The Gymboree Corporation Reports Second Quarter 2008 Results

SAN FRANCISCO, Aug. 20 // PRNewswire-FirstCall // -- The Gymboree Corporation (Nasdaq: GYMB) today reported earnings for the second fiscal quarter ended August 2, 2008, of $8.0 million or $0.27 per diluted share. This compares to earnings of $5.8 million or $0.19 per diluted share for the same period of the prior year.

Net sales from retail operations for the fiscal quarter ended August 2, 2008, totaled $202.8 million, a 13% increase over the $179.9 million in net sales from retail operations for the second fiscal quarter of the prior year. As previously reported, comparable store sales for the second fiscal quarter increased 1% over the same period last year. Total net sales for the second fiscal quarter were $205.7 million, an increase of 13% compared to total net sales of $182.4 million for the second fiscal quarter last year.

Business Outlook

For the third fiscal quarter, the Company expects flat to slightly negative comparable store sales over the same period of the prior year. The Company expects earnings for the third fiscal quarter to be in the range of $1.02 to $1.04 per diluted share. For the full fiscal year 2008, the Company expects net income to be in the range of $3.15 to $3.20 per diluted share.

Management Presentations

The live broadcast of the discussion of second quarter 2008 financial results will be available to interested parties at 1:30 p.m. PT (4:30 p.m. ET) on Wednesday, August 20, 2008. To listen to the live broadcast over the internet, please log on to http://www.gymboree.com, click on "Our Company" at the bottom of the page, go to "Investor and Media Relations" and then "Conference Calls, Webcasts & Presentations." A replay of the call will be available two hours after the broadcast through midnight ET, Wednesday, August 27, 2008, at 800-642-1687, Passcode 32948531.

Gymboree reports same store sales results on a quarterly basis and provides a business update at the end of each month. The next monthly business updates will be available on Thursday, September 4, 2008, October 9, 2008, and November 6, 2008, respectively. Please listen to our monthly business update by calling the Company's Investor Relations Hotline at 415-278-7933. Each monthly recording will be available through Wednesday of the following week after initial release.

About The Gymboree Corporation

The Gymboree Corporation's specialty retail brands offer unique, high-quality products delivered with personalized customer service. As of August 2, 2008, the Company operated a total of 835 retail stores: 606 Gymboree(R) stores (577 in the United States and 29 in Canada), 104 Gymboree Outlet stores, 101 Janie and Jack(R) shops and 24 Crazy 8(R) stores in the United States.

The Company also operates online stores at http://www.gymboree.com, http://www.janieandjack.com and http://www.crazy8.com, and offers directed parent-child developmental play programs at 597 franchised and Company-operated centers in the United States and 30 other countries.

Forward-Looking Statements

The foregoing financial information for the second fiscal quarter ended August 2, 2008, is un-audited and subject to quarter-end and year-end adjustment, and could differ materially from the financial information indicated. The foregoing paragraphs contain forward-looking statements relating to 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 differ materially as a result of a number of factors, including 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, general economic conditions, 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 February 2, 2008. These forward-looking statements reflect The Gymboree Corporation's expectations as of August 20, 2008. The Gymboree Corporation undertakes no obligation to update the information provided herein.

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


THE GYMBOREE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share and operating data)
(Unaudited)

13 Weeks 13 Weeks 26 Weeks 26 Weeks
Ended Ended Ended Ended
August 2, August 4, August 2, August 4,
2008 2007 2008 2007

Net sales:
Retail $202,818 $179,854 $441,735 $386,575
Play & Music 2,930 2,500 6,118 5,079
Total net sales 205,748 182,354 447,853 391,654
Cost of goods sold, including
buying and occupancy
expenses (111,806) (102,141) (230,493) (207,641)
Gross profit 93,942 80,213 217,360 184,013
Selling, general and
administrative expenses (81,067) (71,737) (162,892) (141,930)
Operating income 12,875 8,476 54,468 42,083
Other income 417 637 698 1,755
Income before income taxes 13,292 9,113 55,166 43,838
Income tax expense (5,281) (3,311) (22,117) (17,181)
Net income $8,011 $5,802 $33,049 $26,657

Net income per share:
Basic $0.29 $0.20 $1.19 $0.90
Diluted $0.27 $0.19 $1.14 $0.86

Weighted average shares
outstanding:
Basic 27,988 29,323 27,765 29,659
Diluted 29,166 30,452 29,060 30,846

Operating Data:
Stores Open at the Beginning
of the Period 811 720 786 698
New Stores 26 20 51 45
Closed Stores (2) (1) (2) (4)
Stores Open at the End of the
Period 835 739 835 739

Gross Store Square Footage 1,623,000 1,410,000 1,623,000 1,410,000
Merchandise Inventories per
Square Foot $80 $82 $80 $82

Supplemental Financial Information
Depreciation and
amortization $8,616 $7,510 $17,021 $14,704
Interest income, net $349 $648 $586 $1,742
Stock-based compensation $4,913 $2,960 $9,424 $5,638



CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)

August 2, February 2, August 4,
2008 2008 2007

Current Assets
Cash and cash equivalents $43,775 $33,313 $34,023
Accounts receivable 16,680 12,640 17,700
Merchandise inventories 129,099 119,523 115,677
Prepaid income taxes 22,495 - 18,412
Prepaid expenses and deferred taxes 25,244 23,748 23,406
Total current assets 237,293 189,224 209,218

Property and Equipment, net 200,730 185,357 177,983
Lease Rights, Deferred Taxes and
Other Assets 19,578 22,603 14,715


Total Assets $457,601 $397,184 $401,916

Current Liabilities
Accounts payable $53,876 $52,915 $57,391
Accrued liabilities 73,882 70,282 72,385
Income tax payable - 7,989 -
Total current liabilities 127,758 131,186 129,776

Long Term Liabilities
Deferred rent and other liabilities 65,491 57,703 60,185

Stockholders' Equity 264,352 208,295 211,955

Total Liabilities and Stockholders'
Equity $457,601 $397,184 $401,916


SOURCE The Gymboree Corporation

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