Well known infant and children’s clothing brand Gymboree, currently operating in more than 900 stores in the US and Canada, is preparing for its second Chapter 11 filing. (A case filed under chapter 11 of the US Bankruptcy Code is frequently referred to as a “reorganization” bankruptcy.) Gymboree Group, that owns brands like Gymboree®, Janie and Jack® and Crazy 8®, last filed for bankruptcy in June 2017 when it had a burden of more than US $ 1 billion of debt from its 2010 leveraged buyout. At that time, it had closed around 360 stores and came over bankruptcy after three months.
In India, apparel exporters can face heavy loss due to weak condition of the brand and so put their shipments on hold. Li & Fung, which manages San Francisco-based Gymboree in India, has so far issued no official communication to the Indian exporters.
Apparel Resources talked to three well-known apparel exporters of Tirupur and Delhi-NCR who are working with Gymboree. One of them, on the condition of anonymity, shared, “It is a major issue for us. We have put our shipments of the company on hold and will work according to the things take place in the future.”
As per the report of the Wall Street Journal, Gymboree is seeking a bankruptcy loan to keep stores open while it looks for a buyer. The company recently announced that it has commenced a strategic review process to reposition. Before this, Reuters had reported that the company is considering closing more than half of its 900 stores.
“We are evaluating the retail footprints of its Crazy 8® and Gymboree® brands with the intention of closing the Company’s Crazy 8® store locations and significantly reducing the number of Gymboree® store locations in 2019. All Gymboree®, Janie and Jack® and Crazy 8® stores are open, fully stocked and ready to delight kids and parents throughout the holiday season,” the company said in a statement issued recently.
“The company is shopping for a bankruptcy loan as it prepares for a second chapter 11 filing in less than two years. If Gymboree does file for Chapter 11, it would likely close the majority of its 900 stores,” The report reads.
“We have started working directly with Gymboree just 6 months back and looking to its financial condition, stopped order booking from last two months. Gymboree has just open LC (Letter of Credit) so we are planning how to move forward. Overall it is sad for India exporters.” – PMS Uppal, MD, Pee Empro Exports, Faridabad and President, Okhla Garment & Textile Cluster (OGTC)
With the total turnover of more than Rs. 352 crore, Pee Empro Exports is one of the well-known apparel exporters of Delhi-NCR.
“The process we announced is designed to reposition the Company for success by establishing a brand portfolio and store footprint that is optimized for the current retail environment. These strategic initiatives are an important next step as we continue to look for ways to unlock additional value in our brands. We are optimistic about our future as a more streamlined organization that can deliver enhanced, long-term value to its stakeholders. Our team remains focused on delivering the quality children’s clothing and accessories and exceptional service that our customers have come to expect from us.” – Shaz Kahng, CEO, Gymboree Group
Nearly 20 US-based retailers have filed for bankruptcy in last two years and in October 2018. Sears Holdings Corp filed for bankruptcy which was also a blow for Indian exporters.
“Gymboree is a rare example of a retailer that filed for bankruptcy but was later able to reorganise its business successfully. That time company was very much transparent about its bankruptcy and effectively communicated at every point. We are hoping that same should happen this year too,” said a Tirupur-based exporter who is an old supplier to Gymboree as well as to Sears and don’t want to be quoted.
Apparel Resources will keep updating you about the further development of Gymboree and its impact on Indian apparel exporters.
