Amid less expensive destinations for kids’ online clothing and declining traffic in malls, Gymboree Group Inc. plans to close following its second bankruptcy. The retailer, which has just under 950 locations, filed for protection from creditors in the U.S. Bankruptcy Court for the Eastern District of Virginia, Bloomberg reported.
Gymboree Group CEO Shaz Kahng said in a press release, “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.”
While the company is looking to shutter its Crazy 8 and Gymboree brands, a Goldman Sachs Inc. unit is seeking bids for the company’s Janie and Jack business. As it stands, the company has $212 million in total obligations. They consist of outstanding letters of credit ($44.5 million) and a senior secured asset-based revolving credit facility ($79.1 million) in addition to a senior secured term loan (roughly $89 million).
The news comes as Gymboree Group Inc. was eyeing a bankruptcy loan, per reports in December. That financing could allow some of the company’s stores to stay open as it seeks a buyer. According to sources that were not named in the report, it is probable that Gymboree will shutter most of its 900 stores, yet the company may try and sell over 100 stores and was said to have tapped a firm to help it find a buyer.
The report noted that many retailers have filed for bankruptcy before liquidating. Other companies, however, have made the filing along with “prepackaged plans” to help them remain operating. Retailers such as Sports Authority, RadioShack and Toys R Us wanted to restructure their operations with bankruptcy, but they ended up having to close amid shifts in the brick-and-mortar retail space as well as changes in the behavior of shoppers.