Ascena Retail Group, which owns several major retail stores including Ann Taylor, Dress Barn, Loft, Lane Bryant, Justice, Maurice and Catherine stores, plans to close between 250 and 650 locations over the next two years.
The company’s CEO David Jaffe broke the news during a conference call with investors Thursday. Moreover, He did not explain how store closures will affect the brands.
Jaffe explained 250 locations would shut down, and another 400 will close down as well unless the company can negotiate lower rents at those corresponding mall locations.
According to CNN Money, the CEO explained that the move is necessary to help the company deal with the retail market. Jaffe pointed out that retail is facing a “persistent traffic decline” and expects that it will continue to be a “major headwind” for Ascena.
The decline of the retail industry
It is important to note that Ascena is not the only company feeling the pressure of lower retail traffic. Stores such as Macy’s are losing due to digital retails such as Amazon. In fact, Earlier this week Hudson’s Bay, which owns Saks Fifth Avenue and Lord & Taylor, announced they would be letting go of over 2,000 jobs. Also, Macy’s announced earlier this year that the company will close 68 stores and cut 10,000 jobs. Meanwhile, Amazon announced last January they will be hiring over 10,000 new US jobs. The e-commerce giant announced they are planning to increase their workforce from an existing 180,000 to 280,000 by mid-2018.
But, Amazon is not the only company working on improving e-commerce. Social network giant, Instagram, announced last November the company is working on creating an e-commerce platform that allows for users to buy products through the social media app.
A recent report from Credit Suisse expects a 20% to 25% of American malls with close in the next five years.