Published on : Jun 14, 2017
Gymboree, the kids clothing chain in the US, is closing hundreds of its stores in the wake of filing for bankruptcy. In the midst of crushing pressure from retailers across the nation, the clothing chain will be shutting down 375 to 450 of the 1,281 stores it runs, while still remaining in business. The company, which employees over 11,000 people in the US, is filing for a Chapter 11 bankruptcy reorganization.
Bill Payment Issues in Recent Months Sounded Alarm Bells for Gymboree
Over the last couple of months, Gymboree has been refusing to pay some of its bills, souring its relationship with creditors. The bankruptcy was already expected before the retailer, late on Sunday, acted on its recent struggles. Hopes are that the company will cut US$1 billion of its debt of US$1.4 billion and will earn the approval for its plan by the 24th of September.
Daniel Griesemer, Chief Executive Officer at Gymboree said in a statement that they hope to rise from this situation as fast as possible and as strong an organization as ever before. The aim is to be positioned well in this evolving retail industry, to possess enough financial flexibility to strengthen Gymboree’s long term growth.
Soaring Success of E-Commerce Impacting Fate of Malls
Gymboree’s fate is not unlike many others in the retail sector, buckling under the pressure of declining mall traffic, online competition, and high fixed rental costs. Others that have met with similar fate include Rue21, Payless ShoeSource, and The Limited. It has been estimated that by 2022, nearly 25 per cent of the malls in America could close as shoppers flock to the plethora of e-commerce sites such as Amazon.