Children's fashion maven and early childhood development specialist Gymboree (NASDAQ:GYMB) reports second-quarter earnings Wednesday night. Will the numbers bring a warm glow to investors' cheeks, or leave them bellyaching for more cookies? Let's have a look.

What analysts say:

  • Buy, sell, or waffle? Ten analysts follow the kiddie outfitter, with seven buy ratings and three holds on the stock. In our Motley Fool CAPS database, Gymboree has reached a stable three-star rating after some two-star jitters, based on more than 130 user opinions.
  • Revenue. We already have most of this data, because Gymboree is a good little retailer that reports its sales figures every month -- $179.9 million this quarter, 20% higher than last year. What's missing is the contribution from the Play & Music franchises, which normally lands around $2 million or $3 million per quarter. So the company has already beaten the average $179.5 million estimate.
  • Earnings. Management says that we'll see $0.13 to $0.15 per share, and the analysts are clinging to the upper end of that range. It'll be a huge improvement over the $0.02 per share seen last year.

What management says:
CEO Matt McCauley says that his growth plans are working out as expected. He expects the growth initiatives set in motion during the spring to have a sustained effect over the next several quarters, and has high hopes for the test marketing of new Crazy 8 concept.

What management does:
Margins have reached a high and stable plateau under McCauley's capable management, and direct competitors like Children's Place (NASDAQ:PLCE) and Stride Rite (NYSE:SRR) can only dream about a 7.8% net margin. That hasn't put the brakes on sales growth by any means, and taken together, Gymboree is raking in profits by the busload.

Margins

1/06

4/06

7/06

10/06

2/07

5/07

Gross

44.2%

46.5%

47.5%

48.8%

48.6%

48.8%

Operating

9.6%

12.5%

13.9%

15.5%

14.6%

14.9%

Net

5.0%

6.7%

7.0%

7.5%

7.6%

7.8%

Y-O-Y Growth

1/06

4/06

7/06

10/06

2/07

5/07

Revenue

13.3%

13.1%

14.0%

16.1%

18.6%

18.1%

Earnings

77.2%

249.5%

280.7%

240.9%

86.3%

42.4%
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
What makes me all giggly as a Gymboree investor and longtime Play & Music customer is the fact that McCauley has started to cross-promote the retail and child development concepts both ways now. It used to be a one-way street, leading customers from the playpen into stores.

But those shops are such high-profile assets with a presence in nearly every mall you'd care to think of, while Play & Music locations can be downright hard to find sometimes. Excluding the relatively fixed costs of developing new programs for that service, every new Play & Music franchise brings a handful of free money to its corporate parent at little extra cost.

And, as the kids and parents get addicted to the Gymboree concept through massive exposure to those playful programs, they're more likely to bring that loyalty back over to the mall stores. It's a beautiful synergy just waiting to happen, and the actual implementation has only just begun. Watch this space for more happy news.

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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 the happiest clown on Wall Street.