If you had decided to forgo new clothes for the kids last Christmas, and purchased Gymboree
Considering Gymboree’s first-quarter results, however, it doesn’t look like many parents followed this strategy. Moms hit the stores en masse, boosting revenue 15.7% for the quarter, triggered by a 4% increase in same-store sales and a 12.6% increase in new stores compared to last year. Even with the ongoing potential inflation risk, Gymboree projects “low-single-digit” same-store sales for the second quarter.
Gymboree has certainly been outpacing the competition lately. On the surface, it doesn’t make sense for a retailer touting a “Palm Springs” line of girls’ clothes -- with outfits going for $60 and up -- to do better than midrange competitors such as The Children’s Place
Interestingly, though, we’ve seen a similar phenomenon in teen retail lately. High-end retailers such as Buckle
Gymboree says it plans to continue its store expansion and cost-control efforts. It has managed to keep cost of goods sold in line with sales gains (cost of goods sold trailed the top-line growth a bit, increasing 12.5%), which is impressive, given how rapidly commodity prices are growing. The SG&A cost increase of 16.5% slightly outpaced sales, but it isn’t horrible, especially considering the number of new stores opening, and how expensive everything is these days.
Inventory is the only black mark for Gymboree at this point, with a 12.4% year-over-year jump (although the company has reduced its inventory by 20% in the last three months). Gymboree has increased its cash by more than 75% since February, signaling that it’s not blowing through money to open new stores (another good thing).
With a P/E of 14.6, a solid financial base, and strong sales projected to continue, the Gymboree stampede looks pretty strong at this point. With that said, though, if you want to stay on your kids' good side, I still don’t recommend giving them Gymboree stock shares instead of holiday gifts .
For related Foolishness: