Clothing retailer Gymboree files for bankruptcy again
It’s the end of the line for Gymboree.
The children’s clothing retailer filed for bankruptcy for the second time in less than two years late Wednesday. This bankruptcy will bring about the end of its flagship brand.
Gymboree Group said it plans to start closing all of its Gymboree and Crazy 8 branded stores, according to the filing.
“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 Shaz Kahng, who was tapped as CEO just this past November.
The company’s Janie and Jack stores, a more upscale brand, are expected to be sold through bankruptcy court auction next month. A unit of Goldman Sachs has already agreed to be a bidder.
The filing does not say exactly how many Janie and Jack stores will be saved. There were 149 stores at the time of its first bankruptcy. The company operates more than 900 stores in total, according to the latest filing.
The bankruptcy does not affect Gymboree Play & Music, a chain of more than 730 centers that offer play, music and art classes. That business was sold by Gymboree’s holding company in 2016.
The company filed for bankruptcy the first time in June of 2017 and was able to emerge fairly quickly. It reached a deal with almost all of its lenders to shed about $1 billion in debt in that bankrutpcy and got an infusion of $115 million in new cash, according to BankruptcyData.com. It completed a reorganization by September of that year.
The problems that led to Wednesday’s bankruptcy and shutdown announcement are not unique to Gymboree. In fact it is common for retailers who try to use bankruptcy to reorganize to end up with a second, final trip to bankruptcy court in relatively short order.
That’s what happened recently with RadioShack.
It’s a cautionary tale for those hoping that Sears Holdings, the owner of Sears and Kmart, will be able to survive long term by shedding debt and closing stores in its current bankruptcy.
Chairman and former CEO Eddie Lampert insists that his bid for the operating assets of Sears will allow it to emerge as a smaller, profitable and more competitive company, but other experts believe that the company’s stores are poorly positioned to compete long-term.