Sales increase 8.2% at Gymboree Corp in Q2 FY'13

Net sales for the quarter were $290.9 million, an increase of 8.2% compared to $268.8 million in net sales for the same quarter last year. Comparable sales for the quarter decreased 3% versus the same quarter last year.

Gross profit for the quarter was $107.1 million, or 36.8% of net sales, compared to $89.2 million, or 33.2% of net sales, for the same quarter last year.

Excluding purchase accounting adjustments of $2.5 million and $3.0 million for the second quarter of this year and last year, respectively, relating to the November 2010 acquisition of the Company by Giraffe Holding, Inc., an entity majority-owned by investment funds sponsored by Bain Capital Partners, LLC (the "Acquisition"), gross profit was $109.6 million, or 37.7% of net sales, and $92.2 million, or 34.3% of net sales, for the second quarter of this year and last year, respectively .

SG&A expense for the quarter was $102.0 million, or 35.1% of net sales, compared to $95.6 million, or 35.6% of net sales, in the same quarter last year. Results for the second quarter of this year and last year include $3.3 million and $5.3 million, respectively, of additional costs resulting from the Acquisition, including the effect of purchase accounting adjustments, and other adjustments.

Excluding these expenses, SG&A expense for the second quarter of this year and last year was $98.7 million, or 33.9% of net sales, and $90.3 million, or 33.6% of net sales, respectively.

Net loss for the quarter was $9.3 million compared to a net loss of $14.1 million for the same quarter last year.

Net loss attributable to The Gymboree Corporation before interest, income taxes and depreciation and amortization, adjusted for other items ("Adjusted EBITDA") increased 50.9% to $24.8 million for the quarter compared to $16.4 million for the same quarter last year. Adjusted EBITDA is not a performance measure under GAAP. A reconciliation of net income (loss) attributable to The Gymboree Corporation to Adjusted EBITDA presented herein is included in Exhibit D of this press release.

Financial Highlights:

-There were no borrowings outstanding under the ABL as of the end of the quarter and approximately $139.4 million of undrawn availability.

-Cash at the end of the quarter was $26.8 million compared to $54.6 million at the end of the same quarter last year, reflecting the pay down of approximately $51.6 million of debt since the end of the second quarter last year.

-Capital expenditures for the fiscal year to date were $23.2 million, with the majority of the cash used to fund the opening of 26 new stores during the quarter.

-Inventory balances at the end of the quarter were $215.0 million compared to $220.2 million at the end of the same quarter last year. Compared to the same quarter last year, inventory cost on a per square foot basis was down 12%, while inventory units on a per square foot basis were down in the mid single digits.

Gymboree Corporation