EXHIBIT 99.1
INVESTOR RELATIONS CONTACT:
Jeffrey P. Harris
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 THIRD QUARTER 2006 RESULTS
San Francisco, Calif., November 15, 2006 - The Gymboree Corporation (NASDAQ:
GYMB) today reported earnings for the third fiscal quarter ended October 28,
2006, of $17.4 million, or $0.53 per diluted share, including incremental
pre-tax charges of approximately $10.2 million ($0.19 per diluted share)
relating to the previously announced closure of the Janeville division. Results
also include $1.7 million of stock-based compensation expense ($0.03 per diluted
share) resulting from the adoption of FAS Statement 123R in fiscal 2006.
Excluding Janeville closure costs, earnings for the third fiscal quarter were
$23.6 million, or $0.72 per diluted share. This compares to earnings from
continuing operations of $11.1 million, or $0.35 per diluted share, for the same
period of the prior year.
Net sales from retail operations for the third quarter ended October 28, 2006,
totaled $212.9 million, a 22% increase over the $174.5 million in net sales from
retail operations for the third fiscal quarter of the prior year. As previously
reported, comparable store sales from retail operations for the third fiscal
quarter increased 16% over the same period last year. Total net sales for the
third fiscal quarter were $215.6 million, an increase of 22% compared to total
net sales of $177.1 million for the third fiscal quarter last year.
"Results for the third quarter exceeded our expectations due to great product,
strong marketing and reduced product costs," said Matthew McCauley, Chairman and
Chief Executive Officer. "I am pleased with the third quarter results, and
continue to see additional sourcing, marketing and merchandising opportunities
ahead of us."
BUSINESS OUTLOOK
For the fourth fiscal quarter, the Company expects a low single-digit comparable
store sales increase over the prior year. The Company now expects fourth fiscal
quarter earnings to be in the range of $0.62 to $0.64 per diluted share before
the incremental costs associated with the closure of the Janeville division.
Including the Janeville-related pre-tax charges of approximately $4 million
($0.07 per diluted share), quarterly earnings are expected to be in the range of
$0.55 to $0.57 per diluted share. These figures also include the impact of
stock-based compensation ($0.04 per diluted share) 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 $1.89 to $1.91, before the impact of the Janeville
closure, but including stock-based compensation expense of $0.15. Including the
impact of the Janeville closure, earnings per diluted share for the full year
are expected to be in the range of $1.63 to $1.65. This change represents an
increase of $0.07 over the prior earnings guidance, excluding the impact of the
Janeville closure.
MANAGEMENT PRESENTATION
The live broadcast of the discussion of the third quarter 2006 financial results
will be available to interested parties at 1:30 p.m. PT (4:30 p.m. ET) on
Wednesday, November 15, 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, November 22, 2006, at 800-642-1687,
passcode 5524624, 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 October 28, 2006,
the Company operated a total of 709 stores: 577 Gymboree(R) retail stores (549
in the United States and 28 in Canada), 37 Gymboree Outlet stores, 78 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 550 franchised and company-operated centers in the United States and
27 other countries.
