Based on the latest same-store sales results for kiddie clothing specialist Gymboree (NASDAQ:GYMB), there should be plenty of little ones running around in new threads. I imagine parents were shopping for the perfect Easter outfits for their angels, not to mention picking up new warm-weather outfits to replace ones already outgrown.
For the month of March, Gymboree improved its comps by 9%, easily topping predictions from analysts expecting a repeat of last year's 6% gain. Meanwhile, its total sales rose 20% from a year ago, to $92.1 million. These results highlight Gymboree's ability to continue attracting shoppers to existing locations, while also opening new stores that draw them in from the get-go.
Based on the monthly data, Gymboree certainly seems to be on top of its game -- but remember, we're talking about only one month here. No Fool can make a meaningful assessment based on a single month's information. That's why I think it's more important to pay attention to what the company is saying about its quarterly results.
Gymboree said it expects first-quarter comps in the low single digits, which I doubt will impress many. It expects earnings to increase from the $0.53 per share it earned in the first quarter of 2006 to a range of $0.60 to $0.63 per share for this year's first quarter. What's so bad about growth of 13% to 19%? Well, nothing, except that those results would lag the 21%, or $0.64 per share, analysts want to see.
Gymboree is facing similar woes (sales exceed expectations, but guidance disappoints) as its main competitor, Children's Place (NASDAQ:PLCE). But also like Children's Place, Gymboree is a company with strong management and a never-ending supply of tykes who will abuse its products and come back for more.
Despite dropping a bit from its 52-week high, Gymboree's stock price is still up nearly 50% from the past year's low. I'm not sure I'd jump on this one yet, but if it stumbles any further, it may be wise to hop on board.
For more on what's happening in the world of kiddie retail, check out:
Small caps. Large caps. Fool CAPS! The Motley Fool's investor-intelligence community rates thousands of stocks to help you improve your own stock selections. Join today for a fun new way to research stocks.
Fool contributor Mike Cianciolo welcomes feedback and doesn't own any of the companies in this article.
