SAN FRANCISCO - Dec. 8, 2016 // PRNewswire // - The Gymboree Corporation (the "Company") today reported consolidated financial results for its first fiscal quarter of 2017 ended October 29, 2016. The results disclosed below are from continuing operations of the Company and exclude the discontinued operations of the recently divested Gymboree Play & Music ("Play & Music") business (unless otherwise noted), which was sold on July 15, 2016. As a result of the change in our fiscal year end from the Saturday closest to the end of January to the Saturday closest to the end of July, results for the first quarter of fiscal 2017 ended October 29, 2016 are comparable to results for the third quarter of fiscal 2015 ended October 31, 2015.
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The Company is continuing to actively pursue various other financing alternatives, including refinancing and/or repurchasing its existing debt, incurring additional indebtedness, as well as other opportunities to improve its capital structure. If opportunities are favorable, the Company may consummate one or more of these initiatives and the amounts involved and related financial statement impact may be material.
The Company's outlook for the second quarter of fiscal 2017 is based on current economic environment trends, as well as management expectations through January 28, 2017.
Second Quarter
The Company anticipates Adjusted EBITDA for the second quarter of fiscal 2017 to be in the range of $40 million to $50 millioncompared to $45.5 million for the same period in fiscal 2015, adjusted for Play & Music.
52 Weeks ending January 28, 2017
Taking into consideration the above guidance, combined with actual results for the 26 weeks ended July 30, 2016 and the 13 weeks ended October 29, 2016, the Company expects pro forma Adjusted EBITDA for the 52 weeks ending January 28, 2017 to be in the range of $85 million to $95 million. This compares to $94.8 million for the comparable prior year period, adjusted for Play & Music.
Stores
During the second quarter of fiscal 2017, the Company plans to close approximately 10 stores, primarily in its Crazy 8 and Gymboree brands.
Capital Expenditures
During the second quarter of fiscal 2017, the Company anticipates spending approximately $5 million to $10 million for capital expenditures.
On December 1, 2016, the Company entered into a sublease agreement for approximately 80,000 square feet of office space in San Francisco, California. The Company expects to use the subleased premises as its new corporate headquarters. The sublease is expected to commence on or before April 1, 2017 and will expire on July 15, 2022, subject to the Company's option to extend the sublease until July 15, 2025, if it meets certain performance criteria. The total minimum base rent during the lease term, excluding the extension period of 3 years, is approximately $20.0 million. In addition, the Company has delivered a security deposit to the sublessor in the form of two letters of credit aggregating $5.7 million to guarantee payment of the Company's rent obligations and to cover payment for any damages in the event a termination fee is triggered pursuant to the sublease agreement.
The Company defines "Adjusted EBITDA" as net loss attributable to The Gymboree Corporation before interest expense, interest income, income taxes, and depreciation and amortization ("EBITDA") adjusted for other items including, non-cash share-based compensation, loss on disposal/impairment of assets and sponsor management fees and expenses, as well as the impact of purchase accounting adjustments resulting from the Acquisition and other non-recurring or unusual items. The Company is likely to exclude these items from Adjusted EBITDA in the future and may also exclude other similar items, the effect of which is uncertain but may be significant in amount. The determination of the amounts that are excluded from non-GAAP financial measures is a matter of management judgment and depends upon, among other factors, the nature of the underlying expense or income amounts.
Adjusted EBITDA is a non-GAAP measure but is considered an important supplemental measure of the Company's performance and is believed to be used frequently by securities analysts, investors and other interested parties in the evaluation of similar retail companies. Adjusted EBITDA is calculated in substantially the same manner as "EBITDA" under the indenture governing the Notes and "Consolidated EBITDA" under the agreement governing our Senior Credit Facilities. Adjusted EBITDA is not a presentation made in accordance with GAAP and the Company's computation of Adjusted EBITDA may vary from others in the industry. Adjusted EBITDA should not be considered an alternative to operating income or net income, as a measure of operating performance or cash flow, or as a measure of liquidity. Adjusted EBITDA has important limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of the Company's results as reported under GAAP (see Exhibit D for a reconciliation of Adjusted EBITDA from continuing operations to net loss from continuing operations attributable to The Gymboree Corporation).
