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WIKI ANALYSIS
Gymboree Corporation is comprised of a family of specialty retail brands. The company currently operates 790 retail stores [1] targeting the children's specialty apparel industry with their Gymboree, Gymboree Outlet, Janie and Jack, and Crazy 8 stores, as well as online sales of those brands (excluding Gymboree Outlet). Gymboree Corporation also has the Gymboree Play & Music brand, a concept focusing on developmental play, music and arts classes for children (infant to five years) and their parents; there are approximately 559 centers in the United States and 31 other countries [2].
History
Gymboree Corporation began with the Gymboree Play & Music concept in 1976. They entered the apparel business in 1986, with the goals of producing unique, high-quality newborn and children's apparel. The company had its Initial Public Offering in March 1993. Gymboree has developed a number of new retail concepts since 2002, including Janie and Jack (2002), Gymboree Outlet (2005), Crazy 8 (2007), and Janeville (2004, was closed down in 2006).
Financials
Net Sales
Net sales for FY 2007 increased to $920.8M from $791.6M in 2006. Retail sales increased from $781.2M in 2006 to $909.4M in 2007, an increase of 16%. Comparable store sales increased 7%, driven by greater strength in sales from Gymboree's boys clothing lines, and the Janie and Jack and Gymboree Outlet stores. Non-comparable store sales were driven by increases in numbers of stores as well as increases of square footage. Play & Music sales increased from $10.5M in FY 2006 to $11.4M in 2007.
Gross Profit
Gross profit in FY 2007 was $442.8M, up from $384.5M in FY 2006. Gross profit percentage of net sales decreased from 48.6% in FY 2006 to 48.1% in FY 2007.
Gymboree vs. NASDAQ, Peer Group
Total return on $100 invested in 2/2003 in Gymboree, NASDAQ Composite, and Peer Group retailers is shown for the 2/1/03 - 2/2/08 period. As illustrated, $100 invested in GYMB on 2/1/03 would have been grown to $272.16 by 2/2/08; for NASDAQ, to $187.21, and for Gymboree's peer group, $184.88.
Companies in the peer group, made up of 56 companies in total, include children's and adult retailers. Some of these retailers include Abercrombie & Fitch Company, Carter's, Children's Place Retail Stores, Foot Locker, Nordstrom, and Gap.
Business Units
Gymboree's sales come from two reportable segments: Retail, which includes Gymboree brand clothing stores as well as others, and Music and Play.
Retail Apparel Shops
Gymboree's net sales from retail apparel shops were $909.4M in 2007. Approximately 30% of Gymboree's net sales from retail operations occur during the fourth quarter of each year, primarily during the holiday season (November - December). All stores, with the exception of Gymboree Outlet, have an online sales presence as well as traditional B&M shops.
Brands include:
- Gymboree Stores (and online store)
- Gymboree Outlet
- Janie and Jack (and online store)
- Crazy 8 (and online store)
Gymboree had previously ventured into adult women's retail with the Janeville brand in 2004, but closed the unsuccessful concept in 2006. The company plans to open ~100 new stores during 2008, as well as relocate or expand 20 Gymboree and Janie and Jack stores.
Gymboree
Gymboree's original clothing retail shop was launched in 1986. As of February 2, 2008, the company operated 565 Gymboree stores in the US, 30 in Canada, and 2 in Puerto Rico. Gymboree's clothing lines aim for high-quality manufacturing, with the inclusion of bright coloring and patterns which appeal to the age range they serve, newborn - 12 years. Clothing lines are brought out often, and are designed to be mixed and matched within the line, offering the opportunity to purchase clothing pieces which can be used in many different outfits. The Gymboree stores also use promotions such as "Friends and Family" on certain days of the year, and Gymbucks, which is a loyalty program where, when clothing is purchased during certain times, the customer is given a coupon for a dollar amount off their next purchase (during a redemption period). The company plans to open 20 Gymboree stores in 2008.
Gymboree Outlet
Gymboree outlets offer clothing similar in style and age-ranges as Gymboree stores, but at outlet pricing. The company plans to open 40 Gymboree Outlet shops in 2008; the concept launched in 2005.
Janie and Jack
Janie and Jack shops are differentiated from Gymboree's other retail apparel shops in that the clothing offered is more distinctive, sometimes with a more natural feel, and with even higher-quality manufacturing and materials. The clothing prices in these shops skews higher than those of the Gymboree stores, and is designed for boys and girls, ages newborn through 8. The stores themselves have a vintage feel, with distressed wooden floors, giving the stores a boutique feel. The company plans to open 20 Janie and Jack shops in 2008; the stores began to open in 2002.
Crazy 8
Crazy 8 is Gymboree's newest retail concept, launched in August 2007, with price points approximately 30% lower than those of Gymboree, thereby reaching a broader demographic of customer. However, the retail shop itself still presents in an upscale fashion. The clothing offered is for boys and girls in sizes newborn - 14. Gymboree plans to open 20 Crazy 8 stores in 2008.
Gymboree expects losses in the Crazy 8 division in fiscal 2008[3].
Music and Play
Gymboree Music & Play offers developmental play, music, and arts classes for parents and children to attend together, and are designed for children in the newborn to age 5 range. Launched in 1979, there are currently 541 Music & Play centers worldwide.
The majority of Gymboree Play & Music centers are franchisee-operated; of 559 centers, as of February 2, 2008, 3 were company-owned in California. Of the remaining 556 centers, 48% were located in the United States, and 52% were located in 29 other countries. Net sales in 2007 were $11.4M for Gymboree Play & Music centers.
Competition
The retail brands of Gymboree compete with a number of other established players in the children's apparel industry. Competitive brands on the national level include BabyGap, GapKids, and Old Navy (all divisions of Gap), Children's Place Retail Stores , and discount department store chains such as Target, Wal-Mart Stores, and Kohl's. The Gymboree, Janie and Jack and Crazy 8 brands also compete with local specialty children's stores, mall department stores, and other retail chains. Additionally, non-retail methods of sales, including online and mail-order catalogs, compete with Gymboree's retail divisions for business.
The Play and Music segment faces competition as well, although the players in this industry as nowhere near as well-established as Gymboree's competitors in the retail sector. The children's fitness sector is primarily populated by franchised stores such as The Little Gym, although many franchises are focused on age groups that skew older than those targeted by Gymboree Play and Music. Additionally, other types of competition in this market include city, county, or regional programs offered by Recreations Departments, or through the YMCA; many fitness classes are offered for the parent and child. The current popularity of Yoga has also spawned classes in many studios for the young child and parent to attend together, and as with the other types of competition mentioned, most of this competition is more localized and/or independent rather than being at a national level.
References
- ↑ http://ir.gymboree.com/ReleaseDetail.cfm?ReleaseID=299012
- ↑ Gymboree IR document
- ↑ Gymboree 2007 10-K, Item 1-A, Risk Factors, page 8
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