Exhibit 99.1
The Gymboree Corporation Reports Second Quarter 2004 Results and
Closure of UK/Ireland Retail Operations; Management Change; Updates Earnings
BURLINGAME, Calif., Aug. 17 /PRNewswire-FirstCall/ -- The Gymboree
Corporation (Nasdaq: GYMB) today reported a net loss of ($3.2) million or
($0.10) per diluted share for the second fiscal quarter ended July 31, 2004,
compared to a net loss of ($1.1) million or ($0.04) per diluted share for the
second fiscal quarter ended August 2, 2003.
As previously reported, net sales from retail operations for the second
fiscal quarter of 2004 were $119.8 million, an increase of 9% compared to net
sales from retail operations of $110.4 million for the same period last year.
Comparable store sales for the second fiscal quarter increased 2% compared to
the same period last year. Total net sales, including sales from Gymboree Play
& Music operations, were $122.4 million, an increase of 8% compared to total
net sales of $113.1 million in the second fiscal quarter last year.
Closure of United Kingdom and Ireland Retail Operations
On Monday, August 16, 2004, The Gymboree Corporation's Board of Directors
authorized the Company to proceed with the closure of its United Kingdom and
Ireland retail operations, as a result of the continued poor financial
performance of those operations.
"The closure of our UK and Ireland retail operations was the right
decision to make. It will allow us to focus our attention and financial
resources on the key drivers of our long-term growth strategy," said
Lisa Harper, The Gymboree Corporation's chairman and chief executive officer.
"We truly appreciate the extraordinary group of employees in the UK and
Ireland who have been dedicated to the Gymboree brand over the years."
The wind down of the United Kingdom and Ireland retail operations will
begin immediately and the Company expects the process to be substantially
complete by the end of the third fiscal quarter of this year. The Company
anticipates recording extraordinary charges related to the closure of
approximately $9.5 million, net of tax and exclusive of ongoing operating
costs incurred during the wind down process. These charges, largely related to
costs of lease disposition, asset write-offs and severances, are expected to
be realized in the third and fourth fiscal quarters of this year. Gymboree
Play & Music franchises will continue to operate in the United Kingdom and
Ireland.
Management Change
The Gymboree Corporation announced today that Debbie Nash, vice president
and general merchandise manager of Gymboree retail, has resigned from the
Company in order to take some personal time off. Her responsibilities will now
be handled by Kip Garcia, senior vice president of Merchandising, Kids.
"I'd like to thank Debbie for her important contributions to the Company
and we wish her the best," said Lisa Harper. "Kip Garcia, who will be assuming
Debbie's responsibilities, has been with the Company since April. We
anticipate a smooth transition, as we have a strong team in place and believe
that Kip will bring a fresh perspective to the business."
Business Outlook
As previously stated, The Gymboree Corporation projects that comparable
store sales in August will be flat compared to the prior year. For the third
fiscal quarter, the Company expects comparable store sales to be in the
positive low single digits.
The United Kingdom and Ireland retail operations had been forecasted to
earn a modest profit in the third and fourth fiscal quarters of 2004;
therefore the Company's guidance on earnings from ongoing operations will be
reduced in the third and fourth fiscal quarters by ($0.01) in each quarter to
compensate for the exclusion of the previously forecasted earnings
contribution from the United Kingdom and Ireland retail operations.
The Company now expects its earnings from continuing operations for the
third and fourth quarters to be in the range of $0.28 to $0.30 and $0.45 to
$0.47 per diluted share respectively, which represents a reduction from its
previous guidance of $0.29 to $0.31 and $0.46 to $0.48 respectively. For the
full fiscal year, the Company expects earnings per diluted share from
continuing operations to be in the range of $0.90 to $0.94. These estimates
exclude the effect of a previously disclosed change in accounting principle
recorded in the first quarter of 2004, which resulted in a one-time benefit of
$0.04 per diluted share.
