as of May 4, enough to cover about six weeks of losses.

But wait. The plot thickens further. This cash balance does not include the $210 million in cash before expenses and fees that Ascena received from selling its Maurices stores to an affiliate of PE firm OpCapita (Ascena also received a 49.6% stake in that affiliate). That sale closed on May 6, after the end of the fiscal quarter on May 4.

The company was supposed to pay the proceeds from the sale of Maurices to the group of 40 lenders to pay down debt. But the source told the New York Post that the lenders have not seen any of this money. The debt has stayed the same, but the company – and likely the collateral – has shrunk.

“Why would you pay down your debt if you know you are going to file for bankruptcy?” the source told the New York Post.

At the top, it was either house cleaning or rats abandoning a sinking ship: On May 25, the company announced that David Jaffe CEO and Chairman “will retire … effective today.” A company executive, Gary Muto, was promoted into the CEO slot. And on July 25, the company announced that its CFO would be replaced by a company executive “effective August 4.”

The brick-and-mortar meltdown first melted down the retailers that had been acquired in leveraged buyouts by private equity firms or hedge fund and had subsequently been asset-stripped and strangled by debt. The list is long and includes the biggies Toys ‘R’ Us and Sears Holdings. But now, publicly traded retailers are going into final meltdown. J. C. Penney is getting situated for this fate. And Ascena may beat it to it.

Retailers are notoriously difficult to restructure in bankruptcy court. They have so much debt and few assets. By that time, their brand has been mangled. And they have failed to make the transition to ecommerce in a big way. But the bankruptcy court can only reduce the debt burden. It cannot fix the mangled brand or the ecommerce failure.

For those reasons, most retailers are either liquidated in bankruptcy court the first time around, or if they emerge as a new company, they end up filing for bankruptcy again a year or two later to be liquidated for good.

Retail overall, when ecommerce is included, is doing well in the US, because ecommerce is booming. For ecommerce, the retail stores at malls are sitting ducks that get picked off one after the other. A company that has failed to build a vibrant presence online that can battle all its competitors around the internet and that is big enough to gradually replace most of its brick-and-mortar stores is doomed. ReadHow the Ecommerce Boom Crushes “Mall Retailers” One by One

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  114 comments for “Lenders Fear Ascena with 3,519 Stores May File for Bankruptcy: Source

  1. Tom Stone says:

    There’s nothin’ but blue skies and good times ahead, if you are a Bankruptcy Lawyer.

    • envo says:

      The good thing about being a bankruptcy lawyer is that when the entire world is bankrupt and you run out of clients, you will be very adept at handling your firm’s bankruptcy.

    • Karla says:

      Yep, that will help those “services sector” GDP numbers.

      • qt says:

        “Retail overall, when ecommerce is included, is doing well in the US, because ecommerce is booming. For ecommerce, the retail stores at malls are sitting ducks that get picked off one after the other. A company that has failed to build a vibrant presence online that can battle all its competitors around the internet and that is big enough to gradually replace most of its brick-and-mortar stores is doomed. “

        • char says:

          Ecommerce has an awful lot of shitty jobs with no future prospects unlike b&m which jobs are only badly paid but which does include some useful schooling. There is a real theoretical question if it is economically bad to have an Amazon distribution center in your town. In practice having a distribution center is definitely bad for the economy.

          All retail, B&M and ecommerce, is growing but that is because they sell more goods. The question is if (sales – cost of goods) is growing. Are they?

    • fajensen says:

      Forensic Accountant is another practical and highly valuable career path for the upcoming future.

  2. envo says:

    ‘And they have failed to make the transition to ecommerce in a big way’

    Are there any retailers that have made the transition successfully?

    Does not ‘successfully’ mean cannibalizing your bricks and mortar operation and slowly bleeding out?

    Correct me if I am wrong but Amazon has been a pure online play for 25 years now, and it still does not make a profit on its online sales.

    If not for its cloud computing business, it would lose money.

    • Old Engineer says:

      Home Depot appears to have. And also LL Bean which transitioned from a paper catalog business to e-commerce business very successfully. A transition Sears, who basically invented the catalog business, failed to do. Woodcraft and many other hobby shop businesses have.
      I’m sure there are more, those are just 3 that come readily to mind.

      • envo says:

        As Wolf has commented previously, most retailers do not break out the numbers for online sales.

        So it is very difficult to determine what the true situation is.

        However if Amazon cannot make money I seriously doubt that a retailer with all the legacy costs related to maintaining their shop spaces, would be making money online.

        Amazon surely is by far the most efficient operator as they are 100% focused on online sales.

        Ultimately let’s say all retailers slowly wind down their shops and end up 100% online, once again, if Amazon is not making money after 25 years, how do these other companies?

        Of course as a retailer you MUST have an online strategy regardless of it is a money loser, otherwise you are dead.

        This is akin to the car makers who need to have an EV strategy, even though the market is extremely limited for these expensive vehicles (there would be virtually NO market without subsidies) that lose money, because otherwise your company is a dinosaur.

