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