Gymboree Bankruptcy Comes Amid Falling Store Traffic, Stiff Competition


Gymboree Files for Chapter 11 Bankruptcy

A giant U.S. retailer of children’s apparel, The Gymboree Corporation, has filed for Chapter 11 protection at a bankruptcy court in Virginia.

The company has been forced to take the drastic action as its debt runs out of control. The company aims to reduce its debt by $900.0 million through its post-bankruptcy restructuring efforts.

Gymboree’s bankruptcy became imminent earlier this month when the retailer failed to pay off a significant debt obligation that was due on June 1. The CEO has announced that the company will restructure its debt, with an aim to emerge from the bankruptcy proceedings victorious.

The San Francisco-based retailer has been facing stiff competition in the children’s clothing niche, where it directly competes with Childrens Place Inc and Gap Inc. Gymboree’s Chief Restructuring Officer James Mesterharm says in the bankruptcy court filing that the company’s two biggest competitors are undercutting its business. Both of the rivals are continuing to operate at lower costs than Gymboree. This is because Gymboree is more debt-leveraged than the Children’s Place and Gap. (Source: Ibid.)


Gymboree has been facing a decline in store traffic, partly because the company operates most of its stores in malls. Big department stores, known as anchor stores because they drive the largest crowds to malls, are closing many of their physical locations. As a consequence, shoppers are staying away, causing all stores within these malls to face declines in customer visits.

In addition to the bankruptcy announcement, Gymboree has disclosed that its CFO, Andrew North, will be departing the company for personal reasons. Earlier this year, Gymboree’s former CEO Mark Breitbard also stepped down, making way for new CEO Daniel.

The company may close as many as 375 stores as part of its restructuring plan and, in the process, lay off hundreds of employees. Gymboree currently employs more than 11,000 workers. The company currently has about 1,300 physical stores, of which the majority are operating under the Gymboree brand while the remaining stores operate under the “Crazy 8” and “Janie and Jack” brands. (Source: Ibid.)



Gymboree files for Chapter 11 bankruptcy; CFO leaves retailer,” CNBC, June 12, 2017.

Gymboree files for bankruptcy,” CNN Money, June 12, 2017.


Categories: Bankruptcies, Job Cuts, News