        • Suzie Alcatrez says:

          Amazon continues to experiment with brick & mortar stores.

        • bungee says:

          @Suzie Alcatraz
          Right. There is still a very real need for brick and mortar. It will be different though. Much less staff. Much less room to walk around. Instead of mannequins we’ll just try digital clothes on our avatars. Probably browse and purchase on the phone app in a little waiting area and then a clerk (or robot, whatever) brings the item from the back. Maybe it’ll just pop out of a chute like luggage at the airport. Basically the building itself will function like a giant vending machine. Just the vision i saw…

        • David Hall says:

          Amazon bought Whole Foods, a brick and mortar chain.

        • Old Engineer says:

          Well, Sears really pioneered the forerunner of e-commerce, they made a fortune for several decades with paper catalog, paper pay, and the post office for shipping. Amazon’s basic business plan is updated to replace paper with digital media, but otherwise the business is much the same as what Sears pioneered over 100 years ago. I can only guess that part of Amazon’s problem is the cost of inventory when you try to sell “everything” and not limit your focus. In addition, I think shipping is a bigger issue today because of the cost. In Sears’ days, the railroads shipped mail quickly and cheaply and real shipping costs have inflated dramatically. And Sears is just one example of what were many profitable catalog businesses.
          But LLBean has a good business and only 30 retail stores. And I have used several of the specialty on line companies for over 10 years, so if they are losing money they are doing it for years. E-replacement parts, the source for most of my repair parts now, is an example. And they don’t have stores.
          With exception of the shipping conundrum (cost and the expectation of the customer for instant gratification) I don’t think it should be that hard, based on history, to make a profitable e-commerce business.

        • Otishertz says:

          Amazon loses money on purpose and pays no income tax as a result as it plows profits back into building the beast.

        • Otishertz says:

          Old engineer, the brilliance of the amazon model is that it does not own a lot of the inventory offered on its web site. It rents “shelf space” to independent merchants, turning them into customers in several ways and in doing so transfers inventory risk away from amazon.

        • Otiishertz says:

          Amazon does a similar style risk transfer with Amazon Web Services as it hosts government data, cia data, Rekognition, etc.

          This allows governments to offload their risk of violating certain civil rights onto a “private” corporation bound by user agreements and not the constitution.

          So, in a sense, the government is renting shelf space from amazon for its nefarious deeds and in exchange the government offloads constitutional risk.

        • Petunia says:

          Amazon makes plenty of money, they just choose to reinvest it in the business. You only have to look at the amount of automation and the increase in the size of their distribution network to see where the money is going. They are choosing to post loses.

        • Wisdom Seeker says:

          Amazon’s business model would have been illegal (akin to “dumping”) not too long ago.

          It’s okay to make a profit in Amazon Web Services.

          It’s not okay to use that profit to subsidize sustained loss-making prices in an unrelated business (Amazon.com online retail), particularly in order to drive competition out of business.

        • char says:

          Amazon is not the most efficient operator because they try to sell “everything” and have high growth. They also have a growth over profit strategy in which they enter markets that are not yet ready to be profitable exploited

      • KFritz says:

        How are all those LL Bean retail stores and outlets doing?

    • Raymond Rogers says:

      Saying you dont make a profit and actually not making a profit are two different things . That is merely an accounting trick. Bezos isnt the richest dude in the world because Amazon isn’t making money.

    • Ed says:

      envo – These companies would much rather close stores and sell online at the same price because of the reduced overhead. Margins will be much higher if the companies don’t have to pay rent and payroll.

      The real problem is all of the mall retailers are trying to sell cheap clothes/products at insanely high prices. It’s way more efficient to shop online because of the instant price comparisons. Lesser known brands can push products online at incredibly low prices that larger brands just can’t compete with anymore with enormous overhead and advertising costs.


    • Free Wary says:


      “If not for it’s insane stockholders giving it essentially unlimited capital with zero accountability for 20 years, it would lose money”

      There I fixed it for you.

    • roddy6667 says:

      I was working in the supply chain of JC Penney when they closed their catalog. They had 4 catalog warehouses and trucks going to 1100 stores daily at the time. They were even taking website orders. The geniuses in Plano, with their pagers and rotary phones didn’t think that newfangled thing called the Internet would last.

    • lisa says:

      A lot of the so-called losses that a few monopoly based families, and their subsidiary corporate entities are probably well strategized over the last forty years especially to disguise illegal “gains”. Yes, there has been quite a bit of successful cannibalizing of a lot of brick and mortar operations. The concepts of business operations, and applications of computerization of business activities and functions did not occur just over the last 10 years. A few select groups have been utilizing the strategy over more than 80 years.

      Guilder’s book on Life after Google is definitely a book to read to give you a real scope of the power connections over time that stimulate and really create the changing “idea” dynamics for economies starting with the steps of industrialization back a few centuries, too.

