| WILMINGTON, Del
WILMINGTON, Del Children's apparel retailer Gymboree Corp [BNCPLY.UL] filed for Chapter 11 bankruptcy late Sunday with a plan to cut its debt by around $1 billion and close 375 stores, according to court records.
The operator of Gymboree, Janie and Jack and Crazy 8 stores joins a growing list of specialty retailers and department stores that have closed thousands of locations or filed for bankruptcy this year as consumers shift toward online shopping.
James Mesterharm, Gymboree's chief restructuring officer, said in a court filing the company was hurt by lower-cost competition from rival brick-and-mortar chains Children's Place (PLCE.O) and The Gap Inc (GPS.N), which have less debt financing.
Gymboree's lenders agreed to provide a $35 million loan to finance the company's operations and will invest $80 million into the company when it emerges from bankruptcy, according to Mesterharm.
"We expect to move through this process quickly and emerge as a stronger organization that is better positioned in today’s evolving retail landscape," said Daniel Griesemer, the chief executive officer of Gymboree, in a statement.
San Francisco-based Gymboree opened its first store in 1986 in California and expanded rapidly, going public in 1993. Bain Capital Private Equity took the company private for $1.8 billion in 2010.
Bain launched a global expansion aimed at overtaking rivals such as Carter's (CRI.N) and GapKids, but Mesterharm said the chain failed to achieve the levels of growth it had anticipated.
The company estimated it had $755.5 million in assets and $1.37 billion in debt, according to court records.
Gymboree said 35 percent of its 1,300 stores are leased from GGP Inc (GGP.N) and Simon Property Group Inc (SPG.N).
The stores tend to be located in malls, where declining traffic has taken its toll on specialty retailers and large department store anchor tenants. In the past year, Sears Holdings Corp (SHLD.O) and Macy's Inc (M.N) have closed scores of department stores, while chains such as The Limited Stores, The Wet Seal and shoe retailer Payless Holdings have filed for bankruptcy.
Credit rating agency Moody's said last week it expects the ranks of distressed retailers will continue to grow over the next 18 months. It said 15 percent of the retailers tracked by the agency are now rated at the lowest end of the credit spectrum.
Gymboree is represented by the Kirkland & Ellis law firm, and filed its bankruptcy in Richmond, Virginia.
(Reporting by Tom Hals in Wilmington, Delaware; Editing by Andrea Ricci)