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Gymboree to Shutter Its Stores in Britain and Ireland to Trim Costs

The retailer of children's clothing posts a quarterly loss that matches what analysts had expected.

August 18, 2004|From Reuters

Children's clothing retailer Gymboree Corp. on Tuesday posted a wider second-quarter loss and said it planned to close its retail operations in Britain and Ireland.

For its fiscal second quarter ended July 31, the company posted a net loss of $3.2 million or 10 cents a share, compared with a loss of $1.1 million, or 4 cents a share, a year earlier.

Gymboree, based in Burlingame, Calif., had forecast a second-quarter loss of 10 cents or 11 cents a share.

Analysts, on average, had been expecting it to lose 10 cents a share, according to a Reuters survey.

Net sales for the quarter rose 9% to $119.8 million. Sales at stores open at least one year, a key retail gauge known as same-store sales, rose 2%.

Total net sales, including sales from Gymboree Play & Music operations, rose 8% to $122.4 million from $113.1 million in the second quarter last year.

The company also said its board voted to close its operations in Britain and Ireland because of their poor financial performance. Gymboree Play & Music franchises will continue to operate in those countries.

Gymboree expects to complete the shutdown by the end of the third fiscal quarter of this year. It expects to take a $9.5-million charge in the third and fourth quarters related to the closure for lease disposition, asset write-offs and severance.

As a result of shuttering operations in Britain and Ireland that the company had expected to earn a modest profit in the third and fourth fiscal quarters of 2004, Gymboree trimmed its guidance for earnings from ongoing operations by a penny a share.

Gymboree said it expected third-quarter earnings from continuing operations to be in the range of 28 cents to 30 cents a share, down from its previous forecast of 29 cents to 31 cents a share. Analysts on average had expected the company to earn 30 cents a share.

For the fourth quarter, Gymboree said it expected earnings in the range of 45 cents to 47 cents a share, down from its previous outlook of 46 cents to 48 cents a share and compared with the 46 cents a share that analysts projected.

For the full fiscal year, Gymboree predicted earnings from continuing operations would be in the range of 90 cents to 94 cents a share. Analysts expected 92 cents a share.

Gymboree's shares rose 11 cents to $14.22 on Nasdaq.

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