A new year comes up with the same old results for Gymboree.
Nearly two years after initially filing bankruptcy and amid a sea of speculation, CNBC reported that the parent company for children’s clothing retailer Gymboree is planning to file for bankruptcy a second time in the near future.
CNBC is reporting that “a person familiar with the situation” has revealed that the retailer plans to file for bankruptcy protection as early as this week. As part of the filing, CNBC’s source also reports that the group estimates it would have to close the bulk of its 900+ stores in order to resolve its debts. This would likely include the vast majority of the group’s retail locations across the United States, Canada, Puerto Rico and Australia. Current figures place the Gymboree Group’s total store count at just over the 900 locations that are in danger of closing, according to the CNBC report.
Additionally, Gymboree will look to unload Janie and Jack, the group’s premium retail brand, possibly saving the 139 stores it operates. It is unclear how the filing will affect the group’s low-end brand, Crazy 8. According to the most recent data provided by the group, Crazy 8 currently operates “more than 383” locations, about a third of the company’s total stores. The rest of the 633 remaining stores are operated under the Gymboree brand.
In June of 2017, Gymboree filed for Chapter 11 bankruptcy protection thanks to outstanding debt of $1.4 billion from a leveraged buyout by Bain Capital in 2010. At the time, it was able to restructure the organization, closing around 375 stores in order to reduce its debt by more than $900 million with $308 million in debtor-in-possession financing that kept its stores open and its vendors paid.
Then, at the end of November 2018, reports again began to surface that the retailer may elect to close about half of its remaining stores in another debt-management maneuver. Another report quickly followed in December, this time alleging that the retailer would, indeed, prep for a second bankruptcy.
Those earlier reports now appear to be accurate, though it was unclear to what extent another bankruptcy would affect the organization. However, the sheer magnitude of the proposed store closings is the story with this new report from CNBC. If accurate, Gymboree’s long-standing problems with “overstoring” could finally be resolved. Still, it remains to be seen what will be left of the brand if it truly parts with the bulk of its physical retail operation.