Gymboree Set to Be Next Retailer to Seek Bankruptcy Protection
There seems to be no end in sight to the drumbeat of distressed private-equity owned retailers seeking relief from their debt loads by filing for bankruptcy protection.
Bloomberg News reported on Tuesday that children’s apparel store chain Gymboree was preparing a Chapter 11 bankruptcy filing ahead of a June 1 interest payment on its large debt load, citing people with knowledge of the matter.
The company, saddled with $1 billion in debt stemming from its buyout by Bain Capital in 2010, is trying to restructure that debt and perhaps even transfer control of the company to lenders, Bloomberg wrote.
Gymboree did not immediately respond to a request from Fortune for comment. But last month, in a regulatory filing, the retailer said it didn’t project having enough cash to get through the following 12 months, and raised the specter of its disappearance in the event it fails to refinance debt. In its most recent quarter, Gymboree’s comparable sales fell 5% and it reported a net loss of $324.9 million, including a $368.1 million write down to reflect the deterioration of its business.
The company operates nearly 1,300 stores and has lost hundreds of millions in the last few years: it hasn’t reported an annual profit since 2011. Gymboree has struggled as more shoppers avoid malls, and retailers like Children’s Place, Target (TGT) and Kohl’s (KSS) have stepped up their children’s apparel lines.
If Gymboree ends up seeking bankruptcy court protection, it will only be the latest retailer to do so. Chains to have filed for bankruptcy in the recent past include, Payless ShoeSource (last week), Aéropostale, American Apparel, PacSun, Wet Seal, and The Sports Authority. Other retailers to be struggling with high debt loads resulting from leveraged buyouts are include J.Crew and Neiman Marcus.