Gymboree's Update

Gymboree's Net Income Jumps 38%
On Increase in Sales, Gross Margin
By LAUREN POLLOCK
August 20, 2008 5:25 p.m.
Wall Street Journal
http://online.wsj.com/article/SB121926377601257739.html?mod=djkeyword

Gymboree Corp.'s fiscal second-quarter net income rose 38% on an increase in sales and gross margin, and the children's clothing retailer affirmed its full-year outlook.

For the period ended Aug. 2, net income increased to $8.01 million, or 27 cents a share, from $5.8 million, or 19 cents a share, a year earlier. The latest period included $13.5 million in depreciation, amortization and stock-compensation expense, up from $10.5 million.

Earlier this month, the company raised its earnings forecast to 23 cents to 25 cents a share, above analysts' expectations, citing increased promotional activity, markdown optimization and tight expense management, despite a difficult retail environment.

The latest mean estimate of analysts polled by Thomson Reuters was for per-share earnings of 24 cents.

Total sales climbed 13% to $205.7 million. Two weeks ago, Gymboree said net retail sales jumped 13% to $202.8 million on a 1% increase in sales at stores open at least a year, in line with analysts' forecast for a low-single digit increase. Gross margin rose to 45.7% from 44%.

Gymboree expects fiscal third-quarter earnings of $1.02 to $1.04 a share and affirmed its already increased fiscal-year earnings guidance of $3.15 to $3.20 a share. Analysts were looking for $1.04 and $3.20 a share, respectively. The company also expects third-quarter same-store sales to be flat to "slightly negative."

As of Aug. 2, Gymboree operated 835 retail stores and ran play programs at 597 franchised and company-operated centers in the U.S. and 30 other countries.

Write to Lauren Pollock at lauren.pollock@dowjones.com