The Gymboree Corporation Announces Plan to Refinance Existing $820 Million Senior Secured Term Loan and Provides Preliminary Estimates for Fiscal 2010 and Preliminary Outlook for Fiscal 2011
SAN FRANCISCO, Feb. 1, 2011 // PRNewswire // -- The Gymboree Corporation (the "Company") today announced its intention to refinance its existing $820 million senior secured term loan, maturing in 2017, with a new $820 million senior secured term loan facility. The terms of the new facility are expected to be substantially similar to those of the existing facility, except that the new facility is expected not to have any financial maintenance covenants.
The Company anticipates the refinancing process will be completed in the next two weeks. However, there can be no assurance that the Company will enter into the new senior secured term loan facility and refinance its indebtedness under its existing senior secured term loan facility.
In connection with the anticipated refinancing, the Company is providing the following updated financial expectations for the fourth fiscal quarter and full year ended January 29, 2011, based on preliminary data:
- Net sales from retail operations for the 13 weeks ended January 29, 2011 are expected to be $314.7 million, an increase of 6% compared to $295.7 million for the same 13 week period of the prior year. Comparable store sales for the fourth fiscal quarter of 2010 are expected to be down 2%. For the full fiscal year 2010, net sales from retail operations are expected to grow 6% to $1.1 billion compared to $1.0 billion for all of fiscal 2009. Comparable stores sales for fiscal 2010 are expected to be down 2%.
- Adjusted EBITDA is expected to range from $61 million to $64 million for the fourth quarter of fiscal 2010. This compares to Adjusted EBITDA of $69 million for the same quarter of the prior year. Full year Adjusted EBITDA for fiscal 2010 is expected to range from $232 million to $235 million compared to $221 million in fiscal 2009.
Fourth Quarter 2010 Highlights / Outlook for 2011
The overall retail environment continued to be very promotional in the fourth quarter of fiscal 2010, putting downward pressure on gross margins. SG&A expenses, excluding transaction-related costs, are expected to be lower as a percentage of sales for the quarter due primarily to ongoing cost containment efforts.
Results from the Crazy 8 concept continued to be encouraging. The Company opened over 90 stores during the year and was pleased with the sales trends seen during the fourth quarter of fiscal 2010 as inventory levels returned to more healthy levels. The Company anticipates ongoing growth from the concept and is planning to open over 80 new Crazy 8 stores in fiscal 2011.
The outlook for fiscal 2011 continues to be influenced by the rise in cotton prices on the world markets. The Company has taken steps to mitigate the impact of the rising prices and is currently evaluating the impact of the cotton pricing pressures on its expected 2011 financial performance. Overall, the Company expects to be able to grow Adjusted EBITDA in the coming year over fiscal 2010 results. The Company also continues to anticipate generating solid cash flow after mandatory debt repayments in fiscal 2011.
Non-GAAP Financial Measures
The Company defines "Adjusted EBITDA" as net income before interest (income) expense, income tax expense, and depreciation and amortization ("EBITDA") adjusted for other items, including non-cash shared-based compensation, loss on disposal/impairment of assets and sponsor management fees, as well as the impact of purchase accounting adjustments resulting from the recent acquisition of the Company by Giraffe Holding, Inc., an entity controlled by investment funds sponsored by Bain Capital Partners, LLC.
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 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.
About The Gymboree Corporation
The Gymboree Corporation's specialty retail brands offer unique, high-quality products delivered with personalized customer service. As of January 29, 2011, the Company operated a total of 1,065 retail stores: 635 Gymboree® stores (594 in the United States, 37 in Canada, 2 in Puerto Rico and 2 in Australia), 150 Gymboree Outlet stores, 123 Janie and Jack® shops and 157 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 688 franchised and Company-operated Gymboree Play & Music® centers in the United States and 35 other countries.
The foregoing paragraphs contain forward-looking statements relating to the Company's fourth fiscal quarter and full year ended January 29, 2011, as well as anticipated sales growth and future financial performance for fiscal 2011. The foregoing financial information is unaudited and subject to quarter-end and year-end adjustments, which could be material. Actual results could vary materially as a result of a number of factors, including the ongoing volatility in the commodities market for cotton, costs and uncertainties relating to 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 the Company's delivery targets, the Company's promotional activity, gross margin achievement, the Company's ability to appropriately manage inventory, effects of future embargos from countries used to source product, competitive market conditions, and other factors. In addition, if the Company enters into the new senior secured term loan facility, the terms and conditions of such facility may differ materially from those described above. The forward-looking statements contained in this press release reflect the Company's expectations as of the date hereof. The Company undertakes no obligation to update the information provided herein.
Gymboree, Janie and Jack, Crazy 8 and Gymboree Play & Music are registered trademarks of the Company.
SOURCE The Gymboree Corporation