Gymboree Surges on Earnings Beat, Improved Guidance

Children's clothing retailer Gymboree Corp. boosted its Q1 earnings and raised its full-year forecast and offered second-quarter earnings guidance above Wall Street's expectations, causing shares to jump 8.45% in after-hours trading. Q1 earnings were up 17% to $20.9 million ($0.67/share), while revenue grew 14% to $209.3 million; analysts were looking for $0.63/share. Same-store sales were up 3% on the quarter. The company raised its fiscal-year guidance from $2.36-2.40/share to $2.42-2.46. Analysts had been looking for full-year income of $2.40/share. It set Q2 EPS guidance at $0.10-0.12/share, and foresaw same-store sales growth in the "low-to-mid single digits." Analysts had been projecting Q2 earnings of $0.09. In a May 10 note, CIBC World Markets said the company "seems to be more effectively matching various customer events/promotions to capture traffic and also attract new customers," and said Gymboree was "the way to play the trend... toward increased spending on kids' clothes." Shares are up 1.4% YTD and 12.6% over the past year.

Sources: Press release, AP I, II
Commentary: Four Undervalued Retailers • Gymboree: Tumbling Out the Profits • Riding The New Baby Boom
Stocks/ETFs to watch: Gymboree Corp. (GYMB). Competitors: The Children's Place Retail Stores Inc. (PLCE), Under Armour Inc. (UA)

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