  3. envo says:

    Amazon reported record profit in 2018, earning $10.1 billion in net income compared with just $3 billion the prior year.

    Considering the company hardly recorded any profit until 2016, this sudden cash influx represents a new era for Amazon.

    So what’s changed?

    Its cloud computing division, Amazon Web Services, has actually generated the majority of Amazon’s operating income since 2016. Profits from advertising and third-party sellers are also booming.


  4. If malls have a tipping point, we shall soon discover what it is!

  5. envo says:

    Amazon Is Losing Billions From Its Retail Business and Rivals Should Be Scared

    In order to compete though, other retailers such as Walmart (WMT – Get Report) , Target (TGT – Get Report) and J.C. Penney (JCP – Get Report) also must be willing to lose money. This was extremely clear yet again. Anyone planning to open a retail business — or buy a retail stock — better think twice.


    Hmmmmm……. seems racing into online will not result in a happy ending after all.

    • envo says:

      Walmart e-commerce is losing $1 billion as it tries to catch Amazon


      So Walmart is racing to catch Amazon, which loses billions on it’s retail business. So it’s a race to see who can lose the most billions?

      This is almost as entertaining as the Danish bank offering negative interest mortgages. Or junk bonds with negative yields.

      Or on the other channel watch how plunge protection teams prop up the stock market. Followed by central banks offering hundreds of billions in loans to companies at no interest (?) to be used to buyback shares and prop up stock prices.

      Which begs the question, with the many ‘new normals’ we are experiencing, are business schools burning text books? They should be because the rules no longer apply.

      • Brant Lee says:

        Seems the Walmart supply infrastructure should have already been set up perfectly for e-commerce with just a little finagling. What other company had perfected movement of merchandise to its locations so well from as far back as the 70s, allowing for explosive expansion? How could they have dropped the ball so badly on e-commerce in the early 2000s, letting Amazon get so much of an advantage?

        • Ethan in NoVA says:

          Their infrastructure would be just in time delivery of palatalized bulk to large box stores by means of tractor trailer. Quite a bit different than shipping single items to home users.

          They are investing a bunch in technology though. Much of that might have upfront costs but save in the long run.

      • Ed says:

        envo – The Amazon and Uber model is to take losses while crushing your competition to become a monopoly. The taxi industry was pretty much wiped out in under a decade. Retail is taking much longer but it’s pretty clear what the future will look like. Amazon delivering anything you want anywhere you want within minutes. This business will be profitable when 50% of every good bought and sold will be going through Amazon.

        Negative mortgages don’t seem to make sense until you realize that bank depositors are going to eventually be paying even higher negative interest. The banks will charge people to deposit money in the bank and then loan it out at a lesser loss to rake in origination fees. Race to the bottom for sure and terrifying that your savings will soon be evaportating into thin air.

        Never been a bitcoin fanatic or gold bug but it’s pretty clear that people are going to be fleeing to crypto currency and hard assets as soon as the negative interest rates are pushed by the banks.

        • envo says:

          25 years now and Amazon is nowhere near to achieving a monopoly. I guess so long as people buy into this nonsense, Amazon can continue to lose billions on their retail opps.

          End of the day, as we can see with a range of companies that by all standard measures, should collapse, all that matters are the optics.

          PR companies must be making fortunes!

      • Otishertz says:

        Negative interest rates are proof that asset valuations are going way down. No such thing as a free lunch, just bagholders.

      • Clete says:

        Walmart is getting a lot better at e-commerce. I’ve recently made several purchases from Walmart that I wouldn’t have considered even a couple of years ago. They also have the benefit of many locations, so when I go pick up my items I invariably spend money in the store as well.

    • Suzie Alcatrez says:

      If Alibaba can ever figure out how build a website/shopping app, Amazon may have some competition.

      • Ed says:

        Suzie – Alibaba is certainly a fraud. Losses and corruption must be staggering.

      • Gandalf says:

        Alibaba is geared for B to B and large wholesale orders , with only a minority of its sellers willing to sell smaller quantities on a retail level. I’ve looked into but have not ordered from Alibaba.com

        AliExpress.com is the retail arm, and I have ordered many items from them. It used to have lots of things at great prices you couldn’t find easily anywhere else, e.g., cellphone parts and accessories. However, recently Chinese sellers have moved into eBay and Amazon in a big way and the selection and price differences have shrunk considerably

        Buying directly from Chinese sellers on these sites is best described as “buyer beware”. Some items are complete crap, some arrive smashed into tiny little bits. The sellers and websites are generally reasonably accommodating for refunds. Some items are excellent quality

        Shipping costs have increased considerably in the last year, as the US withdrew from the international postage agreement it had signed with China decades ago, which essentially had the US Postal Service subsidizing a huge part of the US leg of the shipping costs

        I suspect this route of sales has been one way for China to avoid the Trump tariffs – by doing direct mail order sales from China. US Customs and the USPS would have to work together somehow and open up every one of these millions of shipped packages and lodge a tariff on the buyer and I don’t see that ever happening

        • Gandalf says:

          And as for forcing these websites to collect the Trump tariffs at the point of sale, well good luck with that! If there were an enforceable law that forced websites to collect tariffs , there would be one to collect sales tax also, which still hasn’t happened

          Trans-shipping to Mexico is probably another way Chinese sellers are avoiding tariffs in larger bulk quantities- this would explain at least part of the sharp rise in Mexican exports to the US recently

        • envo says:

          I ordered a chandelier from one of the Ali sites. A box of parts came over with the wiring hanging out all over the place. I showed to an electrician and his reaction was ‘woooah – that’s going to take some figuring out, are there any instructions?’

