Report: Children’s clothing retailer to reorganize
Gymboree Corp. is planning a significant reduction in its store fleet.
The retailer is looking to close hundreds of stores part of a restructuring under bankruptcy court protection, The Wall Street Journal reported. The final number of stores, however, has yet to be determined.
Citing unnamed sources, the report said Gymboree was likely to file for Chapter 11 bankruptcy protection in the coming week. The retailer is struggling with declining sales, and reported a 5% decrease in same-store sales for its most recent (second) quarter. It has posted losses for the last several years amid increased competition from online and discounters.
Gymboree also has a heavy debt load resulting from Bain Capital’s leveraged buyout of the company back in 2010. According to the report, Gymboree has a $1.04 billion debt that will mature in 12 to 22 months, of which $871.9 million is due in under a year. In March, the company warned it was short on cash and stated it was in talks with lenders to refinance at least a portion of its debt to sustain liquidity.
As of January 28, 2017, Gymboree operated a total of 1,291 retail stores, with 586 namesake stores (536 in the United States, 49 in Canada and one in Puerto Rico), 174 Gymboree Outlet stores (173 in the United States and 1 in Puerto Rico), 149 Janie and Jack shops (148 in the United States and 1 in Puerto Rico), and 382 Crazy stores in the United States.
Study: Retailers pull out the stops to compete with the ‘Amazon effect’
The “Amazon effect,” or the impact of digital on traditional retailing, is forcing retailers to step up their game.
As retailers strive to incorporate new services to satisfy shoppers both in-store and online, their first priority is adding services to compete with the promise of free shipping.
Seventy-five percent of online shoppers are “greatly impacted” by free shipping when they make purchase decisions — no doubt due in large part to the Amazon effect, according to the “2016 Home Delivery and Final Mile Services Report,” from AlixPartners.
In fact, the maximum acceptable delivery time among omnichannel shoppers has declined 13% since 2012 to 4.8 days, according to data.
While retail segments struggle to meet these expectations, many are taking steps to become more competitive.
The footwear segment is most aggressive in this category — so much so that footwear companies now feature the shortest average delivery time and the lowest average free shipping threshold. Specifically, the category’s free shipping minimums range between $24.99 and $100, and deliveries end up in customers’ hands on average, within 5.6 business days, the report said.
“[Companies] bundled free shipping with their tiered rewards program, which includes both standard and premier levels that reward customers based on their loyalty and engagement,” the report said.
Specialty retailers also continue to ramp up their e-commerce offerings, hoping to slowly chip away at Amazon’s lead. However, free shipping minimums range between $40 and $75, and as a group, they offered one of the longest average delivery commitment times — clocking in at almost a full week. Of course, this is not across the board. The shortest delivery commitment is three days, while the longest is eight days.
“Our perspective is that specialty retailers are slowly adapting to this choppy climate, providing trend at a value but free shipping at a slower pace,” the report explained.
Department stores are also making an effort to bridge the gap between online and retail shopping, and adding more services, including “buy-online pick-up in store,” “reserve online, try on in store,” and “curbside pick-up” strategies. Similar to their specialty retail counterparts, this segment’s free shipping minimums range between $49 and $99, and average delivery commitments stretch six business days.
There is a similar story among off-price retailers, when it comes to free shipping minimums ($49 to $99), and average delivery commitments (six business days). However, this segment is not making efforts to compete with Amazon’s two-day free shipping plan. However, this makes sense since this group relies very heavily on in-store sales and the in-person bargain hunting experience, according to the study.
Retail outpaces other industries in…
Job losses are piling up in the retail industry amid ongoing store closings.
The retail industry experienced 11,669 job cuts in April, the highest total among all industries, bringing the year-to-date total to 50,133, according to a report released Thursday from global outplacement consultancy Challenger, Gray & Christmas. That is up 36% from the 36,977 retail-sector job cuts announced in the first four months of 2016.
Overall, the pace of downsizing decreased in April, as U.S.-based employers announced workforce reductions totaling 36,602 during the month. The April figure represents a 15% decrease from March, when employers announced 43,310 planned layoffs.
“Although restructuring in the retail sector continues to shed jobs, we aren’t seeing the wide scale layoffs in other sectors, like energy or tech,” said John A. Challenger, CEO of Challenger, Gray & Christmas.