As of recently, Gymboree summoned the protection of a bankrupt status to cope with its overwhelming debt. The children’s apparel retailer took this decision only weeks after it closed a partnership deal with AlixPartners, a turnaround company. However, Gymboree failed to honor a June 1 payment for one of its debts.
Children’s Apparel Retailer CEO Is Going to Fight for His Company’s Comeback
On Monday, San Francisco-based Gymboree announced that their Chief Financial Officer, Andrew North, is leaving the company. The explanation for this act had personal nature. In light of these events, CEO Daniel Griesemer announced that he is going to support his company through these difficult times with determination.
“We expect to move through this process quickly and emerge as a stronger organization…”
Therefore, from now on the company will focus more thoroughly to address its bankruptcy status with viable solutions. At the same time, the management team is going to invest more resources and efforts into key aspects of the business, which are Brand, Product, and Initiatives.
Tough Competition Was One of the Agents that Forced the Company into Bankruptcy
The financial problems that seem to corner the children’s apparel retailer are a result of its tough competition. Rivals such as Gap and Children’s Place managed to apply better marketing strategies that positioned them higher in fashion trends. This left Gymboree on a weaker level with fewer clients.
According to the filed documents, the Chapter 11 will unburden the company from debts valued at $900 million. However, this is still not enough to revive the business. They are going to need to eliminate expenses for around 375 stores. Gymboree operates 1,300 stores out of which 35% are under leasing agreements with real estate investment trusts, Simon Property Group, REITs, and GGP.
Most of its important brands have settled in malls. However, these locations might be detrimental to the company. Due to online retail, shopping centers such as malls started to record weaker foot traffic than ever before.
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