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Comparable store sales flat for this quarter, Gymboree
14
Jun '11
The Gymboree Corporation reported consolidated financial results for the first fiscal quarter ended April 30, 2011.

For the first fiscal quarter of 2011, net sales were $270.3 million, an increase of 6.9% compared to $252.8 million in net sales for the first fiscal quarter of the prior year. Comparable store sales for the quarter were relatively flat versus the first quarter of the prior year.

Gross profit for the first fiscal quarter of 2011 was $110.9 million or 41.0% of net sales compared to $130.2 million or 51.5% of net sales for the first fiscal quarter of 2010. Results for the first quarter of 2011 include, among other items, $10.7 million of additional product costs resulting from purchase accounting adjustments to inventory balances effective upon the closing of 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"). Excluding the impact of the purchase accounting adjustments of $14.1 million, gross profit for the first fiscal quarter of 2011 was $125.0 million or 46.2% of net sales.

SG&A expense for the first quarter was $84.6 million or 31.3% of net sales, compared to $81.5 million or 32.2% of net sales in the comparable quarter of the prior year. Results for the first quarter of 2011 include approximately $6.1 million of additional costs resulting from the Acquisition, including the effect of purchase accounting adjustments and transaction-related charges recognized during the quarter. Excluding these charges, SG&A expense for the first fiscal quarter was $78.5 million or 29.0% of net sales, down 320 basis points from the prior year.

Net loss for the first quarter of fiscal 2011 was $10.4 million compared to net income of $29.2 million for the same period last year. The significant decrease in earnings primarily resulted from Acquisition-related costs, as well as higher interest expense incurred following completion of the Acquisition.

Adjusted EBITDA for the first fiscal quarter of 2011 decreased 6.2% to $59.3 million compared to $63.3 million for the comparable quarter of the prior year. Adjusted EBITDA margins decreased from 25.0% to 22.0% 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 no borrowings outstanding under the ABL as of the end of the first fiscal quarter and approximately $158.1 million of undrawn availability. Effective February 2011, the term loan was refinanced to lower the interest rate 50 basis points, remove select financial loan covenants and extend the maturity date from November 2017 to February 2018.


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