Ascena Retail (NASDAQ:ASNA) announced that the business plans on selling a majority interest in its Maurices Inc. brand to a private equity firm, sending ASNA stock soaring more than 10% Monday.
The Mahwah, New Jersey-based business, which owns Ann Taylor and Dressbarn, said that an affiliate of OpCapita LLP will buy the majority stake in the women’s clothing retailer. The deal is reportedly valued at roughly $300 million, according to a statement from Ascena.
The move comes following a statement from Ascena Retail in early March, noting that its value unit, which includes the likes of Maurices and Dressbarn, was operating at what it deemed to be an “unacceptable level of profitability.” Maurices CEO George Goldfarb will reportedly continue to run the chain.
Meanwhile, Jeff Kirwan will become the brand’s executive chairman, according to a statement from OpCapita. Ascena has been focusing on addressing its cost structure, while bringing back the focus to its brands in ways that will deliver growth in a competitive retail industry.
According to chairman David Jaffe, the “structural changes in our industry” have had an adverse role in Ascena’s value. He added that the business had plans to make more “deliberate actions” moving forward. The deal is designed to bolster the brand’s liquidity and balance sheet, as part of the proceeds from the deal will help pay the existing term loan balance.
ASNA stock is up 10.3% on Monday.