Children’s clothing chain Gymboree has filed for Chapter 11 bankruptcy and is set to close hundreds of stores. While the store says they will stay in business, 375 to 450 of its 1,281 stores are slated to close, according to a court filing.
This filing did not come as a surprise, as it was already suspected in April that Gymboree would soon be filing for bankruptcy. They faced a June 1 interest payment on their debt, which is more than $1 billion. They’ve also stated that they haven’t made a profit since 2011.
“We expect to move through this process quickly and emerge as a stronger organization that is better positioned in today’s evolving retail landscape, with the right size store footprint and greater financial flexibility to invest in Gymboree’s long-term growth,” Gymboree CEO Daniel Griesemer said in a statement to USA Today.
Like many other retailers, online competition and declining in-person shopping has lead to their downfall. Other stores slated to close locations in 2017 include JCPenney, The Limited, Macy’s and Sears.
For Gymboree, 21 percent of their revenue comes directly from online sales, but in a court filing, Chief Restructuring Officer James Mesterharm says their web systems are dated and unsupported.
Credit Suisse, a global financial services company, predicted earlier this month that up to 25 percent of malls in the United States could close by 2022. (Yup, that’s only five years from now).
Mark Cohen, a former Sears Canada CEO who’s now the director of retail studies at Columbia Business School in New York City, told USA Today that he believes only 230-240 U.S. shopping malls will completely remain when the “industry shakeout” is complete. Currently, there are about 1,211 malls in the U.S.
There is no word yet on which Gymboree locations (or exactly how many) will be closing or how many Gymboree employees may be losing their jobs.