Gymboree — another mall-based retailer looking like it will bite the dust
Gymboree Corp., the struggling children’s clothing retailer, is preparing to file for bankruptcy as it faces a June 1 interest payment on its debt, according to people with knowledge of the matter.The Bain Capital-controlled company is seeking to reorganize its debt load and may transfer control to its lenders, including Searchlight Capital and Brigade Capital Management, said the people, who asked not to be identified because the process isn’t public.
Full Article: Gymboree Is Said to Prepare for Bankruptcy as Payment Looms – Bloomberg
Almost all of Gymboree’s locations are in malls — a place that American’s are avoiding as much as possible these days. Think about it — if you’re a mother with 2-3 kids under the age of 6, the last place you’re going to go is a mall to purchase clothes when you can do it faster and cheaper during nap time at home. Thus the reason why this once debt-free company in 2010 has amassed over $1 billion in debt with mounting losses making sustaining that debt untenable.
As we’ve said here at Tematica again and again, as well as on our Cocktail Investing podcast, the death of the mall is at hand. Retailers need to rethink their strategy and either come up with a new shopping experience — one that will entice people to come our of their homes and into the store.
