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Bloomberg
Gymboree Group Inc will shut down after going bankrupt a second time, the victim of falling mall traffic and cheaper online sources of kids clothing. About 10,000 people could lose their jobs.
The retailer filed for protection from creditors owed about $212 million in US Bankruptcy Court for the Eastern District of Virginia, according to a statement. The San Francisco-based company, which operates 945 stores under three brands in the US and Canada, plans to close its Gymboree and Crazy 8 chains after failing to find anyone willing to buy them, court papers show. A unit of Goldman Sachs Group Inc is leading bids for Gymboree’s higher-end Janie and Jack business.
Gymboree will join Toys R Us Inc, Shopko Stores and Bon-Ton Stores Inc in the ranks of defunct retailers that collapsed as shoppers deserted malls and bought online.
The decision came less than a year and a half after Gymboree emerged from an earlier Chapter 11 bankruptcy that cut debt, overhauled operations and enabled it to launch a rebranded clothing line.
“We are here for a re-do,†given the retailer was in bankruptcy court less than two years ago, Michael Price of Milbank, Tweed, Hadley & McCloy LLP as counsel for the debtors said at the start of the company’s first day hearing. Price expects the case and sale process to move along at a “decent clip,†given the work that was done ahead of the bankruptcy filing, he said.
Apparel Weakness
Going-out-of business sales are being planned to dispose of inventory, raising about $155 million in net proceeds, Chief Restructuring Officer Stephen Coulombe said in court papers. The company expects the sales and store closings will continue through April.
“We are saddened and highly disappointed that we must move ahead with a wind-down of the Gymboree and Crazy 8 businesses,†Chief Executive Officer Shaz Kahng, appointed in November, said. An auction of company assets is expected by February 25.
The bankruptcy comes at a time of weakness for the children’s apparel industry, with sales at children’s and infant wear stores falling 5.8 percent in November and 5.9 percent in December, according to First Data.
Gymboree was acquired by Bain Capital LLC for about $1.8 billion in 2010.
The buyout saddled the company with more than $1 billion in debt, leading Gymboree to cut costs and defer investments before filing for court protection in June 2017. It emerged with less debt and fewer stores.