SAN FRANCISCO, Nov. 19 /PRNewswire-FirstCall/ -- The Gymboree Corporation (Nasdaq: GYMB) today reported earnings for the third fiscal quarter ended November 1, 2008, of $30.9 million or $1.06 per diluted share. This compares to earnings of $26.9 million or $0.91 per diluted share for the same period of the prior year.

Net sales from retail operations for the fiscal quarter ended November 1, 2008, totaled $261.3 million, a 6% increase over the $247.6 million in net sales from retail operations for the third fiscal quarter of the prior year. As previously reported, comparable store sales for the third fiscal quarter decreased 2% over the same period last year. Total net sales for the third fiscal quarter were $264.1 million, compared to total net sales of $250.7 million for the same fiscal quarter last year.

"We are extremely pleased to report a 16% increase in earnings per share in the face of a difficult retail environment," said Matthew McCauley, Chairman and Chief Executive Officer. "And while we are proud of this accomplishment, we anticipate the upcoming holiday season and following year to be more challenging given an expected pullback in consumer spending."

Business Outlook

For the fourth fiscal quarter, the Company expects comparable store sales to decrease in the range of mid-single digits over the same period of the prior year. The Company expects earnings for the fourth fiscal quarter to be in the range of $0.92 to $1.00 per diluted share. For the full fiscal year 2008, the Company expects net income to be in the range of $3.12 to $3.20 per diluted share.

Management Presentations

The live broadcast of the discussion of third quarter 2008 financial results will be available to interested parties at 1:30 p.m. PT (4:30 p.m. ET) on Wednesday, November 19, 2008. To listen to the live broadcast over the internet, please log on to http://www.gymboree.com, click on "Our Company" at the bottom of the page, go to "Investor and Media Relations" and then "Conference Calls, Webcasts & Presentations." A replay of the call will be available two hours after the broadcast through midnight ET, Wednesday, November 26, 2008, at 800-642-1687, Passcode 32949127.

Gymboree reports same store sales results on a quarterly basis and provides a business update at the end of each month. The next monthly business updates will be available on Thursday, December 4, 2008, January 8, 2009, and February 5, 2009, respectively. Please listen to our monthly business update by calling the Company's Investor Relations Hotline at 415-278-7933. Each monthly recording will be available through Wednesday of the following week after initial release.

About The Gymboree Corporation

The Gymboree Corporation's specialty retail brands offer unique, high-quality products delivered with personalized customer service. As of November 1, 2008, the Company operated a total of 873 retail stores: 614 Gymboree(R) stores (585 in the United States and 29 in Canada), 112 Gymboree Outlet stores, 110 Janie and Jack(R) shops and 37 Crazy 8(R) stores in the United States. The Company also operates online stores at http://www.gymboree.com, http://www.janieandjack.com, and http://www.crazy8.com. The Company also offers directed parent-child developmental play programs at 597 franchised and Company-operated centers in the United States and 30 other countries.

Forward-Looking Statements

The foregoing financial information for the third fiscal quarter ended November 1, 2008, is un-audited and subject to quarter-end and year-end adjustment, and could differ materially from the financial information indicated. The foregoing paragraphs contain forward-looking statements relating to anticipated sales growth and future financial performance. These are forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results could differ materially as a result of a number of factors, including customer reactions to new merchandise, service levels and new concepts, success in meeting our delivery targets, the level of our promotional activity, our gross margin achievement, our ability to appropriately manage inventory, general economic conditions, effects of future embargos from countries used to source product, and competitive market conditions. Other factors that may cause actual results to differ materially include those set forth in the reports that we file from time to time with the Securities and Exchange Commission, including our annual report on Form 10-K for the year-ended February 2, 2008. These forward-looking statements reflect The Gymboree Corporation's expectations as of November 19, 2008. The Gymboree Corporation undertakes no obligation to update the information provided herein.

Gymboree, Janie and Jack and Crazy 8 are registered trademarks of The Gymboree Corporation.

                           THE GYMBOREE CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
             (In thousands, except per share and operating data)
                                 (Unaudited)

                              13 Weeks    13 Weeks    39 Weeks    39 Weeks
                                Ended       Ended       Ended       Ended
                              November 1, November 3, November 1, November 3,
                                2008        2007        2008        2007

    Net sales:
      Retail                   $261,296    $247,569    $703,031    $634,145
      Play & Music                2,809       3,163       8,926       8,242
       Total net sales          264,105     250,732     711,957     642,387
    Cost of goods sold,
     including buying
     and occupancy
     expenses                  (129,520)   (126,020)   (360,012)   (333,661)
       Gross profit             134,585     124,712     351,945     308,726
    Selling, general and
     administrative expenses    (84,377)    (80,314)   (247,269)   (222,244)
      Operating income           50,208      44,398     104,676      86,482
    Other income                    152         691         849       2,446
      Income before income
       taxes                     50,360      45,089     105,525      88,928
    Income tax expense          (19,413)    (18,194)    (41,529)    (35,376)
      Net income                $30,947     $26,895     $63,996     $53,552

    Net income per share:
      Basic                       $1.10       $0.94       $2.30       $1.83
      Diluted                     $1.06       $0.91       $2.20       $1.76

    Weighted average shares
     outstanding:
      Basic                      28,051      28,565      27,861      29,294
      Diluted                    29,099      29,621      29,073      30,438

    Operating Data:
    Stores Open at the
     Beginning
     of the Period                  835         739         786         698
    New Stores                       39          34          90          79
    Closed Stores                    (1)          -          (3)         (4)
    Stores Open at the End
     of the Period                  873         773         873         773

    Gross Store Square
     Footage                  1,706,000   1,489,000   1,706,000   1,489,000
    Merchandise Inventories
     per Square Foot                $83         $88         $83         $88

    Supplemental Financial
     Information
       Depreciation and
        amortization             $8,761      $7,982     $25,782     $22,686
       Interest income, net        $362        $351        $948      $2,093
       Stock-based
        compensation             $4,939      $3,167     $14,363      $8,805



                    CONDENSED CONSOLIDATED BALANCE SHEETS
                                (In thousands)
                                 (Unaudited)

                                        November 1,  February 2, November 3,
                                            2008        2008        2007

    Current Assets
      Cash and cash equivalents           $93,153     $33,313     $24,096
      Accounts receivable                  15,793      12,640      19,403
      Merchandise inventories             142,042     119,523     130,520
      Prepaid income taxes                    804           -           -
      Prepaid expenses and deferred
       taxes                               24,126      23,748      21,993
         Total current assets             275,918     189,224     196,012

    Property and Equipment, net           206,630     185,357     186,680
    Deferred Taxes and Other Assets        18,078      22,603      14,750


      Total Assets                       $500,626    $397,184    $397,442

    Current Liabilities
      Accounts payable                    $59,941     $52,915     $62,974
      Accrued liabilities                  70,266      70,282      75,078
      Income tax payable                        -       7,989       1,641
         Total current liabilities        130,207     131,186     139,693

    Long Term Liabilities
      Deferred rent and other
       liabilities                         70,272      57,703      61,242

    Stockholders' Equity                  300,147     208,295     196,507

      Total Liabilities and
       Stockholders' Equity              $500,626    $397,184    $397,442

SOURCE The Gymboree Corporation