Another iconic retailer, Gymboree, has filed bankruptcy. This is the second Chapter 11 filing in two years, prompting some to label this a “Chapter 22.”
Founded in 1986, Gymboree flourished in shopping malls in the 1990s, at one point expanding to China, South Korea, Australia and several Latin American countries, and boasted over 1,300 retail outlets worldwide. However, as the 21st Century opened, Gymboree, like so many other brick and mortar retailers, found itself beset on all sides. Online competition took its toll, but so did discount stores like Walmart that offered children’s clothing along with tires, appliances and food.
In June 2017, Gymboree filed its first Chapter 11 as a pre-packaged case, meaning it had already negotiated a restructuring deal with its creditors and simply wanted the bankruptcy court’s approval, which it received in September 2017. It eliminated nearly $1 billion in debt, raised $80 million in a public offering, and obtained a $285 million facility. It emerged from bankruptcy barely two months after filing.
Through 2017 and 2018 Gymboree worked to implement its plan but the market forces were against it. In October 2018 Gymboree sought the advice of an investment banker, a restructuring expert and financial advisor to explore its alternatives and on January 16, 2019, it filed a second Chapter 11. Gymboree was unable to find any purchasers for its Gymboree and Crazy 8 brands and intends to hold store-closing sales at all locations. It is looking for buyers of the Janie and Jack brand as an ongoing concern.
Gymboree is about to join Sports Authority, Toys R Us and a small but growing group of retailers that once were stalwarts in malls but are nowhere to be found anymore.