Gymboree Corp. filed for chapter 11 bankruptcy protection Monday after retaining a turnaround firm last month to assist with its operations. Gymboree now has more than 11,000 employees according to a filing. The company was not announced if any of Utah's 13 stores and outlets may close. It operates 582 Gymboree stores, 172 outlets, 378 value-focused insane 8 stores and 149 upscale Janie and Jack stores worldwide.
According to a filing in bankruptcy court, the company owes more than $171 million on an outstanding term loan that lists its largest creditor, Deutsche Bank Trust Company Americas, as trustee.
Gymboree and Janie and Jack have locations in Santa Barbara, and there is a Gymboree Outlet in Pismo Beach. The company hopes to cut $1 billion of its $1.4 billion in debt through the bankruptcy process.
"Fitch's expectation of increasing retail defaults stems from increased discounter (including off-price and fast-fashion apparel) and online penetration, along with shifts in consumer spending toward services and experiences", the credit rating agency said. His permanent replacement, Daniel Griesemer, was appointed May 22.
Gymboree said 35 percent of its 1,300 stores are leased from GGP Inc. and Simon Property Group Inc. In January, the CEO stepped down. However, the company is profitable: It just has $1.4 billion in debt from a leveraged buyout by Bain Capital a few years ago.
Still, Gymboree posted a profit before interest, taxes, depreciation, and amortization of $71 million in 2016, down from $94 million in 2015.
The company also announced its chief financial officer, Andrew North, would be resigning for personal reasons.
Gymboree says it secured a total of $308.5 million in financing to keep the company operating through the Chapter 11 process.