Exhibit 99.1
INVESTOR RELATIONS CONTACT:
Blair W. Lambert
Tel: 415-278-7933
investor_relations@gymboree.com
MEDIA RELATIONS CONTACT:
Jamie Falkowski
Tel : 415-278-7942
media_relations@gymboree.com
THE GYMBOREE CORPORATION REPORTS SECOND QUARTER 2006 RESULTS
San Francisco, Calif., August 16, 2006 - The Gymboree Corporation (NASDAQ: GYMB)
today reported earnings for the second fiscal quarter ended July 29, 2006, of
$0.5 million, or $0.02 per diluted share, including a one-time pretax charge of
$3.7 million ($0.07 per diluted share) relating to the recent retirement of its
former Chairman and Chief Creative Officer. Results also include $2.0 million of
stock-based compensation expense ($0.04 per diluted share) resulting from the
adoption of FAS 123R in fiscal 2006. This compares to a loss from continuing
operations of $3.7 million, or $0.12 per diluted share, for the same period of
the prior year.
Net sales from retail operations for the second quarter ended July 29, 2006,
totaled $153.0 million, an 18% increase over the $129.3 million in net sales
from retail operations for the second fiscal quarter of the prior year. As
previously reported, comparable store sales from retail operations for the
second fiscal quarter increased 12% over the same period last year. Total net
sales for the second fiscal quarter were $155.5 million, an increase of 18%
compared to total net sales of $132.0 million for the second fiscal quarter last
year. It has been almost 10 years since Gymboree has achieved profitability in
the second quarter," said Matthew McCauley, Chairman and Chief Executive
Officer. "This milestone achievement validates the initiatives we have been
focusing on these past two years. And while I am pleased with the quarterly
results, I am even more excited about the merchandising, marketing and
operational opportunities ahead of us."
BUSINESS OUTLOOK
For the third fiscal quarter, the Company expects a low single-digit comparable
store sales increase over the prior year. The Company expects third and fourth
fiscal quarter earnings to be in the range of $0.40 to $0.42 and $0.58 to $0.60
per diluted share, respectively. These quarterly earnings expectations include
the impact of stock-based compensation ($0.04 per diluted share each quarter)
arising from the adoption of FAS Statement 123R. For the full fiscal year 2006,
the Company now expects earnings per diluted share to be in the range of $1.54
to $1.57, including stock-based compensation expense of $0.16. This change
represents an increase of $0.12 over the prior earnings guidance of $1.42 to
$1.45 per diluted share.
MANAGEMENT PRESENTATION
The live broadcast of the discussion of the second quarter 2006 financial
results will be available to interested parties at 1:30 p.m. PT (4:30 p.m. ET)
on Wednesday, August 16, 2006. 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 two
hours after the broadcast through midnight ET, Wednesday, August 23, 2006, at
800-642-1687, passcode 4081957, 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 29, 2006, the
Company operated a total of 684 stores: 570 Gymboree(R) retail stores (542 in
the United States and 28 in Canada), 27 Gymboree Outlet retail stores, 70 Janie
and Jack(R) retail shops and 17 Janeville(R) stores in the United States. The
Company also operates online stores at www.gymboree.com and
www.janieandjack.com, and offers directed parent-child developmental play
programs at 528 franchised and company-operated centers in the United States and
27 other countries.
FORWARD-LOOKING STATEMENTS
The foregoing financial information for the fiscal quarter-ended July 29, 2006,
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 The Gymboree
Corporation's anticipated sales growth and cash flows 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 embargoes 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 28, 2006. These forward-looking statements reflect The Gymboree
Corporation's expectations as of August 16, 2006. The Gymboree Corporation
undertakes no obligation to update the information provided herein.
Gymboree, Janie and Jack and Janeville are registered trademarks 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
----------------------- -----------------------
JUL 29, JUL 30, JUL 29, JUL 30,
2006 2005 2006 2005
---------- ---------- ---------- ----------
Net sales:
Retail $ 152,996 $ 129,296 $ 339,176 $ 290,075
Play & Music 2,481 2,742 5,248 4,928
---------- ---------- ---------- ----------
Total net sales 155,477 132,038 344,424 295,003
Cost of goods sold, including
buying and occupancy expenses (89,896) (84,803) (188,412) (183,138)
---------- ---------- ---------- ----------
Gross profit 65,581 47,235 156,012 111,865
Selling, general and administrative expenses (66,667) (53,302) (129,952) (109,923)
---------- ---------- ---------- ----------
Operating income (loss) (1,086) (6,067) 26,060 1,942
Other income 1,768 294 3,059 501
---------- ---------- ---------- ----------
Income (loss) before income taxes 682 (5,773) 29,119 2,443
Income tax (expense) benefit (138) 2,062 (10,692) (874)
---------- ---------- ---------- ----------
Income (loss) from continuing operations 544 (3,711) 18,427 1,569
Income from discontinued operations, net of tax - 368 - 607
---------- ---------- ---------- ----------
Net income (loss) $ 544 $ (3,343) $ 18,427 $ 2,176
========== ========== ========== ==========
Basic per share amounts:
Income (loss) from continuing operations $ 0.02 $ (0.12) $ 0.58 $ 0.05
Income from discontinued operations, net of tax - 0.01 - 0.02
---------- ---------- ---------- ----------
Net income (loss) $ 0.02 $ (0.11) $ 0.58 $ 0.07
========== ========== ========== ==========
Diluted per share amounts:
Income (loss) from continuing operations $ 0.02 $ (0.12) $ 0.55 $ 0.05
Income from discontinued operations, net of tax - 0.01 - 0.02
---------- ---------- ---------- ----------
Net income (loss) $ 0.02 $ (0.11) $ 0.55 $ 0.07
========== ========== ========== ==========
Weighted average shares outstanding:
Basic 31,570 31,254 32,031 31,210
Diluted 33,041 31,254 33,380 31,607
Number of stores at end of period 684 646 684 646
CONDENSED CONSOLIDATED BALANCE SHEETS
-------------------------------------
(In thousands)
(Unaudited)
July 29, January 28, July 30,
2006 2006 2005
------------ ------------ ------------
CURRENT ASSETS
Cash and cash equivalents $ 31,581 $ 32,037 $ 34,953
Marketable securities 85,250 115,000 38,843
Accounts receivable 11,316 12,027 13,190
Merchandise inventories 94,314 100,474 89,373
Prepaid income taxes 16,056 5,285 7,764
Prepaid expenses and deferred taxes 7,482 7,225 6,105
Current assets of discontinued operations - 479 1,107
------------ ------------ ------------
Total current assets 245,999 272,527 191,335
------------ ------------ ------------
Property and Equipment, net 149,372 146,055 147,051
Lease Rights, Deferred Taxes and Other Assets 5,593 6,196 13,577
------------ ------------ ------------
Total Assets $ 400,964 $ 424,778 $ 351,963
============ ============ ============
CURRENT LIABILITIES
Accounts payable $ 44,562 $ 45,186 $ 40,439
Accrued liabilities 70,278 55,303 37,742
Current liabilities of discontinued operations - 732 1,732
------------ ------------ ------------
Total current liabilities 114,840 101,221 79,913
------------ ------------ ------------
LONG TERM LIABILITIES
Deferred rent and other liabilities 48,897 48,480 49,868
Stockholders' Equity 237,227 275,077 222,182
------------ ------------ ------------
Total Liabilities and Stockholders' Equity $ 400,964 $ 424,778 $ 351,963
============ ============ ============