EX-99.1 2 e17967ex99_1.txt PRESS RELEASE Exhibit 99.1 The Gymboree Corporation Reports First Quarter 2004 Results BURLINGAME, Calif., May 18 /PRNewswire-FirstCall/ -- The Gymboree Corporation (Nasdaq: GYMB) today reported net income, before the cumulative effect of the change in accounting principle, of $8.5 million or $0.27 per diluted share for the first fiscal quarter ended May 1, 2004, compared to $7.3 million or $0.24 per diluted share for the first fiscal quarter ended May 3, 2003. The cumulative effect of the change in accounting principle resulted in a onetime benefit of $1.2 million net of taxes, or an additional $0.04 per diluted share, bringing total earnings for the first quarter of 2004 to $0.31 per diluted share. Net sales from retail operations for the first fiscal quarter of 2004 were $151.4 million, an increase of 11% compared to net sales from retail operations of $136.1 million in the first fiscal quarter last year. Comparable store sales for the 13-week period ended May 1, 2004, increased 6% compared to a 2% increase in comparable store sales for the same period last year. Total net sales, including sales from Gymboree Play & Music operations, were $154.0 million, an increase of 10% compared to total net sales of $139.5 million in the first fiscal quarter last year. "This was an exciting quarter for us with the opening of our first three Janeville stores, a retail concept offering clothing and accessories for the 30-something woman," said Lisa Harper, The Gymboree Corporation's chairman and chief executive officer. "As we develop into a multi-brand company, we're investing in new opportunities while remaining focused on Gymboree, as evidenced by the launch of the Gymboree(R) Visa(R) card, the introduction of a new Gymboree store prototype and our commitment to update a large percentage of our stores this year." Business Outlook The Gymboree Corporation provided updated guidance for upcoming comparable store sales. The Company now projects that comparable store sales in May will be in the negative mid single digits compared to the same period last year. For the second fiscal quarter, the Company expects comparable store sales to be in the negative low single digits. The Company also reaffirmed its earnings guidance for the second, third and fourth fiscal quarters and provided updated guidance for the balance of the fiscal year: the Company expects earnings per share to be in the range of $(0.10) to $(0.08), $0.29 to $0.31, and $0.46 to $0.48, respectively. Earnings per diluted share for the fiscal year 2004 are now expected in the range of $0.92 to $0.98. These estimates exclude the additional $.04 per diluted share effect of the change in accounting principle described below. Notice of Change in Accounting Principle Effective February 1, 2004, The Gymboree Corporation elected to change its method of inventory valuation from the retail method to the cost method. Management believes the cost method is a preferable method for matching the cost of merchandise with the revenues generated. The cumulative effect of this accounting change on the results for the first quarter of 2004 was a one-time benefit of $1.2 million net of income taxes, or an additional $0.04 per diluted share. Management Presentation The live broadcast of the discussion of first quarter 2004 earnings results will be available to interested parties at 1:30 p.m. Pacific (4:30 p.m. Eastern) on Tuesday, May 18. 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 EST, May 25, 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 May 1, 2004, the Company operated a total of 633 stores: 590 Gymboree(R) retail stores (540 in the United States, 28 in Canada, and 22 in Europe), 40 Janie and Jack(R) retail shops and 3 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 526 franchised and company-operated centers in the United States and 24 other countries. Forward-Looking Statements The foregoing sales and earnings figures for the first fiscal quarter 2004 are un-audited and subject to quarter-end and year-end adjustment, and 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, including our annual report on Form 10-K for the year ended January 31, 2004. THE GYMBOREE CORPORATION CONDENSED CONSOLIDATED INCOME STATEMENTS (In thousands, except per share and store data) (Unaudited) 13 Weeks Ended May 1, May 3, 2004 2003 Net sales: Retail $151,381 $136,082 Play & Music 2,667 3,373 Total net sales 154,048 139,455 Cost of goods sold, including buying and occupancy expenses (88,268) (80,634) Gross profit 65,780 58,821 Selling, general and administrative expenses (52,700) (46,926) Operating income 13,080 11,895 Other income/(expense) 230 (89) Income before income taxes and cumulative effect of change in accounting principle 13,310 11,806 Income tax expense (4,858) (4,545) Income before cumulative effect of change in accounting principle 8,452 7,261 Cumulative effect of change in accounting principle, net of tax 1,227 -- Net income $9,679 $7,261 Basic per share amounts: Income before cumulative effect of change in accounting principle $0.28 $0.25 Cumulative effect of change in accounting principle, net of tax 0.04 -- Net income $0.32 $0.25 Diluted per share amounts: Income before cumulative effect of change in accounting principle $0.27 $0.24 Cumulative effect of change in accounting principle, net of tax 0.04 -- Net income $0.31 $0.24 Weighted average shares outstanding: Basic 30,476 29,314 Diluted 31,348 30,609 Number of stores at end of period 633 589 CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) May 1, January 31, May 3, 2004 2004 2003 Current Assets Cash and cash equivalents $110,206 $89,553 $60,133 Accounts receivable 8,716 11,456 7,610 Merchandise inventories 67,927 73,017 50,504 Prepaid expenses and deferred taxes 10,399 5,564 11,537 Total current assets 197,248 179,590 129,784 Property and Equipment, net 121,824 112,743 104,733 Lease Rights, Deferred Taxes and Other Assets 7,712 6,378 6,767 Total Assets $326,784 $298,711 $241,284 Current Liabilities Accounts payable $36,193 33,356 10,252 Accrued liabilities 46,604 34,963 32,462 Total current liabilities 82,797 68,319 42,714 Long Term Liabilities Deferred rent and other liabilities 26,808 26,644 20,734 Stockholders' Equity 217,179 203,748 177,836 Total Liabilities and Stockholders' Equity $326,784 $298,711 $241,284 SOURCE The Gymboree Corporation -0- 05/18/2004 /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 IN: REA SU: ERN ERP CCA