Gymboree reports tough third quarter

A rough summer season, and an adjusted fiscal year end, took a toll on Gymboree’s third quarter earnings.



The retailer’s net sales for the three months ended July 30, 2016, were $250.3 million, a decrease of 4% compared to $261.8 million for the three months ended August 1, 2015.



Gymboree’s comparable sales, including online sales, decreased 2% for the quarter compared to the three months in 2015. Net loss from continuing operations, net of tax, for the three months was $20.0 million, compared to a net loss of $29.4 million last year. This year’s loss included a gain on extinguishment of debt of $18.0 million.



Gross profit was $86.0 million, or 34.4% of net sales, compared to $91.5 million, or 34.9% of net sales for the same period in 2015. The reduction in gross profit quarter-over-quarter was driven by lower retail and franchise sales resulting from weak traffic trends, a company statement reported.



When looking at the company’s six-month transition period, which encompasses Gymboree changing its fiscal year end from the Saturday closest to the end of January to the Saturday closest to the end of July, net sales for the period ended July 30, 2016, were $523.2 million, a 1% decrease compared to $529.2 million of net sales for the six months ended August 1, 2015. Comparable sales, including online sales, for the six-month transition period increased 1% compared to same-store sales for the same period in 2015.



"We started the year off strong, particularly in our Gymboree and Janie and Jack brands," said Gymboree’s CEO Mark Breitbard.



"However, the second quarter proved to be difficult, particularly the end of June and July, and our results for the three-month period ended July 30, 2016 were disappointing,” he said. “While these trends have continued throughout our most recent quarter, we believe we have the right strategies in place to build on the strong holiday performance we delivered last year."