The live broadcast of the discussion of first quarter fiscal 2017 financial results and fiscal 2017 business outlook will be available to interested parties at 2:00 p.m. PT (5:00 p.m. ET) on Thursday, December 8, 2016. To listen to the live broadcast over the internet, please log on to www.gymboree.com, click on "Company Information" at the bottom of the page; go to "Investor & Media" and then "Conference Calls & Webcasts." A replay of the call will be available two hours after the broadcast through midnight PT, December 22, 2016, at 855-859-2056, passcode 61967993.
The Gymboree Corporation's specialty retail brands offer unique, high-quality products delivered with personalized customer service. As of October 29, 2016, the Company operated a total of 1,300 retail stores: 591 Gymboree® stores (541 in the United States, 49 in Canada and 1 in Puerto Rico), 174 Gymboree Outlet stores (173 in the United States and 1 in Puerto Rico), 150 Janie and Jack® shops (149 in the United States and 1 in Puerto Rico), and 385 Crazy 8® stores in the United States. The Company also operates online stores at www.gymboree.com, www.janieandjack.com and www.crazy8.com.
This press release includes forward-looking statements, including statements relating to The Gymboree Corporation's anticipated future financial performance, especially those set forth under the heading "Second Quarter of Fiscal 2017 Business Outlook" and the Company's expectation that it has the right strategies in place to achieve its goals in 2017. These forward-looking statements generally can be identified by the use of words such as "anticipate," "expect," "plan," "could," "may," "will," "believe," "estimate," "forecast," "goal," "project," and other words of similar meaning. Each forward-looking statement contained in this press release is subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statement. The Company presently considers the following risks and uncertainties to be important factors that could cause actual results to differ materially from the Company's expectations: the ongoing volatility in the commodities markets, mall traffic, particularly during the holiday selling season, our ability to successfully upgrade our omni-channel platforms and technology , as well implement our omni-channel strategy, our ability to realize expected expense management initiatives and drive growth in our wholesale channel, the success of our marketing initiatives, overall retail trends in the holiday season, uncertainties relating to high levels of consumer debt and general economic conditions, volatility in the financial markets, potential data breaches of the Company's or the Company's vendors' or suppliers' computer networks, the Company's ability to anticipate and timely respond to changes in trends, consumer preferences and customer reactions to new merchandise (during the holiday season), competitive market conditions, including promotional activities of the Company's competitors, success in meeting the Company's delivery targets, gross margin achievement, the Company's ability to appropriately manage inventory and the level of promotional activity required to reduce inventory, the Company's ability to pursue and achieve opportunistic strategies to improve its capital structure, effects of future embargos from countries used to source product, the Company's ability to attract and retain key personnel and other qualified team members, the limited data available in the future upon which to base its expectations for stabilizing sales trends, and other factors, including those discussed under "Risk Factors" in "Item 1A. Risk Factors" of the Company's Transition Report on Form 10-K for the 26 weeks ended July 30, 2016, filed with the Securities and Exchange Commission on October 28, 2016. The Company cautions investors to carefully consider the risks associated with, and not to place considerable reliance on, the forward-looking statements contained in this press release. The forward-looking statements in this press release speak only as of the date of this document, and the Company undertakes no obligation to update or revise any of these statements.
Gymboree, Janie and Jack, and Crazy 8 are registered trademarks of The Gymboree Corporation.
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SOURCE The Gymboree Corporation
The Gymboree Corporation is a family of specialty retail brands that provide unique, high-quality products. All of our brands have an important thing in common: a concentrated focus on pleasing every customer.