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The Gymboree Corporation Reports Preliminary Fourth Quarter and Full Year 2009 Results

Thursday, March 11, 2010 General News
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SAN FRANCISCO, March 10 The Gymboree Corporation (Nasdaq: GYMB) today reported consolidated financial results for the fourth fiscal quarter and full year ended January 30, 2010.
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Fourth Fiscal Quarter Ended January 30, 2010

For the fourth fiscal quarter, net sales were $299.6 million, an increase of 4% compared to $288.7 million in net sales for the fourth fiscal quarter of the prior year. As previously reported, comparable store sales for the quarter decreased 2% versus the fourth quarter of the prior year.
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Gross profit for the fourth fiscal quarter of 2009 was $140.0 million or 46.7% of net sales compared to $124.3 million or 43.0% of net sales for the fourth fiscal quarter of 2008. Excluding the impact of the prior year $6.0 million write-off of merchandise inventories, gross profit increased 180 basis points.

SG&A expense for the fourth quarter was $86.4 million or 28.9% of net sales, compared to $80.6 million or 27.9% of net sales in the comparable quarter of the prior year.

Net income for the fourth quarter of fiscal 2009 was $33.2 million or $1.11 per diluted share, compared to net income of $29.5 million or $1.00 per diluted share for the same period last year. The tax rate for the quarter was 38.6% versus 33.2% in the prior year. The lower than normal tax rate last year was primarily due to tax planning efforts that resulted in higher foreign tax credits arising from foreign tax expense.

Fiscal Year 2009 ended January 30, 2010

Net sales for the 52-week period ended January 30, 2010, were slightly more than $1.0 billion, a 1% increase from the prior fiscal year. Comparable store sales for fiscal 2009 were down 4% compared to the prior year.

Operating income for the full fiscal year was up 10% to $163.6 million compared to $148.3 million in the prior fiscal year. Operating margins increased 130 basis points to 16.1%.

For the full fiscal year ended January 31, 2010, net income was $101.9 million or $3.41 per diluted share, compared to net income of $93.5 million or $3.21 per diluted share in the prior year.

First Quarter Fiscal 2010 Business Outlook

Sales Expectations

For the first quarter of fiscal year 2010, the Company is planning for comparable store sales growth in the range of mid single digits.

Net Income

The Company expects net income for the first fiscal quarter of 2010 to be in the range of $0.90 to $0.94 per diluted share.

Tax Rate

The Company is planning for a tax rate of 39% to 41% for the first quarter of fiscal 2010.

Real Estate

During the first quarter, the Company plans to open 35 new stores consisting of 3 Gymboree stores, 6 Gymboree Outlets, and 26 Crazy 8 stores.

Management Presentation

The live broadcast of the discussion of fourth quarter and full fiscal year 2009 financial results and plans for fiscal 2010 will be available to interested parties at 1:30 p.m. PT (4:30 p.m. ET) on Wednesday, March 10, 2010. 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 PT, Wednesday, March 17, 2010, at 800-642-1687 passcode 54961987.

About The Gymboree Corporation

The Gymboree Corporation's specialty retail brands offer unique, high-quality products delivered with personalized customer service. As of February 27, 2010, the Company operated a total of 960 retail stores: 629 Gymboree® stores (593 in the United States, 34 in Canada and 2 in Puerto Rico), 140 Gymboree Outlet stores, 119 Janie and Jack® shops and 72 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 655 franchised and Company-operated Play & Music® centers in the United States and 30 other countries.

Forward-Looking Statements

The foregoing financial information for the fourth fiscal quarter and year ended January 30, 2010, is unaudited and subject to quarter-end and year-end adjustment. The foregoing paragraphs contain forward-looking statements relating to The Gymboree Corporation's anticipated sales growth, planned store 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 vary materially as a result of a number of factors, including high levels of unemployment and consumer debt, volatility in the financial markets, 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 January 31, 2009. These forward-looking statements reflect The Gymboree Corporation's expectations as of March 10, 2010. The Gymboree Corporation undertakes no obligation to update the information provided herein.

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

EXHIBIT A THE GYMBOREE CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share and operating data) (Unaudited) 13 13 52 52 Weeks Ended Weeks Ended Weeks Ended Weeks Ended January 30, January 31, January 30, January 31, 2010 2009 2010 2009 ---- ---- ---- ---- Net sales: Retail $295,689 $284,828 $1,001,527 $987,859 Play & Music 3,872 3,893 13,384 12,819 ----- ----- ------ ------ Total net sales 299,561 288,721 1,014,911 1,000,678 Cost of goods sold, including buying and occupancy expenses (159,520) (164,465) (535,005) (524,477) -------- -------- -------- -------- Gross profit 140,041 124,256 479,906 476,201 Selling, general and administrative expenses (86,425) (80,624) (316,268) (327,893) ------- ------- -------- -------- Operating income 53,616 43,632 163,638 148,308 Other income 428 482 1,095 1,331 --- --- ----- ----- Income before income taxes 54,044 44,114 164,733 149,639 Income tax expense (20,848) (14,629) (62,814) (56,159) ------- ------- ------- ------- Net income $33,196 $29,485 $101,919 $93,480 ======= ======= ======== ======= Net income per share: Basic $1.16 $1.05 $3.55 $3.35 Diluted $1.11 $1.00 $3.41 $3.21 Weighted average shares outstanding: Basic 28,661 28,095 28,679 27,919 Diluted 30,016 29,398 29,855 29,154 Operating Data: Stores Open at the Beginning of the Period 950 873 886 786 New Stores 8 15 72 105 Closed Stores (5) (2) (5) (5) --- --- --- --- Stores Open at the End of the Period 953 886 953 886 === === === === Gross Store Square Footage 1,879,000 1,735,000 1,879,000 1,735,000 Merchandise Inventories per Square Foot $64 $66 $64 $66 Supplemental Financial Information: Depreciation and amortization $9,839 $9,073 $37,302 $34,854 Interest income, net $21 $535 $485 $1,482 Stock-based compensation $5,669 $5,488 $18,462 $19,850 CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) January 30, January 31, 2010 2009 ---- ---- Current Assets Cash and cash equivalents $257,672 $140,472 Accounts receivable 9,911 18,735 Merchandise inventories 121,133 114,972 Prepaid expenses and deferred taxes 19,778 19,704 ------ ------ Total current assets 408,494 293,883 ------- ------- Property and Equipment, net 205,461 204,227 Deferred Taxes and Other Assets 22,175 22,471 Total Assets $636,130 $520,581 ======== ======== Current Liabilities Accounts payable $46,470 $44,400 Accrued liabilities 69,295 69,341 Income tax payable 5,381 102 ----- --- Total current liabilities 121,146 113,843 ------- ------- Long-Term Liabilities Lease incentives and other deferred liabilities 76,231 72,463 Stockholders' Equity 438,753 334,275 ------- ------- Total Liabilities and Stockholders' Equity $636,130 $520,581 ======== ========

SOURCE The Gymboree Corporation
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