Report: Gymboree to Close Stores as Bankruptcy Looms

Print Friendly, PDF & Email
Gymboree store
photo credit: Gymboree

The Gymboree Corporation children’s wear retailer is said to be planning to restructure and trim its fleet under bankruptcy protection.

The Wall Street Journal reports that sources with information on the matter say the 1,300-store company, which also operates Janie and Jack and Crazy 8, could close 350 stores, though the final number is still being determined.

Some of the unnamed sources pegged the bankruptcy filing to next week. Neither Gymboree nor Bain Capital, the private equity firm that acquired the company in a $1.8 billion leveraged buyout in 2010, are commenting on these developments.

The company reported a comparable store sales decrease of 5 percent for the second quarter of fiscal year 2017, ended Jan. 28, compared to the fourth quarter 2015 (used as comparison due to changes in the company’s fiscal year calendar). These losses were largely attributed to Gymboree and Crazy 8, both of which were down by 6 percent, while Janie and Jack managed a same store sales improvement of 1 percent.

Gross profit dropped to $116.4 million and 32.6% of net sales from $148.8 million and 39 percent of net sales. A drop-off in traffic, excess inventory and expedited shipping were all cited as culprits.

Most damaging though is the $1.04 billion debt on the company’s balance sheet that will mature in 12 to 22 months, of which $871.9 million is due in under a year.

In a filing with the SEC in March, the company stated it was in talks with lenders to refinance at least a portion of its debt to sustain liquidity or the company could default.

The Journal reports the retailer’s term loan holders may fund its restructuring, enabling Gymboree to continue operations through bankruptcy.

Like Neiman Marcus and J.Crew, Gymboree is the latest retailer to struggle under heavy debt loads, and depending on the timing of its filing, could be the year’s fifteenth retail bankruptcy. But only if it files before Rue21, which is rumored to do so next week as well.


Recent News

Business Analysts’ Top 10 Economic Predictions for 2018 Show Positive Signs

The global economy will expand in 2018, matching the rate of growth achieved in 2017 and marking the first time since 2011 that global growth topped 3 percent, according to an annual forecast by business information provider IHS Markit.

This content is for Annual, Monthly and Limited members only. You can read up to five free articles each month with a Limited Level Subscription. Please log in, or register.
Log In Register
Read more

Shuffle Board: Macy’s Loses Executive Chairman, Nike Ramps Up Digital & Retail Team

Terry Lundgren, Macy’s executive chairman, is retiring from the company’s board, plus Nike added two new executives to elevate its digital and retail teams.

This content is for Annual, Monthly and Limited members only. You can read up to five free articles each month with a Limited Level Subscription. Please log in, or register.
Log In Register
Read more

Report: Only 8% of Retailers Are Maximizing Ominichannel’s Promise

Omnichannel is more than just a buzzword—it's a necessary strategy for survival but too many retailers are struggling amid the current retail turmoil to keep up with consumer demands for a seamless experience.

This content is for Annual, Monthly and Limited members only. You can read up to five free articles each month with a Limited Level Subscription. Please log in, or register.
Log In Register
Read more