The sale, Ascena said, is part of its company review to enhance shareholder value. The review includes an assessment of its portfolio brands, operations and assets.
“Structural changes in our industry have impacted a number of retailers. We have not been immune to these challenges,” David Jaffe, chairman and CEO, 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, 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.”
The Maurices deal is valued at approximately $500 million, Ascena said. Cash proceeds from the transaction will be used to pay down the company’s existing term loan balance and for reinvestment purposes.
Additionally, 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 back office needs.
“The sale of a majority interest in Maurices underscores the value that exists in our portfolio brands. 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,” Jaffe said.
Guggenheim Securities and Proskauer Rose LLP advised Ascena on financial and legal matters, respectively, and PJ SOLOMON and Clifford Chance were financial and legal advisers, respectively, to OpCapita.