(Bloomberg)—Gymboree Group Inc., No. 531 in the Internet Retailer 2018 Top 1000, will shut down after going bankrupt a second time, the victim of falling mall traffic and cheaper online sources of kids clothing. About 10,000 people could lose their jobs.
The retailer filed for protection from creditors owed about $212 million in U.S. Bankruptcy Court for the Eastern District of Virginia, according to a statement late Wednesday. The San Francisco-based company, which operates 945 stores under three brands in the U.S. and Canada, plans to close its Gymboree and Crazy 8 chains after failing to find anyone willing to buy them, court papers show. A unit of Goldman Sachs Group Inc. is leading bids for Gymboree’s higher-end Janie and Jack business.
With its latest move, Gymboree joins Sears Holdings Corp. (No. 24) and Toys R Us Inc. (No. 38) in the ranks of failing brick-and-mortar retailers struggling with high debt burdens that have been unable to keep customers from deserting malls and flocking to online rivals. Gymboree has also seen competition for children’s clothing intensify online.
“The company has worked diligently in recent months to explore options for Gymboree Group and its brands, and we are saddened and highly disappointed that we must move ahead with a wind-down of the Gymboree and Crazy 8 businesses,” said CEO Shaz Kahng, appointed in November, in the statement.
The bankruptcy comes at a time of weakness for the children’s apparel industry, with sales at children’s and infant wear stores falling 5.8% in November and 5.9% in December, according to First Data.
Gymboree began in 1976 as a provider of music and play classes for mothers and their babies in the San Francisco Bay area, and was acquired by Bain Capital LLC for about $1.8 billion in 2010.
That buyout saddled the company with more than $1 billion in debt, leading Gymboree to cut costs and defer investments before filing for Chapter 11 protection in June, 2017. It emerged in September that year with a rebranded apparel line intended to help compete against Forever 21 and other fast-fashion retailers.
With the new filing, Gymboree Group got a commitment for debtor in possession financing, including $30 million in new money loans by SSIG and Goldman Sachs Specialty Lending Holdings, according to the Gymboree statement.Favorite