          There was a folded up piece of paper with some gibberish english language instructions.

        • char says:

          You don’t need to open them all. Storing them in a warehouse for three weeks works almost as good. Picking out first time buyers & whales and hitting them with tariffs works also. And sales tax not working is policy by anti tax fanatics, not anything that is difficult to implement.

  6. pervouss says:

    Perhaps they hope to make things work, until they can have a pre-Christmas going out of business sale in November, but, looks like cash burn will prevent that?

    • char says:

      They have so little cash and so many payables and what they own is clothes which has a much lower wholesale value than retail that i don’t thing cash burn will prevent this. The bankruptcy judge will do the same except with less recovery

  7. Rcohn says:

    It is not just retailers in malls that are in trouble. Barney’s an upscale clothier with a significant portion of its sales coming from its Madison Ave store just filed chap11. The final push to bankruptcy happened when its rent was raised from 13m to 20 m.
    So if pressure is going to continue among retailers , problems will spill over to commercial real estate both in malls and on main st. And if there is pressure in commercial real estate , there will be pressure on those banks and hedges who lent them money and on those ETFs invested in commercial real estate and its debt.This could lead to another Lehman event , but on a smaller scale.

    • Frederick says:

      Yup It sure is getting ugly out there in retail land I’m just glad I never went into retail property investing although I was tempted at one time

    • Tang says:

      Anyone with information about Ingram Micro?

    • Petunia says:

      Actually the rent for Barneys was raised to $30M a year. They could buy a building with that money, there’s no need for them to be on Madison Ave. Downtown is now more chic.

      • Rcohn says:

        Sorry , you are correct
        But high rents leading to vacant stores is not just a mid town issue. A few years ago I noticed a number of retail vacancies in the Village

  8. Walthud says:

    hmmm, 3500 stores. At what, lets guestimate 10 employees per store. That’s 35000 people who ain’t going to be shopping for new cars when the big new model year hits.

    • Frederick says:

      They most likely wouldn’t have been anyway The car sales numbers are way down worldwide and the Millenials supposedly aren’t into car ownership like we boomers were

    • Ed says:

      Walthud – They’ll quickly be absorbed into the job market which has a massive shortage of employees right now. Fewer retail jobs for sure but more delivery and uber drivers, warehouse workers, and coders.

      This should help drive down real estate costs across the board. I live in an affluent suburb and dying retail strips are being converted to multi-family mixed used developments. The death of retail is freeing up land to deliver 1,000’s of new housing units in our zip code alone. Additional housing units in high demand areas is bringing down demand for expensive single family houses. Big win for everyone except greedy baby boomer SFH owners.

      • qt says:


      • nick kelly says:

        If by multi family you mean residential this is not easy. A mall does not have the plumbing to economically convert to res units. You either have to jack hammer the floor or lay pipe and pour new floor. It is cheaper to demolish.
        This is why you see way more older multi-storey buildings converted to res. It runs down hill but not sideways.

      • char says:

        This is only true for the big population centers. Uber and coders are not in the small regional centers.Warehouses only in some (unlucky) ones and delivery is much more seasonal and business cycle following than retail.

        The Death of B&M will kill a lot of small regional centers

  9. David Hall says:

    Costco is a fast growing brick and mortar retailer. They have expanded overseas.

    Target was profitable last time I checked.

    Walmart is a profitable and popular discount grocer and department store company.

    • Frederick says:

      You left out the best of them all IMO Krogers

    • michael Earussi says:

      Last time I checked Costco makes 100% of its profit from membership dues and either breaks even or loses money on its retail sales.

      • Ed says:

        michael -who cares whether the profit is baked into the price of the goods sold or membership dues? The point is Costco is a highly profitable and growing retail business standing it’s ground against the coming tide of ecommerce.

    • Wolf Richter says:

      David Hall,

      Those are the headlines and they misinform you. You have to read the actual earnings reports to see the transition to ecommerce.

      For example, Walmart US is the third largest ecommerce retailer in the US, after Amazon and Ebay. Sales at its brick-and-mortar stores were at best flat, while its ecommerce sales are booming +35% year. Walmart is spending billions of dollars a year to push its ecommerce business.

