Ascena Retail Group to sell majority stake in Maurice’s

MAHWAH, N.J. -- Ascena Retail Group Inc. Monday announced it has signed a definitive agreement to sell a majority interest in its subsidiary, Maurices Inc. to an affiliate of OpCapita LLP as part of its review to enhance shareholder value.

The review includes a comprehensive assessment of its portfolio brands, operations and assets. Management and the company’s Board of Directors are overseeing the review, which is currently under way.

Ascena operates an 800,000-square-foot E-commerce fulfillment center on Greencastle’s East Side.

“Structural changes in our industry have impacted a number of retailers. We have not been immune to these challenges,” David Jaffe, Ascena chairman and chief executive officer, said. “In 2016, we initiated our Change for Growth plan, which is on track to deliver run rate cost savings of $300 million to our company by July 2019.

“We have also identified, and developed plans for, an additional $150 million in savings. These efforts are expected to deliver a leaner operating model and enhanced competitive capabilities, but we must do more. To create value for our shareholders, we are planning deliberate actions to generate more profitable growth from those brands and operations in our portfolio that we believe have greater long-term potential.”

The Maurices transaction is valued at approximately $300 million, and the company expects to receive roughly $200 million in cash after expenses, while maintaining a significant minority interest. Cash proceeds from the transaction will be used to pay down Ascena’s existing term loan balance and/or for reinvestment.

“The sale of a majority interest in Maurices underscores the value that exists in our portfolio brands,” Jaffe said. “The review and evaluation process we are undertaking, with the help of outside advisors, is designed to recognize this value on behalf of Ascena shareholders.”

The transaction, subject to customary closing conditions, is expected to close by early summer.

Ascena Retail Group is a national specialty retailer offering apparel, shoes and accessories for women under the Premium Fashion segment (Ann Taylor, LOFT and Lou & Grey), Value Fashion segment (Maurices and Dressbarn), Plus Fashion segment (Lane Bryant, Catherines and Cacique), and for tween girls under the Kids Fashion segment (Justice).

Ascena Retail Group operates approximately 4,500 stores throughout the United States, Canada and Puerto Rico.