UPDATE: January 11, 2019: Gymboree is "within days" of filing for its second Chapter 11, people with knowledge of the plans told the Financial Times. Gymboree did not immediately respond to Retail Dive's request for comment.
Gymboree is on the hunt for a bankruptcy loan in preparation for its second Chapter 11 in a year and a half, which could come as soon as January, according to a report from The Wall Street Journal citing people familiar with the situation. Gymboree did not immediately respond to Retail Dive's request for comment.
While a Reuters report from November claimed that the children's retailer could be considering the closure of half its stores, sources told the Wall Street Journal that the retailer is looking to close the majority of its 900 stores, with the exception of a little over 100 well-performing locations mainly of the Janie & Jack branch, which it hopes to sell.
If found, a bankruptcy loan would help Gymboree keep some of its stores open while it searches for a buyer, the report said, though the search may not result in a bankruptcy filing. Gymboree exited its first bankruptcy filing in October 2017, just over a year ago.
For the third time in a month, rumors about Gymboree's future are swirling through the industry.
Last month Reuters suggested the retailer might file Chapter 11 and close half its stores. Then — barely a week later — the children's apparel retailer announced it would be closing all of its Crazy 8 locations, as well as "significantly reducing" the number of Gymboree stores it operates in 2019 while undergoing a strategic review of its options.
That strategic review appears to have led the children's retailer to at least consider a second bankruptcy filing, one that would significantly cut down its brick-and-mortar footprint if things pan out the way the Wall Street Journal's sources indicate they would. The result could be a pared-down company, focused on the strengths of its Janie & Jack brand and without the weaknesses of Crazy 8 and, at least to some degree, its namesake Gymboree banner. It might not be the worst path for the children's retailer considering that many analysts thought the Crazy 8 brand would shutter during its last bankruptcy.
The retailer has also faced pressure from rival The Children's Place, which has not only targeted Gymboree customers where the retailer's stores have closed but also announced in the second quarter this year that it has every intention of chasing down Gymboree's current customers as well.
CEO Jane Elfers said at the time that the retailer plans to "aggressively pursue market share from Gymboree in the locations where we are co-located," and noted that their marketing tools are successfully targeting those customers.
Still, a bankruptcy filing is never ideal — and comes with the risk of liquidation. Toys R Us was forced into liquidation earlier this year after filing a rushed Chapter 11 just before the holidays last year, and Sears is still struggling to find a buyer outside of its chairman and former CEO Eddie Lampert.