      Similar with Target. Macy’s and other retailers have reported dropping brick-and-mortar sales and booming online sales. That’s what’s going on: retailers have figured out that they need to get their ecommerce business going, or they’ll die.

      Grocery sales are so far still relatively free from online competition, though that too is changing. So stores that sell produce and the like, such as Costco, have not seen these online sales move to online. But Costco too has a vibrant online business that it is trying to push to the next level because it knows what’s going on.

      • Jessy S says:

        Actually you both are right. The truth is that Wall Street wants profits and doesn’t care where they come from or how they are generated. For them, it is only the bottom line that counts.

  10. Iamafan says:

    I understand there’s more an one trillion of “junky” debt out there in the BBB rated world waiting for an accident to happen. This isn’t junk yet as it’s waiting to be downgraded from “investment” grade. One word comes to mind. Evaporation. Profits dry up then they can’t pay their heavy debt loads.

  11. Stephen says:

    Shall we say the financial / economic landscape in America is rapidly changing. In days of old, if you had a half way decent product and service beyond terrible, and ‘some’ thought to demographics, you could probably survive in a growing economy with lots of available credit. We are entering a new era of the $10–$15/hr worker. Very little deposable income and shrinking lack of credit. Yes, we may have some very niche up scale markets (Tiffany) here and there, but middle income America is going away. The rapid decline of brick and mortar and the thin margins of eCommerce will literally change the land scape. Things are declining very rapidly as the global financial infrastructure frays every day. No Toto, we have left Kansas and are not coming back.

    • Frederick says:

      Finally someone who “gets it”

    • Ed says:

      Stephen – The nature of commerce is constantly evolving but I disagree that it’s a bad thing. For starters, as brick and mortar goes away, a few jobs may be lost, but the cost of goods goes down for everyone freeing up capital to be spent or invested in more productive ways. The same tech that is wiping out low paying meaningless jobs is creating even more highly creative jobs and new ways to earn a living selling products and service on the internet.

      Wages and cost of living have to be measured in tandem. Middle class jobs aren’t that great if the cost of living keeps going up perpetually. Now that we seem to be in a perpetual deflationary cycle, we all might be better off earning less money if every we need becomes much cheaper and more efficient.

      • Xabier says:

        It IS a bad thing, and only those ignorant of the history of the development of civilisation could think otherwise.

        Retail jobs provided stability, security, order and a hierarchy to climb, if they wished, for the mass of people.

        Amazon warehouses and the like do not.

        Moreover, interaction in a decent retail environment teaches civility and toleration.

        Those who wish only to interact with those of their socio-economic bracket are fools, and it will come back to bite them – both upper and lower classes will decline in such a scenario.

        • Ed says:

          Xabier – You are absolutely wrong. Retail jobs are low-paying, mindless, unstable (mostly seasonal work) and drive up the cost of goods for all consumers. Those jobs have been replaced by growth in tech and supply chain jobs. There is no net job loss and the consumers are big winners. Not to mention more efficient use of land which ultimately will bring down the cost of housing.

          Now is the best time ever to be alive. Tech has democratized information and provided unlimited opportunities for anyone lucky enough to have access to the internet (pretty much everyone in developed nations). Start embracing advances in technology and let go of the frustratingly efficient past. Maybe you’ll improve your life enough to not go sulking on the internet about how bad things have gotten.

          Things are better than they ever have been! You are just living the wrong way.

      • 91B20 1stCav (AUS) says:

        Ed-to reprise an old quote: “…a recession is when your neighbor loses his job. A Depression is when you lose yours…”. I don’t know if, or when, you’ve ever worked in retail, but your description of ‘low-paying, mindless, etc. wasn’t always so. It hope it isn’t revealing what appears to be a disdain for those many who get up to go to work every day (often for different employers on different days), in whatever field. Xabier’s comment on the arc of history and the capacity of retail to provide remunerative employment for the greater population is on the mark. In relation to the U.S.: my immigrant grandfather, who always read the Swedish-language newspapers, harshly told me ‘No!’, you’re an American, you speak English!” when I asked him if he would teach me to speak Swedish. Seeing my shock, he explained:

        ‘You see, young one, Sweden didn’t want me, but America did. The greatest thing about this country, as imperfect as it is, is that it is about an idea, not about one’s class or place of birth. All that’s required is that you work, pay your taxes and you are a citizen in full with a say in things with your vote-that said, I never want to see you kowtowing to a wealthy person, or, more important, sneering at someone less well-off than you if they are working and paying their taxes-they are all as equal as you, and you, them. Now, hot chocolate, hm?’

        I know, I know-times have changed.

        May we all find a better day.

      • envo says:

        If those retailers could learn to code they’ll be fine. So I am told

      • char says:

        Middle class jobs are great not so much because of more income but because of status and creating a more equal society

    • Xabier says:

      The US is turning Latino: small elite class, struggling masses. Not a pretty sight…..

