As the retail bankruptcy onslaught continues into mid-July of 2017, children’s clothing retailer Gymboree is the most recent victim in the struggle for stores in North America to stay solvent. Gymboree announced that the company will have to shut down nearly 350 of its 1281 stores nationwide starting on Tuesday, July 18th after filing for Chapter 11 bankruptcy last month. Gymboree’s remaining assets will include somewhere in the vicinity of 900 stores which include stores that sell the product lines Janie and Jack, Gymboree, and Crazy 8. By filing Chapter 11, Gymboree will be allowed to stay in business while it restructures its finances which will include a $35 million loan.
The decision to file bankruptcy comes at a time where Gymboree is saddled with nearly $900 million dollar worth of debt. In a statement by the Gymboree CEO Daniel Greisemer, “The steps we are taking today allow the company to definitely address its debt and enable the management team to turn its full focus toward executing our key strategies.” It is unclear at this time if the San Francisco based clothing company will close additional stores in order to fix its balance sheet. CEO Daniel Greisemer went on to say that “right-sizing our store footprint is a central part of our efforts to ensure Gymboree emerges from this restructuring process as a stronger and more competitive organization”.
The cause of the retail financial woes are a mix between increased use of e-commerce to shop and the inevitable drop in retail sales at shopping malls across the country. Gymboree reported a net loss of $324 million in Q4 of 2016, and mentioned in their bankruptcy filing that more shoppers going online was to blame. This should serve as a sign that retailers who fail to adopt an international base of operations, as well as, online sales could be headed for troubled financial waters.