Gymboree Files for Bankruptcy, Hundreds of Stores Set to Close
- Author: Zachary Reyes Jun 12, 2017,
Jun 12, 2017, 21:32
The bankruptcy was widely expected after Gymboree refused to pay certain bills in recent months, placing the retailer on a collision course with creditors. Gymboree may be preparing to file for bankruptcy as it seeks to reorganize its debt load and may transfer control to its leaders as the company faces an interest payment on its debt June 1.
Gymboree hopes to receive approval for their plans by September 24.
Like other retailers, Gymboree buckled amid declining mall traffic, fixed rental costs and online competition.
The company also announced its CFO was stepping down for personal reasons, but would stay on as a consultant. Liyuan Woo, Director at AlixPartners, has been appointed as Interim Chief Financial Officer, while the company searches for a replacement for Andrew North. James A. Mesterharm, Managing Director and Co-Lead Turnaround & Restructuring Services at AlixPartners, has been appointed as Chief Restructuring Officer.
The company has almost 1,300 stores, including about 750 with the Gymboree brand as well as stores under the insane 8 and Janie and Jack brands. The privately held company said that the majority of its stores will remain open and that Gymboree will conduct business as usual. The Ca rating that Moody's assigned to Gymboree's debt is far below investment grade. Last week, Ascena Retail Group Inc., which owns brands such as Ann Taylor, said it would close more than 250 stores over the next two years, and could close an additional 400 locations if the company could not negotiate "specific rent negotiations" with landlords.
The company, which didn't reveal specific store closings, has also secured $35 million to finance operations during restructuring.