The Who’s Who list of distressed retailers just keeps growing and growing — and it’s just four months into 2017.
Children’s retailer Gymboree is the latest nameplate that is being floated as a possible retailer that could file a Chapter 11 petition for bankruptcy court protection.
That Gymboree is pressured is no surprise. Credit ratings agency Fitch Ratings earlier this year has a Loans of Concern list that is its compilation of issuers with a significant risk of default within the next 12 months. The list of nine retailers includes Gymboree and Payless Shoe Source, which filed its Chapter 11 petition earlier this month. The other seven retailers on the list include: Sears Holdings Corp.; 99 Cents Only Stores; Charming Charlie; Nine West Holdings Inc.; NYDJ Apparel; Rue 21 Inc., and True Religion Apparel. Rue 21 bought itself a little breathing room with additional time, until the end of the month, to negotiate with lenders.
And while Sears is often cited as a possible bankruptcy, given its cash burn rate, the retailer seems to have enough assets that it can sell to buy more time — or at least more time so that it isn’t in any danger of an imminent bankruptcy filing. That’s not the case for Gymboree, which has an interest payment due date of June 1 for notes due in 2018. And the children’s retailer last month already said it was getting short on cash.
One research analyst said Wednesday that if there’s a filing, that would help Gymboree’s competitors Carter’s and The Children’s Place Inc.
Based in San Francisco, Gymboree at the beginning of the year saw its chief executive officer Mark Breitbard electing to step down once a successor is found. The retailer was taken private by Bain Capital in 2010 in a deal estimated at $1.8 billion.
Should a bankruptcy filing occur, Gymboree would be the latest in a string of retail filings that so far this year have included Gordmans; Gander Mountain; The Limited; American Apparel, and BCBG Max Azria.
So far retailers have closed or are in the process of closing over 2,000 stores, many due to the bankruptcies and subsequent liquidations, such as Gordmans and The Limited.
Analyst Dana Telsey of Telsey Advisor Group has estimated about 2,129 store closings so far for 2017, representing a sales loss of nearly $7 billion in 2017. That’s compared with 1,225 closures in 2016 and a sales loss of $4.4 billion. Telsey said the 2017 store closings are likely to increase as the year progresses.
Gymboree operates about 1,300 stores, but it’s too soon to tell what will happen to any of the stores.
A spokeswoman for Gymboree did not return a call for comment.