    • NBay says:

      Just wanted to add another thing in decline….Public Companies.
      For instance, 7 of the top 10 food producing companies in the world by sales are PRIVATE, and I saw that list on Yahoo Finance when they used to list competitors, on ticker reports several years ago, now I imagine it’s “pay for” info…..somewhere.
      Anyway, here’s another take on disappearing public companies….or shall we say equity investments for little people? Hell, one could make a case for Public Stocks going up because they are….RARE.

  12. Augusto says:

    The problem with “rumours” of coming bankruptcy is that they are a self fulfilling prophecy. Every supplier, customer, creditor, employee, banker and landlord is now aware of the risk. These groups attempts to lower their risk of exposure will put more operational and credit risk on what is already a wobbling organization.

    • nick kelly says:

      With the creditors retaining bankruptcy lawyers and the retailer talking to two outfits, with the landlords having already been coerced into concessions with the Dressbarn threat, with the stock at 28 cents. with the retailer just keeping the money that was supposed to pay down debt….it looks like the only ones in the dark MAY have been the employees.

  13. Otishertz says:

    As traditional street level retail continues to get decimated by internet retail we will see communities and people become more isolated and insular because people will have less and less reasons to simply go outside.

    If you live in a city and work remotely you conceivably might never have to leave your comfy media bunker because everything, even groceries, can be delivered now.

    Death of traditional retail will drive classes further apart as rich have access to everything from their high security easy chairs and the poor sleep on the street under shuttered store fronts.

    Meanwhile, every purchase will be tracked and used to rate you as a person by your consumption. Cash, the last bastion of privacy, will get obsoleted.

    Brave new world.

    • Ed says:

      Otishertz – My family already lives in this brave new world and it’s absolutely amazing. We live in a luxury apartment far enough from a city for it to be reasonably priced and own only 1 cheap car for our family of four. The cost of living in the burbs is much cheaper than the city and we purchase everything we need from the internet. We never have to interact with awful people in the office or retail stores or travel to undesirable places to buy stuff or sit around an office. We have plenty of social interaction strictly with other people that are in our socioeconomic group. Exactly how i want to raise my children. Completely cut off from the struggles of the bottom 80%.

      A remote worker would be a fool for living in a city right now. The cost of living drops dramatically the further you move from a city so the ideal places to live are college towns 3-4 hours from the closest metro areas. Nice, cheap walkable towns with little crime and good schools.

      • Xabier says:

        The ‘other 80%’ are your fellow men and women: if you cannot see this, you are gravely deluded, and may I say heading for the punishment that follows Hubris.

        Look up the word,and you might become more civilised and reflect a little.

        Your ancestors were ’80 per centers’, no doubt.

        In fact, I know aristocrats from the most ancient families who do not talk about the lower classes like you: they have good manners, and are civilised.

        • Ed says:

          Xabier – American society is a ruthless, winner take all competition. We are born and bread to stomp on each others necks to move up the ladder. I did not make the rules and I’m not the first person to play this game. Sure, the game isn’t fair and there are big losers. But this game creates innovation that improves everyones lives for the better. Even the lowly bottom 80%.

          Anyone born into the middle class is at a major disadvantage in life. The middle class would be well served to either work their ass off to move up or move out to a more socialist minded country.

      • Zantetsu says:

        That’s not the only way to live though. There are quite a few people who actually value rubbing elbows with all walks of life; to them it is enrichment of their own lives. There are many people who like the aspects of city life that you seem to hate.

        The older I get the more convinced I am that our system is fantastic at producing ease and comfort, but that too much ease and comfort is likely to make you less happy, not more. Lots of people don’t understand that and push themselves too far into a life of ease and comfort and are unhappy as a result.

        • Xabier says:

          People who want to live in an elite bubble will find that, sooner or later, it will be prciked.

          Probably quite violently: if you haven’t mixed sociably with people, why should hey treat you decently?

        • Dave Kunkel says:


          I agree! Interacting with all sorts of people is what makes life worth living.

      • Rcohn says:

        Those damn “deplorables”!

      • Jon says:

        Wow. A comment that is empty of any civic duty. I hope you’re really not that selfish.

      • 91B20 1stCav (AUS) says:

        Ed-remember that when things get bad enough for the 80%, there will be eight of those for every two of your 20% (unless you’re engaged in ‘stepping on the neck’ of your cohort at the time things fall apart. Your odds of receiving quarter might be higher from those eight, though).

        May we all find a better day.

      • envo says:

        Ed – not all retail jobs are mindless and dull. Sales person is a sales person regardless of what you are selling.

        A friend of mine used to flog equities for SG bank. He explained his job this way : I am like a shoes salesman, only I sell different products. And get paid more.

        It seems most people hate their jobs, so perhaps most jobs are just mindless paper pushing monotony.

        So let’s just eliminate them all?

