‘Children Retail’ Also Struggling, Gymboree CEO to Step Down

Gymboree Clothing Retail In Trouble

Another day another struggling clothing retail store. The surprise this time is that it is a niche market under fire, Gymboree the kid focused fashion brand has started its “strategic restructuring”.

Announcing the resignation of CEO Mark Breitbard is the latest news posted by Gymboree, however this move is more of a policy shift as he will not be stepping down until a replacement can be found. The executive cited the “evolving needs” of the company and a “focus on the strategic plans for our brands.” Breitbard will remain with the company becoming Chairman of the Board of Directors.

Rightly recognizing that in an environment where brick and mortar chains must adapt to sluggish traffic and increased online activity new ideas are needed. Traditional physical stores for retail are having trouble because many costs, like rent, and to some degree employees and advertising are fixed; and even without special discounts, margins have always been thin.

Right now Gymboree counts on a $769.1 million debt, coming dangerously close to it 2010 valuation of 1.8 billion, when it was bought by Bain Capital. Closing the year, it reported a $10.9 million quarterly loss but things have not gone as smooth as it would have liked for 2017. Comparable sales (including online sales) decreased 5% during the first quarter of fiscal 2017 compared to the third quarter of fiscal 2015 and net sales were $279.8 million, down from 2015 Q3 amount of $295.5.

The company hopes to escape the fate of The Limited and Wet Seal who recently filed for bankruptcy laying off workers and closing stores. The nature of the Gymboree brand, with its niche market may still hold a unique distinction in the market due to its young clientele. As reported in Jan, many retailers like Target hope to be able to attract the young costumers of tomorrow. We will stay tuned as to what new initiatives and lines of clothing the company launches in 2017, or if more store closings and layoffs continue to be reported, then a probable slide toward bankruptcy awaits.

Source: Bloomberg