Ascena sells majority stake in Maurices

By

Gabriella Lacombe

Published
Mar 26, 2019

American women's clothing retailer Ascena Retail Group, Inc. has signed a definitive agreement to sell a majority interest in its subsidiary, Maurices Incorporated, to an affiliate of sector-focused private equity firm OpCapita LLP, as part of its review to enhance shareholder value. 

The Maurices transaction is valued at approximately $300 million, and the company said it expects to receive about $200 million in cash after expenses while maintaining a significant minority interest. ​The deal is subject to customary closing conditions and is expected to close by early summer.

Cash proceeds from the transaction will be used to pay down the company’s existing term loan balance and for reinvestment in the company’s business in accordance with the terms of its credit facilities. 

"Structural changes in our industry have impacted a number of retailers," said David Jaffe, chairman and chief executive officer of Ascena, in a release. "We have not been immune to these challenges. 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, which will drive operating margin rate expansion."

"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," concluded Jaffe. 

Ascena will continue to support Maurices on its shared business services platform through a managed services agreement, including support for IT, supply chain, sourcing and certain back office functions. The transaction furthers the development of the company’s platform services business, and is structured to allow Ascena to participate in potential upside by partnering with a strong operator who has a history of success in apparel retailing.

OpCapita LLP specializes in transforming operationally underperforming businesses in the retail, consumer and leisure sectors, and counts NKD, a value clothing retailer operating primarily in secondary and tertiary cities throughout Germany and Austria, as its most relevant transaction in the retail space. After turning the retailer around, OpCapita announced an agreement to sell NKD to funds advised by TDR Capital in March. 

In addition to Maurices, Ascena also operates as the parent company of Ann Taylor, Loft, Lou & Grey, Dressbarn, Lane Bryant, Catherines, Cacique and Justice.