Gymboree Corp. is said to be preparing to file for bankruptcy as it faces an upcoming interest payment on its debt on June 1. Bloomberg reports that the Bain Capital-controlled company is seeking to reorganize its debt load and may transfer control to its lenders, including Searchlight Capital, Brigade Capital Management and Oppenheimer Holdings. The children’s clothing retailer, which operates about 1,300 stores, hasn’t posted an annual profit since 2011, with losses totaling more than $800 million.
Total Retail’s Take: Here's another example of a retailer failing due to the rise of online competitors and declining mall traffic. Most of Gymboree’s stores are located within malls, forcing the retailer to go head-to-head with the likes of specialty chains such as Children’s Place and Carter’s. I wouldn’t be surprised if we hear Gymboree plans to close some stores to offload debt. Another potential factor in Gymboree's struggles is that it's in a state of transition — CEO Mark Breitbard announced in January that he would be stepping down to become the chairman of the company’s board of directors. A replacement CEO has yet to be named.