That's why I found Gymboree's (NASDAQ:GYMB) earnings conference call last night to be such a thrill. CEO Matt McCauley explained to the analysts that the Play & Music program has lost its red-headed-stepchild status and will now mingle with the Gymboree retail and outlet chain, as well as with Janie and Jack -- the store, that is. In short, it's one of the cool kids now.
According to McCauley, 300,000 families attend those early-childhood Play & Music play groups and educational programs in the U.S. alone -- and 40% of the locations are international. So leveraging the brand loyalty of those existing customers should be a no-brainer, and the company has been herding them toward the mall stores with Gymbucks rebate deals and promotional materials for quite some time now.
But that loyalty cuts both ways. And the real news last night was that retail customers will now be exposed to Play & Music marketing in the mall stores. The integration goes deep enough that a limited pilot program is investigating how to sign the kids up for those classes right in the retail stores.
McCauley noted that 70% of the Play & Music customers are new moms, which gives the company a great opportunity to draw them into the brand and never "give them any reason to shop at the competition." And on the other hand, many customers just come into the stores and "don't have any idea about the benefits of Play & Music."
So by taking a holistic view of the total customer base, Gymboree should be able to create a stronger brand, driving increased sales to both segments of its business. The early-childhood activities set Gymboree apart from kiddie clothiers like Children's Place (NASDAQ:PLCE) or the toddler section at Target (NYSE:TGT), and it can be made into a real competitive advantage with some sweet, sweet TLC.
That's exactly what I wanted to hear as a shareholder. And the good stuff doesn't stop there. Some media outlets called the company's flattish future outlook disappointing, but they obviously didn't listen in on that conference call.
You see, these meek comparable-sales forecasts aren't shoot-for-the-moon targets. Gymboree has those, too, but their "Mission: Impossible" goals are for internal use only. The sales and earnings guidance numbers are baseline goals, accounting for risks like a lengthy economic recession or missing the fashion boat for a quarter or two.
It's a conservative outlook, reflecting the lowest performance at which the company's expansion plans can proceed as planned. And it's a breathless expansion plan, to be sure. The company expects to add 90 net stores in 2007, on top of the 550 it has today. But it's doing so in a responsible, measured manner, financed entirely from operating cash flows. That's how growth is managed at companies like Buffalo Wild Wings (NASDAQ:BWLD), Zumiez (NASDAQ:ZUMZ), and Pacific Sunwear (NASDAQ:PSUN), all of which are debt free, growing like weeds -- and highly respectable.
Just for a bit of added shareholder-friendly fun, McCauley announced that the company will start adding earnings data to those monthly sales reports, in the interest of transparency. I don't know that such a level of short-term granularity is useful for the average Fool, but I do welcome any and all extra information we can get. With a clearer picture of a company's operations, we can make better investment decisions. My dollars are staying with Gymboree for the foreseeable future, and it's not because our trading guidelines force my hand, either.
Further Foolishness:
- Foolish Forecast: It's a Gymboree Day
- The Gymboree Jamboree: Fool by Numbers
- Children's Place Is "Approximately" Great
Buffalo Wild Wings and Zumiez are two of our Motley Fool Hidden Gems recommendations, and PacSun is a Motley Fool Stock Advisor pick. Dress yourself up in a free 30-day trial or two, and check out what's hot and what's not.
Fool contributor Anders Bylund is a Gymboree shareholder but holds no other position in any of the companies discussed here. You can check out Anders' holdings if you like, and Foolish disclosure is a fountain of bubbly, youthful joy.
