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Comparable store sales soar at Gymboree
02
Sep '11
The Gymboree Corporation reported consolidated financial results for the second fiscal quarter ended July 30, 2011.

For the second fiscal quarter of 2011, net sales were $259.0 million, an increase of 16.3% compared to $222.7 million in net sales for the second fiscal quarter of the prior year. Comparable store sales for the quarter increased 8% versus the second quarter of the prior year.

Gross profit for the second fiscal quarter of 2011 was $92.0 million or 35.5% of net sales compared to $96.9 million or 43.5% of net sales for the second fiscal quarter of 2010. Results for the second quarter of 2011 include approximately $3.4 million of additional costs resulting from the November 2010 acquisition of the Company by Giraffe Holding, Inc., an entity controlled by investment funds sponsored by Bain Capital Partners, LLC (the "Acquisition"), including the effect of purchase accounting adjustments and transaction-related charges recognized during the quarter. Excluding these costs, gross profit for the quarter was $95.4 million or 36.6% of sales.

SG&A expense for the second quarter was $88.9 million or 34.3% of net sales, compared to $77.9 million or 35.0% of net sales in the comparable quarter of the prior year. Excluding Acquisition-related charges of $5.3 million, SG&A expense for the second fiscal quarter was $83.6 million or 32.1% of net sales, down 290 basis points from the prior year.

Net loss for the second quarter of fiscal 2011 was $6.9 million compared to net income of $12.3 million for the same period last year and reflects the impact of $21.9 million of incremental interest expense over the prior year resulting from the addition of approximately $1.2 billion of debt on the balance sheet during the fourth fiscal quarter of fiscal 2010.

Adjusted EBITDA for the second fiscal quarter of 2011 decreased 23.5% to $25.5 million compared to $33.3 million for the comparable quarter of the prior year. Adjusted EBITDA margins decreased from 15.0% to 9.8% due primarily to lower gross profit margins. A reconciliation of net income (loss) to Adjusted EBITDA is included in Exhibit A of this press release.

Balance Sheet Highlights
As part of the Acquisition, the Company incurred a total of $1.2 billion in debt, consisting of an $820 million seven-year term loan and $400 million in high-yield notes maturing in 8 years. An asset-backed loan (ABL) in the amount of $225 million was also established to support working capital needs. There were $40 million of borrowings outstanding under the ABL as of the end of the second fiscal quarter and approximately $75.8 million of undrawn availability.

Cash at the end of the second fiscal quarter decreased to $54.8 million from $132.4 million at the end of the second quarter of fiscal 2010. The decrease reflects the impact of the Company's utilization of cash to fund the transaction.

Capital expenditures for the second fiscal quarter were $8.9 million compared to $13.1 million in the prior year. The vast majority of cash used during the quarter was to fund the opening of 27 new stores. Smaller amounts of cash were utilized to support infrastructure investments at the corporate office and the Company's distribution center.


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