By Suzanne Kapner
Ascena Retail Group Inc. has agreed to pay about $2 billion for
the parent of Ann Taylor, further expanding a company that has
grown by catering to the less fashionable reaches of women's
clothing.
The owner of Dressbarn and Lane Bryant is a little known player
in an industry dominated by personalities like J. Crew's Mickey
Drexler and L Brands' Les Wexner. But Chief Executive David Jaffe
has built a growing retail empire around middle-aged women and plus
sizes.
Under the deal announced Monday, Ascena will pay cash and stock
worth $47 a share at Friday's closing price, a 21% premium. The
combined company will be one of the largest sellers of clothing to
women with sales of $7.3 billion and more than 4,900 stores.
Shares in Ascena were little changed at $14.22. Ann's stock
jumped 20% to $46.28.
Ascena owns Dressbarn, Catherines, Maurices and Justice in
addition to Lane Bryant. Ann brings it a venerable line popular
with suburban moms and career women with Ann Taylor, and a lower
priced more casual line with Loft.
Like many retailers, however, Ann has been struggling with a
weak retail environment characterized by heavy discounting and
tough competition. Questioned about the wisdom of getting bigger in
that area, Mr. Jaffe said Ann Taylor and Loft were strong brands
that could do well.
"It's been a rough time the last few years," Mr. Jaffe said on a
conference call with analysts. "Quality will win out."
The deal comes three years after Ascena paid about $900 million
for Charming Shoppes Inc., a deal that brought it the Lane Bryant
chain.
Mr. Jaffe said Ascena has been building a platform that lets it
cut costs on back-end operations like sourcing and distribution and
run brands more efficiently. The company said it has identified
$150 million in annual cost cuts that will kick in after three
years. Ascena also expects to adopt some of Ann's successful
strategies. For instance, some 20% of Ann's sales come from
e-commerce, a higher percentage than what Ascena sells online.
The empire building is at odds with an age in which the retail
conglomerate has steadily been replaced by single-brand
companies.
Liz Claiborne, once home to 40 brands ranging from Juicy Couture
to Dana Buchman, sold off all of its brands except Kate Spade.
Jones Group Inc., home to Brian Atwood shoes and Nine West, sold
itself to private equity, which has begun dismantling the
business.
Dana Mattioli contributed to this article.
Write to Suzanne Kapner at Suzanne.Kapner@wsj.com
Access Investor Kit for ANN, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US0356231078
Access Investor Kit for Ascena Retail Group, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US04351G1013
Access Investor Kit for L Brands, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US5017971046
Subscribe to WSJ: http://online.wsj.com?mod=djnwires