The Gymboree Corporation Reports Third Quarter 2010 Results

SAN FRANCISCO, Nov. 15, 2010 /PRNewswire-FirstCall/ -- The Gymboree Corporation (Nasdaq: GYMB) today reported earnings of $34.4 million or $1.26 per diluted share for the third fiscal quarter ended October 30, 2010.  This compares to earnings of $34.8 million or $1.15 per diluted share for the same period of the prior year.  Excluding $3.5 million of transaction-related expenses, earnings per diluted share for the third fiscal quarter was $1.33.

Net sales from retail operations for the fiscal quarter ended October 30, 2010, totaled $276.6 million, a 4% increase from $265.6 million in net sales from retail operations for the third fiscal quarter of the prior year.  As previously reported, comparable store sales from retail operations for the third fiscal quarter decreased 4% versus the same period last year.  Total net sales for the third fiscal quarter were $280.9 million, an increase of 4% compared to total net sales of $269.1 million for the third fiscal quarter last year.  Excluding the impact of transaction-related expenses, operating margins increased to 21.4% of sales versus 21.0% in the third quarter of the prior year.

"We are pleased to continue to report higher operating margins after excluding the impact of transaction-related expenses," said Matthew McCauley, Chairman and Chief Executive Officer.  "Our strategy of leveraging existing infrastructure across a multi-brand portfolio, coupled with the strong performance of Crazy 8, has served as the catalyst for our continued margin improvement.  Looking ahead, we plan to build on our success with the Crazy 8 brand and expect to roll out an additional 80 stores in 2011."  

Management Presentation

The broadcast of the discussion of third quarter 2010 earnings results will be available to interested parties at 5:00 a.m. PT (8:00 a.m. ET) on Monday, November 15, 2010.  To listen to the broadcast over the Internet, please log on to www.gymboree.com, go to "About Us" at the bottom of the page, go to "Investors & Media" and then "Conference Calls & Webcasts."  The call will be available through midnight ET, Monday, November 22, 2010, at 800-642-1687, passcode 54962970, as well as archived on our Web site at the same location as the live Web cast.

About The Gymboree Corporation

The Gymboree Corporation's specialty retail brands offer unique, high-quality products delivered with personalized customer service. As of October 30, 2010, the Company operated a total of 1,049 retail stores: 636 Gymboree® stores (595 in the United States, 37 in Canada, 2 in Australia and 2 in Puerto Rico), 148 Gymboree Outlet stores, 122 Janie and Jack® shops and 143 Crazy 8® stores in the United States. The Company also operates online stores at www.gymboree.com, www.janieandjack.com and www.crazy8.com, and offers directed parent-child developmental play programs at 672 franchised and Company-operated Gymboree Play & Music® centers in the United States and 33 other countries.

Forward-Looking Statements

The foregoing financial information for the third fiscal quarter ended October 30, 2010, is unaudited and subject to quarter-end and year-end adjustment.  The foregoing paragraphs contain forward-looking statements relating to The Gymboree Corporation's anticipated sales growth and future financial performance. These are forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results could vary materially as a result of a number of factors, including high levels of unemployment and consumer debt, volatility in the financial markets, general economic conditions, customer reactions to new merchandise, service levels and new concepts, success in meeting our delivery targets, the level of our promotional activity, our gross margin achievement, our ability to appropriately manage inventory, effects of future embargos from countries used to source product, and competitive market conditions. Other factors that may cause actual results to differ materially include those set forth in the reports that we file from time to time with the Securities and Exchange Commission, including our annual report on Form 10-K for the year-ended January 30, 2010. These forward-looking statements reflect The Gymboree Corporation's expectations as of November 15, 2010.  The Gymboree Corporation undertakes no obligation to update the information provided herein.

Gymboree, Janie and Jack, Crazy 8, and Gymboree Play & Music are registered trademarks of The Gymboree Corporation.  

EXHIBIT A
THE GYMBOREE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share and operating data)
(Unaudited)
			13 Weeks Ended		13 Weeks Ended		39 Weeks Ended		39 Weeks Ended
			October 30,		October 31,		October 30,		October 31,
			2010		2009		2010		2009
Net sales:
	Retail		$                      276,585		$                       265,596		$                      746,073		$                      705,836
	Play & Music		4,265		3,485		10,351		9,513
		Total net sales	280,850		269,081		756,424		715,349
Cost of goods sold, including
	buying and occupancy expenses		(142,046)		(131,973)		(390,549)		(375,484)
		Gross profit	138,804		137,108		365,875		339,865
Selling, general and administrative expenses			(82,102)		(80,689)		(241,515)		(229,843)
	Operating income		56,702		56,419		124,360		110,022
Other income			47		159		179		668
	Income  before income taxes		56,749		56,578		124,539		110,690
Income tax expense			(22,353)		(21,823)		(48,703)		(41,966)
	Net income		$                        34,396		$                         34,755		$                        75,836		$                        68,724
Net income per share:
	Basic		$                            1.30		$                             1.20		$                            2.77		$                            2.40
	Diluted		$                            1.26		$                             1.15		$                            2.68		$                            2.31
Weighted average shares outstanding:
	Basic		26,400		28,952		27,382		28,684
	Diluted		27,355		30,093		28,291		29,801
Operating Data:
Stores Open at the Beginning of the Period			1,019		926		953		886
New Stores			30		25		99		65
Closed Stores			-		-		(3)		-
Stores Open at the End of the Period			1,049		951		1,049		951
Gross Store Square Footage			2,097,000		1,866,000		2,097,000		1,866,000
Merchandise Inventories per Square Foot			$                               82		$                                77		$                               82		$                               77
Supplemental Financial Information:
		Depreciation and amortization	$                        10,169		$                           9,285		$                        29,712		$                        27,463
		Interest income, net	$                               19		$                                43		$                               65		$                             464
		Stock-based compensation	$                          4,013		$                           4,442		$                        12,551		$                        12,793

CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
		October 30,		January 30,		October 31,
		2010		2010		2009
Current Assets
	Cash and cash equivalents	$           176,835		$         257,672		$    212,107
	Accounts receivable	18,777		9,911		14,500
	Merchandise inventories	171,191		121,133		144,559
	Prepaid expenses and deferred taxes	19,697		19,778		17,431
	Total current assets	386,500		408,494		388,597
Property and Equipment, net		218,274		205,461		208,627
Deferred Taxes and Other Assets		21,051		22,175		20,130
	Total Assets	$           625,825		$         636,130		$    617,354
Current Liabilities
	Accounts payable	$             55,775		$           46,470		$      47,409
	Accrued liabilities	70,776		69,295		64,975
	Income tax payable	624		5,381		3,559
	Total current liabilities	127,175		121,146		115,943
Long Term Liabilities
	Lease incentives and other liabilities	80,630		76,231		75,423
Stockholders' Equity		418,020		438,753		425,988
	Total Liabilities and Stockholders' Equity	$           625,825		$         636,130		$    617,354

SOURCE The Gymboree Corporation

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