Children’s apparel retailer The Gymboree Corp.’s long talked-about bankruptcy filing came to fruition on Sunday.
Gymboree, No. 392 in the 2017 Internet Retailer Top 500, formally filed in the United States Bankruptcy Court for the Eastern District of Virginia. Gymboree becomes the 11th retail chain to file for bankruptcy in 2017, joining a growing list that most recently added teen apparel retailer rue21 Inc. (No. 408) and Payless ShoeSource Inc. (No. 364) to its ranks.
In its filing, the retailer cited assets in the $100-$500 million range, and liabilities of between $1 billion and$10 billion. Its largest creditor is Deutsche Bank, to which it owes more than $171 million. Gymboree says it plans to continue operating its stores and online business for now. Gymboree did an Internet Retailer-estimated $60.3 million in online sales in 2016, up 8.5% from $55.6 million the previous year.
The Chapter 11 filing comes just weeks after Gymboree named former Tilly’s Inc. (No. 347) CEO Daniel Griesemer as its new CEO.
“The steps we are taking today allow the company to definitively address its debt and enable the management team to turn its full focus toward executing our key strategies, including our product, brand, and omnichannel initiatives,” Griesemer said.
Gymboree reported in March that overall retail sales, which include online, were down 5.5% year-over-year to $629.2 million through the first six months of the 2017 fiscal year from $665.9 million last year. Gymboree also reported a net loss of $335.8 million during the first six months of fiscal 2017, compared to a $39.4 million profit during the same time last year. Gymboree attributes the loss in part to a $368.1 million goodwill and intangible asset impairment charge, the kind of charge companies take when their brand value has diminished.
For more on why companies are buying financially troubled retailers and what is being done to breathe new life into those retailers, check out “Brand Revival” in the March issue of Internet Retailer magazine.