      • envo says:

        ‘We never have to interact with awful people in the office or retail stores or travel to undesirable places to buy stuff or sit around an office. We have plenty of social interaction strictly with other people that are in our socioeconomic group. Exactly how i want to raise my children. Completely cut off from the struggles of the bottom 80%.’

        it’s really going to be difficult for you when this bubble explodes and you join the riff raff. I’d be very careful about leaking any of this attitude when that happens.

        it would be a particularly bad idea to mention anything about eating cake

  14. anon says:

    No Ann Taylor, no Barneys, pretty soon I will be walking around with no clothes at all.

  15. raxadian says:

    Wolf, why is people still investing in retail? Are they captive investors or something?

    • Wolf Richter says:

      Overall retail is good. It’s just brick-and-mortar that has a problem.

      I know some landlords that have retail properties. They denied that ecommerce is a problem for them until very recently. Some still don’t see it as a big problem. And then, suddenly one of their tenants goes out of business, and it’s a big problem. Once by one, these landlords are coming around.

      Valuations of mall properties have fallen quite a bit, as tracked by Greenstreet. Strip malls with grocery stores and restaurants are still doing OK. Auto parts stores are doing OK. Things like that. Most everything else is in trouble.

      Some developers are still building big malls. And they’re putting amusement parks and fitness centers and restaurants inside. So maybe that’s a way out. But it’s not retail.

      One brand-new mall in San Francisco’s center (just south of Market) is vacant because there is no demand from retailers, and now the developers are trying to figure out what else to do with it (likely redo it as offices).

      The developer of a huge new mixed-use development (at Candle Stick Park) decided to abandon the mall that was supposed to be part of it and is now trying to get the city to issue a new permit for a different type of building, such as apartments.

      So the money flowing into brick-and-mortar is getting a little leerier. But I think if the 10-year Treasury yield were at 5%, no one would invest in brick-and-mortar retail.

      • raxadian says:

        If it was at 5% I think some people would have an aneurysm. Let’s not get crazy here,

  16. Senecas Cliff says:

    If everyone works from home, and does not need to go anywhere to shop or get food then soon the E-commerce inventory problem will be solved as the only clothing items that they will need to stock are underwear and pajamas.

  17. Xabier says:

    Ed: I well understand US society, and know people from the elite which is actually my social strata – I am European, from the old aristocracy by the way, but I have elite US customers.

    Your view remains perverted and short-sighted, and will rebound on you one day.

    Here’s a story for you.

    A friend of mine, from the very highest European aristocracy, and a great and cultured gentleman, made a trip back to the estate his mother had owned until WW2 in Eastern Europe.

    The locals, once true serfs, greeted him with tears of affection, because ‘their’ former lords had returned, albeit fleetingly. They had many happy memories, above all of his mother who was beloved..

    A true elite should behave in such a way that their ‘inferiors’ respect and even love them: the US attitude you embody leads only to violence and doom.

    Frankly, it stinks; and, practically, it is short-sighted.

    • chillbro says:

      God bless your heart, dear sir.

    • WT Frogg says:

      Xabier : Couldn’t agree with you more. Therein lies the difference between “old money” and ” nouveaux riches”.

      I’ve said it many times over the years : Your money can buy you almost anything EXCEPT happiness and class.

      Unfortunately, Ed’s kids may learn that lesson the hard way at some point in the future. I’ve seen that scenario play out many times over the years.

  18. Another Scott says:

    What then accounts for the success of TJX, which grew 9% last year, having increased both comparable stores sales and store count? They only launched the ecommerce website in 2013 and have less than 5% sales from it. The company is now larger than Macy’s.

    • NickL says:

      Even better is buying stuff at clearance and then selling it at full price on Ebay. I have bought headphones for $49 at TJ Maxx and were easily able to sell then for $99 or more on Ebay

  19. Petunia says:

    I recently watched a video of vintage resale shops in New York City. They are booming with many having multiple locations. Even Neiman Marcus has some kind of relationship with a reselling platform. Old is in.

    • NickL says:

      You probably were confused and were watching movies from the 1940s or 1950s when such stores existed. Now people in NYC pay full price at stores like Macy’s or Bloomingdales

    • 91B20 1stCav (AUS) says:

      Petunia-how long can the old-better quality-though-used trend , truly last? We’ve shopped vintage, thrift and used for well over fifteen years now, and have noticed the amount and availability of quality used products definitely shrinking (NorCal). It may be different in other parts of the country. (Just can’t find many of those genuine ‘Titanic’ deck chairs anymore…).

      A better day to us all.

      • R hughes says:

        In palm springs area resale in all forms is a booming business. Angel view, goodwill somewhat middle, southwest, vets, revivals lower, Eisenhower, America cancer near top. They often trade stuff they get in, better stuff goes to higher end and junky stuff to lower end. Same with stores as regards which city in the desert. So you need to know where to shop. Then there is consignment stores especially for furniture, art, etc. Some amazing quality for excellent prices, if you are patient you can outfit a house with high quality and unique versus the cheap crap they sell new at mor, ashley.

  20. HR01 says:


    Many thanks for the details on this latest retail train wreck.

