June 12 (UPI) -- Children's clothing chain Gymboree announced Monday it filed for Chapter 11 bankruptcy protection and plans to slash debt by closing several hundred stores.
The retailer is seeking bankruptcy protection in the Eastern District of Virginia and hopes to win judicial approval by Sept. 24, the company said in a release.
Gymboree hopes to slash $900 million of its $1.4 billion in debt by closing 375 to 450 of its 1,281 stores, USA Today reported. It operates 582 Gymboree stores, 172 outlets, 378 value-focused Crazy 8 stores and 149 upscale Janie and Jack stores worldwide.
The company, which didn't reveal specific store closings, has also secured $35 million to finance operations during restructuring.
"The steps we are taking today allow the company to definitively address its debt and enable the management team to turn its full focus toward executing our key strategies, including our product, brand and Omni-channel initiatives," said Daniel Griesemer, president and CEO of Gymboree. "The support of our lenders and their new financing commitment underscores their confidence in the company.
"We expect to move through this process quickly and emerge as a stronger organization that is better positioned in today's evolving retail landscape, with the right size store footprint and greater financial flexibility to invest in Gymboree's long-term growth."
Griesemer was hired as CEO on May 22. In January, CEO Mark Breitbard announced he would step down from that position, although he remained with the company as chairman.
Gymboree's owner, Bain Capital Private Equity, acquired the retailer for $1.8 billion in 2010 and expanded worldwide.
Gymboree missed a June 1 debt payment.
The company reported a $324 million net loss for the three-month period that ended in January. Its net sales were $352 million. Through July 2016, Gymboree's annual profit before interest, taxes, depreciation and amortization was $71 million, down from $94 million in 2015.
Gymboree is among the numerous brick-and-mortar retails that have struggled against online companies, including Amazon. Online sales represent 21 percent of Gymboree's revenue, and its Web operations are "dated and unsupported," recently appointed Chief Restructuring Officer James Mesterharm said in a court filing. It also has struggled against retailers Children's Place and GapKids, he said.
Gymboree started in San Francisco in 1976 with mom-and-baby classes. As a separate company, there are more than 700 Play & Music franchise and company-owned centers worldwide, according to its website.
Since 1986, Gymboree has been making kids clothes.