Children’s clothing retailer files for bankruptcy; store closings loom
Gymboree has filed for Chapter 11 bankruptcy protection.
The retailer announced the filing, which was widely expected, on Sunday. Gymboree, which has partnered with AlixPartners to assist with turnaround efforts, plans to close 375 to 450 of its 1,281 stores, according to the filing.
The Chapter 11 filing should reduce Gymboree's debts by more than $900 million. The company has been under increasing pressure with a heavy debt load, the majority of which stems from Bain Capital’s $1.8 billion leveraged buyout of the retailer in 2010. Gymboree said expects to operate its overall business and the majority of its stores as usual during its financial restructuring.
"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 Omni-channel initiatives," said Daniel Griesemer, president and CEO of Gymboree, which operates 1,281 stores. "We have three great brands, strong operations and dedicated employees, and throughout this process, we will continue to deliver superior service to our customers and put them at the center of all we do."
The retailer has secured commitments for $35 million in new-money debtor-in-possession financing from a majority of its existing term loan lenders. It also has secured up to $273.5 million in additional DIP financing from the existing lenders under asset backed loan credit facilities which, in addition to Gymboree's ongoing cash flow, will ensure the company is able to continue meeting its financial obligations throughout the Chapter 11 case.
"The support of our lenders and their new financing commitment underscores their confidence in the company," Griesemer said. "We expect to move through this process quickly and emerge as a stronger organization that is better positioned in today's evolving retail landscape, with the right size store footprint and greater financial flexibility to invest in Gymboree's long-term growth."
Additionally, Gymboree announced that Andrew North is stepping down as CFO for personal reasons. He will remain for a period of time as a consultant. Liyuan Woo, director at AlixPartners, has been appointed as CFO, while the company searches for a replacement.
As of April 29, 2017, Gymboree operated a total of 1,281 retail stores: 582 Gymboree stores (532 in the United States, 49 in Canada and one in Puerto Rico), 172 Gymboree outlet stores (171 in the United States and one in Puerto Rico), 149 Janie and Jack shops (148 in the United States and 1 in Puerto Rico) and 378 Crazy 8 stores in the United States.
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