Gymboree Corp., the struggling children’s clothing retailer, is preparing to file for bankruptcy as it faces a June 1 interest payment on its debt, according to people with knowledge of the matter.
The San Francisco-based retailer, which operates about 1,300 stores, hasn’t posted an annual profit since 2011, with losses totaling more than $800 million. Gymboree hired Rothschild & Co. to advise it on a potential restructuring this year, people with knowledge of the matter have said.
Gymboree operates more than a dozen stores in Indiana, including four at some of the Indianapolis-area's top shopping centers—The Fashion Mall at Keystone, Clay Terrace, Hamilton Town Center and Greenwood Park Mall.
The Bain Capital-controlled company is seeking to reorganize its debt load and may transfer control to its lenders, including Searchlight Capital, Brigade Capital Management and Oppenheimer Holdings, said the people, who asked not to be identified because the process isn’t public.
Representatives for Bain, Gymboree, Brigade and Searchlight declined to comment. An Oppenheimer representative didn’t respond to an email seeking comment.
Gymboree, laboring under more than $1 billion in debt from its Bain buyout in 2010, warned last month that it’s running short on cash and may not survive if it can’t persuade creditors to refinance its debt. The June 1 interest payment applies to its 9.125 percent notes that are due 2018.
A Rothschild representative also declined to comment.
Retailers have been hammered by a decline in mall shopping and the rise of online competitors like Amazon.com Inc. Gymboree, which has most of its stores in malls, goes head-to-head with specialty chains such as Children’s Place Inc., as well as mass merchants like Target Corp.
Shares of rivals Children’s Place Inc. and Carter’s Inc. rose after Bloomberg reported that Gymboree was preparing a filing.
Gymboree has a $761 million term loan due in February 2018. The loan is trading at about 44 cents on the dollar, compared with 80 cents in late September.
The Gymboree Corp. got its start in 1976 with the founding of Gymboree Play & Music, which offers a variety of classes for children 5 and under. There are about 700 Gymboree Play & Music locations worldwide, including area locations in Carmel and Greenwood.
The company began opening clothing stores in 1986.
In 2016, the company agreed to sell its play-center business to a Singapore-based investment group for $127.5 million. That narrowed Gymboree’s focus to apparel.