    I gasped when reading the puny revenue numbers for Ascena. $1.27 billion generated from 3,519 stores. WOW! This works out to just $360K in annual revenues per store. $30K per month per store. That won’t even cover the rent for most stores.

    Sounds like a remake of George Romero’s “Dawn of the Dead” only in this case we have the stores playing the part of the zombies.

    Lenders will get next to nothing here, as they should.

    Now as for that $210 million received from the sale of Maurice’s, well the vast majority is likely safely tucked away in the Caymans.

    • HR01 says:


      Mis-read the article. Those numbers were for the quarter, not the year.

      OK, so each store taking in about $120K per month. That still won’t break even with all the overhead.

      Turn out the lights.

    • Wolf Richter says:


      There’s a little mix-up: The $1.27 in revenues was reported for the quarter — so quarterly revenue. It works out to be $360K per store per quarter. On an annual basis, it might be closer to $1.5 million per store.

      In terms of the $210 million: Looking how fast they’re losing money, and how little cash they had on May 4, I think they are using this cash to keep the lights on and pay vendors and store leases and make payroll. And they’ll run this year, if my math is right.

  21. Mike R says:

    Ubiquity of on-line outlets for all types of retail products sold at stores in malls, renders the entire concept of malls totally outdated. There really is no need for so many stores to be in one gathering place, and with the way people now consume, and their schedules, and lack of time, there are probably more people actually shopping on line during their ‘work hours’, than people actually wasting their time going to a mall. Its crazy, but women all over now have no issue buying multiple sizes of all sorts of garments, getting them the next day, and returning what does fit or look good on them. Once they find a brand that they know the sizes are consistent, as long as that brand keeps coming out with fresh styles and colors, the women will buy. Women are also very persistent researchers in terms of shopping, and they rely more on word of mouth, and on line reviews, then men do. Women do the bulk of the buying and shopping in most families, or partner situations, and they’d much rather do something like this in the privacy of their own homes, rather than go to a filthy and germ infested mall. Just look at all the tupperware parties or cosmetics bought in people’s homes over the years. women love that stuff and to do it at HOME. now with the internet and social media they dont even need a ‘party’ to do it, but can converse and chat on line with their female friends and get all sorts of instantaneous feedback any time of the day. Men have never bothered their buddies for feedback on buying. and men do the least amount of shopping except for when it comes to big ticket purchases, but even women are doing more of that everyday. Men are still ‘hunters’ and women still ‘gatherers’ which is true of todays information world on line. Isn’t amazing how so many of these clothing retailers, missed the ecommerce boat ??? They were all run by…. drum roll… MEN ! Men who dont get women, or even how they buy. I run a retail business part time, and I’m killing it, because I understand women and how they buy. Growing up with 3 sisters didn’t hurt, but the mentality of women is easy to understand if you know HOW to listen. None of what is happening in retail these days is of any surprise at all. I’m only surprised they didn’t all get wiped out much sooner, and no this is not the Amazon effect at all. Amazon is run by one of the most unethical men, and most egotistical man on the planet, and his ego and undisciplined level of ethics, will be the ruin of his company far sooner than anyone imagines. Amazon’s culture is so biased against women, its not even funny. Women have a really low tolerance for lack of ethics. They arent’ vocal at all about it either. When you are done, you are done. Thats why so many men, get the wrong end of the stick in divorce. They ‘earned it’ with their lack of ethics. They practice it every day in business. they dont even know better.

  22. NickL says:

    well stores in the NYC area are always packed. It took over 30 minutes to wait on line and pay at Marshall’s at 4:00pm on a MONDAY afternoon a few weeks ago in Rego Park Queens NY. I could only imagine it on a Saturday afternoon.
    In Manhattan stores are expanding — Neiman Marcus opened a brand new store in the Hudson Yards area and Nordstrom is opening (a full priced store) in midtown

    • Wolf Richter says:


      To dampen your enthusiasm about Nordstrom and brick-and-mortar a little: The Nordstrom store in Manhattan was planned a long time ago, and it is finally opening. But Nordstrom has been shuttering stores all year around the country.

      Nordstrom is one of the few retailers that separates out its digital sales. So we get a good glimpse of how this is working out. At Nordstrom, its digital sales now amount to 30% of its total sales.

      Revenues in the last quarter (data from its SEC filing):
      Total revenues: -5.1%
      Digital revenues: +4.0%
      Brick-and-mortar revenues: -7.7%


  23. Robby says:

    Robots don’t need Dress Barn garbage or none of that outdated fembot gear, this is the future, wake up and smell the silicon!

  24. Old-school says:

    I was recently researching stock Duluth Trading Company and found they are going to what they call omni channel which means getting some synergy effect by having brick and morter plus on-line. They are rolling out 15 stores per year. We will see how it works out.

    Ran across it on the most shorted list of stocks. I like looking at that list as excessive shorting can lead to an overshoot on the downside.

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