Business

Gymboree will go out of business

Turnaround plan fails

Gymboree Corp. expects sales and store closings to continue through April. (Bloomberg)
Gymboree Corp. expects sales and store closings to continue through April. (Bloomberg)

Gymboree Group will shut down after going bankrupt a second time — the victim of falling mall traffic and cheaper online sources of kids clothing.

About 10,000 people could lose their jobs.

The retailer filed for protection from creditors who were owed about $212 million in U.S. Bankruptcy Court for the Eastern District of Virginia, according to a statement late Wednesday.

The San Francisco-based company, which operates 945 stores under three brands in the United States and Canada, plans to close its Gymboree and Crazy 8 chains after failing to find anyone willing to buy them, court papers show.

Gymboree stores are in Coral Ridge Mall in Coralville and Tanger Outlets in Williamsburg.

A unit of Goldman Sachs Group is leading bids for Gymboree’s higher-end Janie and Jack business.

Gymboree will join Toys “R” Us, ShopKo Stores and Bon-Ton Stores — Younkers’ parent company — in the ranks of defunct retailers that collapsed as shoppers deserted malls and bought online.

The decision came less than a year and a half after Gymboree emerged from an earlier Chapter 11 bankruptcy that cut debt, overhauled operations and enabled it to launch a rebranded clothing line.

An auction of company assets is expected by Feb. 25. Going-out-of business sales are being planned to dispose of inventory, raising about $155 million in net proceeds, Chief Restructuring Officer Stephen Coulombe said in court papers.

The company expects the sales and store closings will continue through April.

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The bankruptcy comes at a time of weakness for the children’s apparel industry, with sales at children’s and infant wear stores falling 5.8 percent in November and 5.9 percent in December, according to First Data.

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