For years, Ascena Retail Group ($NASDAQ:ASNA) has monopolized a strain of women’s fashion that might be called “mallcore” — basic, feminine, low to mid-priced — with its seven subsidiaries Loft, Ann Taylor, Lane Bryant, Lou & Gray, Justice, Cacique, and Catherines. But their reign of ruffly cardigans and striped maxi dresses may be coming to a close.

Ascena is preparing to file for bankruptcy, according to Bloomberg, and plans to shutter at least 1,200 of its nearly 3,000 stores. The company’s also reportedly considering closing or shedding tween chain Justice and plus-size brand Catherines. 

The company can be counted as another victim of COVID-19, joining over 20 other retail casualties including J.C. Penney, Neiman Marcus, J. Crew, and MUJI. Ascena revenue fell 45% in the third quarter thanks to store closures and a limited need for office clothes with much of the country working from home.

The pandemic was just the last straw. Ascena had racked up over a billion dollars in debt over the last few years, as it acquired brands and opened more stores despite declining sales. The company picked up Lane Bryant and Catherines in 2012, and Ann Taylor, LOFT and Lou & Grey in 2015 (it dumped both its flagship brand Dressbarn as well as Maurices in 2019).

As of last year, Ann Taylor and Loft locations made up 22% of total Ascena stores. Here's a map including some of Ascena's soon-to-be-closed retail locations.

Forbes speculates that Ascena expanded with the hope that its size and scale “would make it too big to fail.” No such luck. Ascena brands, tailored to malls, were especially hurting from the rise of online shopping and the decline of shopping centers and department stores. (According to Forbes, “most” of Ascena’s stores are located in malls.)

The death of mall culture wasn’t Ascena’s only problem. The company started out in the 1960s with the mission of clothing women entering the workforce. Though it helped pioneer women’s workwear (and as such, should be held criminally responsible) today, its designs look dated and stuffy next to modern competitors. Plus-size fashion, in particular, has evolved way past Lane Bryant, Cacique and Catherines’ flowy tops and caftans in recent years.

The solution isn’t as simple as updating Loft’s necklines. Ascena’s entire brand was created for a set of rules about workwear and professionalism that was transforming well before the pandemic had us doing conference calls in sweats. Start-up culture, which idolizes CEOs in hoodies rather than suits, has infiltrated the corporate world, making more casual, comfortable and modern styles kosher for the office. Iconic suit retailers Brooks Brothers and J. Crew felt the pain of this shift as they announced bankruptcies earlier this month. It’s entirely possible after offices reopen, the demand for professional workwear will never go back to “normal.” 

Vineyard Vines, Ralph Laurens, and millennial-targeted suit brands like Suit Supplier and Tie Bar are coming for Brooks Brothers’ and J Crew’s customers. So who stands to gain from Ascena’s downsizing?

Fast fashion, which adapts to shoppers’ whims at a breakneck, unsustainable pace was surely already playing a role in Ascena’s troubles. H&M, Forever 21 and Zara all became competitors when they started selling work-friendly clothes for women. H&M ($STO:HM-B) stores are clustered around Ascena’s locations in a number of states, presenting serious competition, especially in New York and New Jersey. H&M has 4,471 stores worldwide, covering nearly 50% more ground than Ascena. 

State

H&M stores within 5 miles of Asena retailers

New York

104

New Jersey

50

California

19

Virginia

15

Pennsylvania

10

Nevada

10

One set of zeros on the pricetags over, Madewell and Everlane have also become office staples in the cities where they’re concentrated, and have potential to spread outward, poaching mallcore defectors. In states like New York, New Jersey and California, there are at least ten Madewell ($JCREW) locations within five miles of Ascena stores. 

State

Madewell stores within 5 miles of Ascena retailers

New York

25

New Jersey

15

California

10

Virginia

6

Massachusetts

6

Georgia

6

These competitors are becoming officewear standards. As they overhaul with help from bankruptcy court, Ascena will have their work cut out for them if they want to keep up.

About the Data:

Thinknum tracks companies using the information they post online - jobs, social and web traffic, product sales, and app ratings - and creates data sets that measure factors like hiring, revenue, and foot traffic. Data sets may not be fully comprehensive (they only account for what is available on the web), but they can be used to gauge performance factors like staffing and sales.