• Company swings to Q3 profit of $4.9m
  • Sales edged up 2.8% to $311.5m

Children's apparel retailer The Gymboree Corporation has returned to profit during its third-quarter on the back of increasing sales. 

Net income reached US$4.9m for the 13 weeks to 27 October compared to a loss of $3m the prior year.

Total net sales climbed 2.8% to $311.5m against $303.1m the same period last year, while comparable store sales slipped 4% compared with last year. Gross margin reached 40.3%, down from 43.2% the prior year.

Looking forward, the company expects full-year comparable store sales to be flat to slightly down and plans to open around 124 stores during the year.

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The Gymboree Corporation Reports Third Fiscal Quarter 2012 Results

 

San Francisco, Calif., December 5, 2012 - The Gymboree Corporation (the "Company") today reported consolidated financial results for the third fiscal quarter ended October 27, 2012.

For the third quarter of the fiscal year ending February 2, 2013 ("fiscal 2012"), net sales were $311.5 million, an increase of 2.8% compared to $303.1 million in net sales for the third quarter of the fiscal year ended January 28, 2012 ("fiscal 2011"). Comparable store sales for the third quarter of fiscal 2012 decreased 4% compared to the third quarter of fiscal 2011.

Gross profit for the third quarter of fiscal 2012 was $125.6 million, or 40.3% of net sales, compared to $130.8 million, or 43.2% of net sales, for the third quarter of fiscal 2011. Excluding purchase accounting adjustments of $3.1 million and $3.4 million for the third quarter of fiscal 2012 and the third quarter of fiscal 2011, respectively, relating to the November 2010 acquisition of the Company by investment funds sponsored by Bain Capital Partners, LLC (the "Acquisition"), adjusted gross profit was $128.7 million, or 41.3% of net sales, and $134.2 million, or 44.3% of net sales, for the third quarter of fiscal 2012 and the third quarter of fiscal 2011, respectively (see Exhibit D for relevant reconciliation information).

SG&A expense for the third quarter of fiscal 2012 was $99.0 million, or 31.8% of net sales, compared to $99.4 million, or 32.8% of net sales, in the third quarter of the prior year. Results for the third quarter of fiscal 2012 and fiscal 2011 include $5.3 million and $5.4 million, respectively, of additional costs resulting from the Acquisition, including the effect of purchase accounting adjustments. Also included in the third quarter of fiscal 2011 was a $7.2 million charge resulting from a termination fee incurred to terminate a master franchisee in China. Excluding these charges, adjusted SG&A expense for the third quarter of fiscal 2012 and fiscal 2011 was $93.8 million, or 30.1% of net sales, and $86.8 million, or 28.6% of net sales, respectively, which represents an increase of 150 basis points over fiscal 2011 (see Exhibit D for relevant reconciliation information).

Operating income for the third quarter of fiscal 2012 was $26.6 million compared to $31.4 million for the same period last year. The decrease in operating income primarily resulted from lower gross profit margins and, to a lesser extent, from SG&A deleveraging due to the comparable store sales decrease of 4%.

Net income attributable to the Company before interest (income) expense, income tax benefit and depreciation and amortization, adjusted for other items ("Adjusted EBITDA"), for the third quarter of fiscal 2012 decreased 22.6% to $46.9 million, compared to $60.6 million for the third quarter of the prior year. Adjusted EBITDA is not a performance measure under U.S. generally accepted accounting principles ("GAAP"). See "Non-GAAP Financial Measures" below. A reconciliation of net income/(loss) attributable to the Company to Adjusted EBITDA presented herein is included in Exhibit D of this press release.

Balance Sheet Highlights

There were no borrowings outstanding under the Company's $225 million asset-backed loan as of the end of the third fiscal quarter and approximately $189.2 million of availability.

Cash at the end of the third quarter of fiscal 2012 decreased to $42.6 million from $45.7 million at the end of the third quarter of fiscal 2011.

Capital expenditures for the third quarter of fiscal 2012 were $13.4 million, with the majority of the cash used to fund the opening of 38 new stores during the quarter.

Inventory balances at the end of the third quarter of fiscal 2012 were $255.7 million compared to $252.7 million at the end of the third quarter of fiscal 2011. Inventory cost on a per square foot basis was down 8% and inventory units on a per square foot basis were also down in the low single-digits.

In November 2012, the Company made a voluntary prepayment of $25 million on the outstanding principal of its senior secured term loan facility.

Fiscal 2012 Business Outlook

Sales Expectations

The Company anticipates comparable store sales to be flat to slightly down for the full year fiscal 2012.

Adjusted EBITDA

The Company expects Adjusted EBITDA for the fourth quarter to be comparable to slightly higher than the prior year. The Company continues to anticipate generating sufficient cash flow to service its debt and fund its growth in fiscal 2012.

New Stores

During fiscal 2012, the Company plans to open approximately 124 new stores, including approximately 98 Crazy 8 stores.

Capital Expenditures

During the fourth quarter of fiscal 2012, the Company anticipates spending approximately $15 million for capital expenditures.

 

Original source: http://ir.gymboree.com/releasedetail.cfm?ghome=2534374303003787&gplay=17291&gnewborn=2534374302774749&gbabygirl=2534374302774671&gbiggirl=2534374302774537&gbabyboy=2534374302775071&gbigboy=2534374302774567&ggift=2534374306242432&gsearch=2534374302780803&g