We’re trying to raise $200,000 by midnight! Help us reach our goal.
TEXT OF STORY
Kai Ryssdal: The private equity firm Bain Capital did a little Columbus Day shopping today. They picked up the kids store, Gymboree, for $1.8 billion. That’s a whole lotta activity classes and footie PJs, so we asked Marketplace’s Alisa Roth to find out what makes the company worth a price like that.
Alisa Roth: Gymboree’s biggest business is a middle-to-upper range kids clothing line. Think something like Gap Kids. But it also has a high-end line, and a relatively new lower-end one that competes with places like Old Navy.
Betty Chen follows Gymboree at Wedbush Securities. She says at some competitors’ stores, you get the feeling they’ve added kids’ clothes just to make you spend more money there. She says investors like the idea that Gymboree is really all about the kids.
Betty Chen: There’s a little area for you to sit your kids down, they can watch an educational program on TV, so that you can shop in peace. And it really tries to cater to the parents and the caregivers and making the shopping experience as easy as possible.
She says there are other things that make Gymboree attractive: The lower-end line is so new, there’s lots of room to grow. And Gymboree recently started expanding overseas.
The other thing is kids always need more clothes because they’re constantly growing.
Wendy Liebman is CEO of WSL Strategic Retail, which is a marketing and research firm. She says the kid’s clothing business has been pretty recession-proof.
Wendy Liebman: The kids business in general — babies, kids — has been a business where parents have felt less-inclined to cut back, even in these tough times.
Gymboree has another month or so to solicit other offers. But if this deal goes through, it’s expected to close by the end of the year.
In New York, I’m Alisa Roth for Marketplace.
There’s a lot happening in the world. Through it all, Marketplace is here for you.
You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible.
Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.