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Children’s apparel retailer misses critical interest payment


Gymboree Corp. could be filing Chapter 11 sooner than expected.

Struggling to manage its debt and churn a profit, Gymboree missed an interest payment due June 1, for its outstanding 9.125% senior notes due 2018. The missed payment was reported in a filing on Thursday, June 1, by the Securities and Exchange Commission, according to CNBC.

The retailer has a 30-day grace period to make good on the note, however the SEC is dubious. “We do not expect [Gymboree] to make this payment or any other payments on its debt obligations, and expect a general de-fault given ongoing lender negotiations,” S&P Global Ratings wrote in a note to clients Friday, the company said in the report.

Gymboree has more than $1 billion in debt resulting from its Bain Capi-tal buyout in 2010. It warned in March that it was running short on cash.

The retailer, which operates some 1,300 stores, has posted losses for the last several years amid increased competition from online and dis-counters. In its most recently completed second quarter, the company posted a 5% decline in same-store sales. Net sales declined to $356.8 mil-lion, from $381.4 million in the year-ago period.

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