NEWS­MAK­ERS IN­TER­NA­TIONAL RE­STRUC­TUR­ING RE­TAIL IN OR­DER TO MEET BOT­TOM-LINE CHAL­LENGES

Images Retail - - CONTENTS - – By IM­AGES Re­tail Bu­reau

Re­tail­ers have strug­gled re­cently as con­sumers’shop­ping habits con­tinue to shift to­ward on­line plat­forms.

GYM­BOREE FILES BANK­RUPTCY, CLOSES 450 STORES

Chil­dren’s cloth­ing chain Gym­boree has filed for bank­ruptcy pro­tec­tion, aim­ing to slash its debts and close hun­dreds of stores amid crush­ing pres­sure on re­tail­ers. Gym­boree said it plans to re­main in busi­ness but will close 375 to 450 of its 1,281 stores in fil­ing for a Chap­ter 11 bank­ruptcy re­or­ga­ni­za­tion. Gym­boree em­ploys more than 11,000 peo­ple, in­clud­ing 10,500 hourly work­ers. The bank­ruptcy was widely ex­pected af­ter Gym­boree re­fused to pay some of its bills in re­cent months, plac­ing the re­tailer on a col­li­sion course with cred­i­tors. The re­tailer said in its fil­ing late Sun­day that it hopes to slash $1 bil­lion of its $1.4 bil­lion in debt and to win ap­proval for its plan by Septem­ber 24, 2017.

“We ex­pect to move through this process quickly and emerge as a stronger or­ga­ni­za­tion that is bet­ter po­si­tioned in to­day’s evolv­ing re­tail land­scape, with the right size store foot­print and greater fi­nan­cial flex­i­bil­ity to in­vest in Gym­boree’s long-term growth,” the re­tailer’s CEO, Daniel Griese­mer, said in a state­ment. Like other re­tail­ers, Gym­boree buck­led amid de­clin­ing mall traf­fic, fixed rental costs and on­line com­pe­ti­tion. Other mall re­tail­ers that have re­cently suc­cumbed to bank­ruptcy fil­ings in­clude Pay­less Shoesource, Rue21 and The Lim­ited. Global fi­nan­cial ser­vices gi­ant Credit Suisse pre­dicted last week that up to 25 per­cent of US malls could close by 2022.

As shop­pers flock to Ama­zon and other e-com­merce op­tions, on­line sales rep­re­sent only 21 per­cent of Gym­boree’s rev­enue, and its web sys­tems are “dated and un­sup­ported,” re­cently ap­pointed Chief Re­struc­tur­ing Of­fi­cer James Mester­harm said in a court fil­ing. Mester­harm also said Gym­boree had “strug­gled against other es­tab­lished brick-and-mortar re­tail­ers,” in­clud­ing Chil­dren’s Place and Gap­kids. Among other short­com­ings, Gym­boree failed to in­no­vate quickly, hav­ing only re­cently in­tro­duced store email, an­a­lyt­ics and tablet com­put­ers to help em­ploy­ees do their jobs. The tur­moil also re­sulted in re­cent lead­er­ship changes. The com­pany’s CEO since 2013, Mark Bre­it­bard, re­signed on April 3, 2017.

His per­ma­nent re­place­ment, Daniel Griese­mer, was ap­pointed on May 22. Upon fil­ing for bank­ruptcy, the com­pany an­nounced the exit of Chief Fi­nan­cial Of­fi­cer, Andy North and the ap­point­ment of in­terim CFO Liyuan Woo, a con­sul­tant at re­struc­tur­ing firm Alix­part­ners.

Re­tail­ers have strug­gled re­cently as con­sumers’ shop­ping habits con­tinue to shift to­ward on­line plat­forms. Chil­dren’s ap­parel re­tailer Gym­boree filed for Chap­ter 11 bank­ruptcy ear­lier this month, while ap­parel maker Bebe closed all brick-and­mor­tar stores. Sears, Jcpen­ney and Macy’s have also cut phys­i­cal store lo­ca­tions in re­cent months. Play­ers like Tesco and Nike have slashed jobs in a bid to man­age ris­ing costs pres­sures.

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