Exclusive: Kids clothing retailer Gymboree weighs closing half its stores - sources

© Reuters. Exclusive: Kids clothing retailer Gymboree weighs closing half its stores - sources

By Jessica DiNapoli

(Reuters) - Gymboree Group Inc, a U.S. retailer of infant and children's clothing, is considering closing more than half of its approximately 900 stores, people familiar with the matter said on Tuesday.

The move would be a setback for Gymboree after it emerged from bankruptcy last year. It was one of the few brick-and-mortar retailers that managed to escape liquidation in a wave of bankruptcies that swept the sector, amid the rise of online shopping.

Gymboree has hired consulting firm Berkley Research Group LLC to assist it in evaluating options, which could include filing for bankruptcy again, the sources said. Berkley Research Group will also help cut costs and analyze the mall-based chain's leases, the people said.

This effort could help determine Gymboree's future. Without the cooperation of landlords willing to give rent breaks, struggling retailers are often forced to file for bankruptcy as a way to get out of their store leases.

The sources asked not to be identified because the matter is confidential. Gymboree declined to comment, while Berkley Research Group did not immediately respond to a request for comment.

San Francisco-based Gymboree filed for bankruptcy in June 2017. Through that process, it cut its debt by $1 billion, and closed one-quarter of its shops. It emerged from bankruptcy in September 2017 with debt that included an $85 million term loan and $200 million revolving credit line.

Gymboree's former lenders, a group including distressed-debt oriented hedge funds Searchlight Capital Partners LP and Brigade Capital Management LP, as well as private equity firm Apollo Global Management LLC (N:APO), now own the company.

In addition to Gymboree, the chain has the Janie and Jack and Crazy 8 brands.

More than 20 U.S. retailers have filed for bankruptcy since the beginning of 2017, as e-commerce giants such as Amazon.com Inc (O:AMZN) surged in popularity. Sears Holdings Corp (PK:SHLDQ) filed for bankruptcy in October, while Toys R Us Inc decided to close down earlier this year.

Like its peers, Gymboree is now at the most critical time of the year for its business, as shoppers stock up for the holidays. Sales at brick-and-mortar stores declined in the shopping period right after last week's U.S. Thanksgiving holiday, while more consumers made purchases from their smartphone.

To boost sales after it emerged from bankruptcy, Gymboree revamped its brands earlier this year, highlighting new graphic tees and outerwear. The retailer also launched an app focused on its tees.