Management Presentation
The live broadcast of the discussion of second quarter 2004 earnings
results will be available to interested parties at 1:30 p.m. Pacific Time
(4:30 p.m. Eastern Time) on Tuesday, August 17. To listen to the live
broadcast over the Internet, please log on to 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 shortly after the broadcast through midnight Eastern Time, August
24, 2004, at 703-925-2533, pass code 386507, 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 July
31, 2004, the Company operated a total of 646 stores: 593 Gymboree(R) retail
stores (543 in the United States, 28 in Canada, and 22 in Europe),
46 Janie and Jack(R) retail shops and 7 Janeville(TM) stores in the United
States. The Company also operates online stores at gymboree.com and
janieandjack.com, and offers directed parent-child developmental play programs
at 525 franchised and company-operated centers in the United States and
29 other countries.
Forward-Looking Statements
The foregoing sales and income figures for the second fiscal quarter of
2004 are un-audited and subject to year-end adjustment, and actual results
could differ materially from those indicated. 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 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, 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.
NOTE: Gymboree and Janie and Jack are registered trademarks of The
Gymboree Corporation. Janeville is a trademark of The Gymboree Corporation.
THE GYMBOREE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share and store data)
(Unaudited)
13 Weeks Ended 26 Weeks Ended
July 31, August 2, July 31, August 2,
2004 2003 2004 2003
Net sales:
Retail $119,794 $110,356 $271,175 $246,438
Play & Music and Other 2,585 2,734 5,252 6,107
Total net sales 122,379 113,090 276,427 252,545
Cost of goods sold, including
buying and occupancy expenses (78,271) (71,855) (166,540) (152,489)
Gross profit 44,108 41,235 109,887 100,056
Selling, general and
administrative expenses (49,232) (43,506) (101,932) (90,432)
Operating income (loss) (5,124) (2,271) 7,955 9,624
Other income 138 468 368 379
Income (loss) before income
taxes and cumulative
effect of change in accounting
principle (4,986) (1,803) 8,323 10,003
Income tax benefit (expense) 1,820 744 (3,038) (3,801)
Income (loss) before cumulative
effect of
change in accounting principle (3,166) (1,059) 5,285 6,202
Cumulative effect of change in
accounting
principle, net of tax -- -- 1,228 --
Net income (loss) $(3,166) $(1,059) $6,513 $6,202
Basic per share amounts:
Income (loss) before cumulative
effect of
change in accounting principle $(0.10) $(0.04) $0.17 $0.21
Cumulative effect of change in
accounting
principle, net of tax -- -- 0.04 --
Net income (loss) $(0.10) $(0.04) $0.21 $0.21
Diluted per share amounts:
Income (loss) before cumulative
effect of
change in accounting principle $(0.10) $(0.04) $0.17 $0.20
Cumulative effect of change in
accounting
principle, net of tax -- -- 0.04 --
Net income (loss) $(0.10) $(0.04) $0.21 $0.20
Weighted average shares
outstanding:
Basic 30,693 29,552 30,584 29,433
Diluted 30,693 29,552 31,374 30,723
Number of stores at end of period 646 594 646 594
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
July 31, January 31, August 2,
2004 2004 2003
Current Assets
Cash and cash equivalents $76,495 $89,553 $48,440
Accounts receivable 14,575 11,456 7,943
Merchandise inventories 78,542 73,017 67,618
Prepaid expenses and deferred
taxes 4,161 5,564 10,624
Total current assets 173,773 179,590 134,625
Property and Equipment, net 132,870 112,743 104,620
Lease Rights, Deferred Taxes and
Other Assets 11,039 6,378 7,303
Total Assets $317,682 $298,711 $246,548
Current Liabilities
Accounts payable $33,036 33,356 30,756
Accrued liabilities 40,653 34,963 17,866
Total current liabilities 73,689 68,319 48,622
Long Term Liabilities
Deferred rent and other
liabilities 27,905 26,644 20,151
Stockholders' Equity 216,088 203,748 177,775
Total Liabilities and
Stockholders' Equity $317,682 $298,711 $246,548
SOURCE The Gymboree Corporation
-0- 08/17/2004
/CONTACT: investors, Charles Bracher, +1-650-373-7137, or
charles_bracher@gymboree.com, or media, Jennifer Bonzagni Marshall,
+1-650-373-7637, or jennifer_bonzagni@gymboree.com, both of The Gymboree
Corporation/
/Web site: http://www.gymboree.com /
(GYMB)
CO: Gymboree Corporation
ST: California, England, Ireland
IN: REA TEX
SU: ERN ERP RCN PER CCA