Children’s retailer Gymboree could close up to half of its remaining stores to skirt a second round of bankruptcy.
When the children’s wear retailer declared bankruptcy in September of 2017, it was able to cut its debt down by $1 billion while only losing about a quarter of its 1,291 stores. Current information from Gymboree places the number of stores at “over 900 stores in the United States and Canada,” including the locations run under the chain’s other brands, Janie and Jack and Crazy 8.
Now the brand could be looking to downsize further as it looks to save costs amid a troubling time for brick-and-mortar retailers, sources close to the matter told Reuters in a report Tuesday.
This could be a major setback for Gymboree after it managed to avoid liquidation last year and reduced its $1.4 billion in debt to manageable levels. As a result of the bankruptcy, Gymboree was left with an $85 million term loan and a $200 million revolving credit line.
Additionally, a group of Gymboree’s former lenders, including hedge funds Searchlight Capital Partners LP, Brigade Capital Management LP and private equity firm, Apollo Global Management LLC, was awarded ownership of the company.
According to Reuters, the retailer has enlisted the services of the Berkeley Research Group to advise it through the next stage of financial difficulties and to help it cut costs. One of the primary roles for the group will be to analyze Gymboree’s leases, which are primarily located in malls.
If Gymboree’s landlords are unwilling to cooperate with rent or lease breaks, that could instigate bankruptcy for the San Francisco-based retailer.
In July, Gymboree launched a mobile app called “Made You Smile” as a part of efforts to “refresh” the brand and boost sales. It combines augmented reality features with the opportunity to win prizes through Gymboree’s “Surprize, Surprize Sweepstakes.” Along with the app, Gymboree also launched a full rebranding of its core business, placing more emphasis on graphic tees and outerwear.
However, a report released by the Wall Street Journal suggested that its customer base wasn’t pleased with the “refresh,” quoting one parent as saying “they’ve lost the core Gymboree fan base.”