FORWARD-LOOKING STATEMENTS
The foregoing financial results for the third fiscal quarter ended October 28,
2006, as well as the expected financial effects of the closure of Janeville
operations, are 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, unanticipated costs incurred in
connection with the closure of the Janeville division, 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 January 28, 2006. These forward-looking
statements reflect The Gymboree Corporation's expectations as of October 28,
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 INCOME
-------------------------------------------
(In thousands, except per share and operating data)
(Unaudited)
13 WEEKS ENDED 39 WEEKS ENDED
------------------------------ ------------------------------
OCT 28, OCT 29, OCT 28, OCT 29,
2006 2005 2006 2005
------------ ------------ ------------ ------------
Net sales:
Retail $ 212,922 $ 174,507 $ 552,098 $ 464,582
Play & Music 2,708 2,576 7,956 7,505
------------ ------------ ------------ ------------
Total net sales 215,630 177,083 560,054 472,087
Cost of goods sold, including
buying and occupancy expenses (110,013)(a) (95,779) (298,425)(a) (278,918)
------------ ------------ ------------ ------------
Gross profit 105,617 81,304 261,629 193,169
Selling, general and administrative expenses (77,221)(b) (60,956) (207,173)(b) (170,879)
------------ ------------ ------------ ------------
Operating income 28,396 20,348 54,456 22,290
Other income 1,083 488 4,142 989
------------ ------------ ------------ ------------
Income before income taxes 29,479 20,836 58,598 23,279
Income tax expense (12,062) (9,725) (22,754) (10,600)
------------ ------------ ------------ ------------
Income from continuing operations 17,417 11,111 35,844 12,679
Income from discontinued operations, net of tax - 46 - 653
------------ ------------ ------------ ------------
Net income $ 17,417(c) $ 11,157 $ 35,844(c) $ 13,332
============ ============ ============ ============
Basic per share amounts:
Income from continuing operations $ 0.56 $ 0.36 $ 1.13 $ 0.41
Income from discontinued operations, net of tax - - - 0.02
------------ ------------ ------------ ------------
Net income $ 0.56 $ 0.36 $ 1.13 $ 0.43
============ ============ ============ ============
Diluted per share amounts:
Income from continuing operations $ 0.53 $ 0.35 $ 1.08 $ 0.40
Income from discontinued operations, net of tax - - - 0.02
------------ ------------ ------------ ------------
Net income $ 0.53 $ 0.35 $ 1.08 $ 0.42
============ ============ ============ ============
Weighted average shares outstanding:
Basic 31,332 31,370 31,798 31,263
Diluted 32,735 32,051 33,206 31,767
OPERATING DATA:
Stores Open at the Beginning of the Period 684 646 659 648
New Stores 26 19 51 26
Closed Stores (1) (2) (1) (11)
------------ ------------ ------------ ------------
Stores Open at the End of the Period 709 663 709 663
============ ============ ============ ============
Gross Store Square Footage 1,352,000 1,248,000 1,352,000 1,248,000
Merchandise Inventories per Store $ 148,000 $ 152,000 $ 148,000 $ 152,000
(a) Includes approximately $3.1 million in pre-tax charges related to the
closure of the Janeville division.
(b) Includes approximately $7.1 million in pre-tax charges related to the
closure of the Janeville division.
(c) Includes approximately $6.2 million in after-tax charges, or $0.19 per
diluted share, related to the closure of the Janeville division.
CONDENSED CONSOLIDATED BALANCE SHEETS
-------------------------------------
(In thousands)
(Unaudited)
OCT 28, JANUARY 28, OCT 29,
2006 2006 2005
------------ ------------ ------------
CURRENT ASSETS
Cash and cash equivalents $ 25,549 $ 32,037 $ 34,132
Marketable securities 97,600 115,000 58,275
Accounts receivable 14,243 12,027 12,095
Merchandise inventories 104,694 100,474 100,814
Prepaid income taxes 11,471 5,285 8,615
Prepaid expenses and deferred taxes 6,970 7,225 5,700
Current assets of discontinued operations - 479 514
------------ ------------ ------------
Total current assets 260,527 272,527 220,145
------------ ------------ ------------
Property and Equipment, net 145,533 146,055 148,492
Lease Rights, Deferred Taxes and Other Assets 4,748 6,196 4,969
------------ ------------ ------------
Total Assets $ 410,808 $ 424,778 $ 373,606
============ ============ ============
CURRENT LIABILITIES
Accounts payable $ 54,251 $ 45,186 $ 45,404
Accrued liabilities 65,360 55,303 44,990
Current liabilities of discontinued operations - 732 956
------------ ------------ ------------
Total current liabilities 119,611 101,221 91,350
------------ ------------ ------------
LONG TERM LIABILITIES
Deferred rent and other liabilities 46,654 48,480 47,599
Stockholders' Equity 244,543 275,077 234,657
------------ ------------ ------------
Total Liabilities and Stockholders' Equity $ 410,808 $ 424,778 $ 373,606
============ ============ ============