Reuters: Gymboree could close half its stores, file Ch. 22
- A little more than a year after exiting Chapter 11, Gymboree is mulling whether to close more than half of its remaining store footprint and potentially file for bankruptcy a second time, according to a Reuters report that cited unnamed sources.
- The news service also reported that Gymboree has hired Berkley Research Group as advisers to assist the children's apparel retailer in cutting costs, analyze its leases and evaluate other options, including a possible Chapter 22.
- Gymboree currently operates more than 900 stores, after shedding more than 300 in bankruptcy last year. The company did not immediately respond to Retail Dive's request for comment.
Gymboree was one of 2017's bankruptcy success stories, if such a thing is possible. The retailer — buckling under debt leftover from a leveraged buyout by Bain Capital — went into Chapter 11 with a pre-arranged plan with lenders.
The plan allowed Gymboree to shed nearly $1 billion in debt and quickly exit hundreds of leases that had become a financial burden after years of declining sales and foot traffic at its mall-based stores. But many of its competitive struggles remained, and potentially even intensified.
Many analysts pointed to Gymboree's split brands — a high-end brand in Janie & Jack, a mid-tier eponymous brand and the low-end Crazy 8 — as potentially cannibalizing each other. Meanwhile, it had strong competitors to fend off, including Target, Carter's and The Children's Place. The latter operates in many of the same malls as Gymboree and has undergone an impressive transformation that, so far, Gymboree has been unable to emulate.
Under CEO Jane Elfers, Children's Place has not been content merely to pick off Gymboree's shoppers in stores Gymboree closed in or out of bankruptcy. It has also been developing digital marketing tools to lure Gymboree shoppers in all areas where the latter overlaps geographically with Children's Place.
"[W]e have made the decision to aggressively pursue market share from Gymboree in the locations where we are co-located," Elfers told investors in August, in a conference call during which she put numerous peers on notice that her company was coming for their market share. "Many of our competitors have been forced into playing varying degrees of defense as they come to realize that significant parts of their strategic growth plans are not delivering the intended results,” she said in August.
For its part, Gymboree tried to reset this summer. Given the news of a possible second Chapter 11 and hundreds more potential store closings, the re-brand and assortment shake up may not have been enough. Further, changes to Gymboree's product lineup and styles apparently alienated some of Gymboree's loyal customers.
"You lost me, Gymboree," one parent told the company on Facebook in a post about the retailer's new clothing lines that echoed plenty of similar posts. Another wrote: "I guess it's official my kids will be naked now since Gymboree has NOTHING cute to buy and I bought 90% of our clothes there. If I wanted to look like cat and jack or gap i [sic] would have shopped there."
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