Gap Inc.'s $35M bid for Janie and Jack approved
UPDATE: March 5, 2019: Gap Inc.'s bid to acquire Janie and Jack has been approved, and the retailer will shell out $35 million for the high-end children's brand, according to court documents filed late Monday evening. That's in addition to purchasing the Janie and Jack inventory at cost, plus additional expenses, per a Gap press release. The Children's Place's acquisition of the remaining assets of Gymboree and Crazy 8, for a whopping $76 million, plus the assumption of assumed liabilities, was also approved on Monday, according to court documents filed that same evening.
- In court documents filed Saturday, Gymboree named Gap Inc. as the likely buyer of its Janie and Jack line, being "the highest and best offer" for the business. The sale will still need to be approved, however, at a later hearing.
- The children's retailer also named the likely acquirer of the remaining assets for its Gymboree and Crazy 8 brands, which would go to The Children's Place (referred to in the documents as TCP LLC), pending court approval. A hearing to confirm the transactions was set for early this week.
- It was not immediately clear which part of Gap Inc. the Janie and Jack brand will join in the wake of an announcement that the company is splitting itself into two publicly traded companies. A Gap Inc. spokesperson referred Retail Dive to the company's statement: "We are excited about the potential opportunity to acquire Janie and Jack — a leader in children's specialty retail. We believe this transaction will provide Gap Inc. with the opportunity to expand our customer base in a desirable category with a loyal brand following."
About a month and a half after filing for its second bankruptcy in two years, it appears that Gymboree has found a potential buyer for its profitable Janie and Jack unit in one of its largest competitors, as well as for the remaining assets of Gymboree and Crazy 8.
In the company's original filing, the children's retailer called out Gap and The Children's Place by name when discussing competitive pressures that pushed it to file Chapter 11, and those retailers weren't exactly shy about their role in stealing share. The Children's Place CEO Jane Elfers discussed the retailer's attempts to win over Gymboree shoppers in areas where the brands were co-located during multiple earnings calls, and data collected by Earnest Research showed that both The Children's Place and Carter's had significant customer overlap with Gymboree and were taking market share from the retailer prior to its bankruptcy.
The acquisition of Janie and Jack also comes at an interesting time for Gap Inc., which announced Thursday its plans to operate as two separate, publicly traded businesses, one of which would contain only Old Navy and the other of which would include Gap, Banana Republic, Athleta, Hill City and Intermix.
Having a higher-end children's apparel business could be complementary to the retailer's own Gap Kids brand, but there is always the threat that two brands in the same space might cannibalize each other. That's been the fear at some department stores with popular off-price businesses, and analysts speculated that was also partly to blame for the demise of Gymboree, which operated Crazy 8 in the lower end of the market, Gymboree in the middle, and Janie and Jack in the higher end.
While the children's retailer announced plans to close all of its Crazy 8 and Gymboree stores, the website for the latter is still operating and the brand could exist in an online form going forward, depending on the buyer's plans for the brand.
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