Gymboree Banks on New Apparel Line in Post-Bankruptcy Turnaround
(Bloomberg) -- Kids’ clothes retailer Gymboree is taking its first big step since emerging from bankruptcy in September: unveiling a rebranded apparel line and an increased tech push in an effort to appeal to the modern parent.
“We have spent the past nine to 10 months positioning the company, and the Gymboree brand in particular, for a turnaround,” said Chief Executive Officer Daniel Griesemer, who took the helm in May 2017. “So nationwide, all new products, new brand positioning, new look and feel. Essentially, an all-new Gymboree.”
The chain is rolling out its refreshed product line Monday that includes more basic staples that better allow for mixing and matching -- a defensive move against fast-fashion retailers that have taken a bigger share of the youth market.
“The modern parent learned to shop at Forever 21 and H&M and Zara” where they can curate their own look by pairing separate pieces, Griesemer said, noting that Gymboree’s old way of building outfits in a collection felt “dated.”
Out With the Old
Within the next few weeks, as much as 75 percent of each store’s merchandise will be the new line, which is made up of hundreds of pieces. The remainder will be the store’s old inventory on clearance discount, Griesemer said.
Gymboree filed for Chapter 11 in June 2017, after struggling with the shift to online shopping and ramped-up competition from retailers like Gap Inc. and Children’s Place Inc., which had less debt. At the time of the filing, Gymboree was operating under more than $1 billion in debt from a buyout from private equity firm Bain Capital.
The children’s clothing chain, which was founded in 1976, started out as a music and play center and grew to a major global retailer with more than 1,000 stores, before being bought by Bain in 2010. The bankruptcy filing came with funding and creditor support to restructure the company, which involved Gymboree closing about 330 stores worldwide. During the restructuring, Bain handed control to a group of lenders including Brigade Capital Management, Oppenheimerfunds and Apollo Global Management LLC.
The chain also saw a rotation of senior level staff last year, with then Chief Financial Officer Andrew North and CEO Mark Breitbard both leaving the firm.
San Francisco-based Gymboree also expects to open about 12 new Janie and Jack stores across the country in both new and existing markets this year, Griesemer said. The higher-end clothing line “has significant room to grow” and will see a “broadening product line” he said. There are also plans to open “a couple” of new Crazy 8 stores, another affiliated brand.
Over the years, Gymboree had deferred investments and cut costs in an effort to service its significant debt, Griesemer said.
“The new ownership we have understands that we need to reinvest in the business,” he said, adding that the first move was upgrading its website. The company is also launching an interactive mobile app that transforms designs on some Gymboree t-shirts into augmented reality images.
About a quarter of the company’s business is online now, with the company planning to grow that to 50 percent, including with more personalization.
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