The Gymboree Corporation (GYMB), the children’s retailer, has a streak of 4 consecutive earnings surprises and has averaged a beat of 6.64%. Will it keep the streak alive when it reports its second quarter results in August?
Company Description
Gymboree is a specialty children’s retailer with stores in the United States, Canada and Puerto Rico. The company operates 901 retail stores including 619 Gymboree stores, 126 Gymboree outlets, 118 Janie and Jack shops and 38 Crazy 8 stores.
It also has several online stores for its three brands.
Gymboree Surprised by 4.23% in the First Quarter
On May 20, Gymboree beat Wall Street estimates for the first quarter of 2009 by 3 cents reporting 74 cents compared to analysts’ estimates of 71 cents. Despite the surprise, it was still under the year ago EPS of 86 cents per share.
Revenue fell 5% to $228 million from $238.9 million in the year ago period. Comparable store sales were down 10% year over year.
The company has been actively reducing product costs and operating expenses which helped the quarterly numbers.
The company doesn’t expect the economic conditions to improve in the near term but is focusing on its core business of acquiring new customers and opening new stores.
Consensus Estimates Jumped
Despite the rough economic environment, covering analysts are optimistic about the second quarter and the rest of the year.
Second quarter consensus estimates rose 9 cents to 16 cents in the last 60 days. 2009 consensus estimates jumped 8.9% in the last 60 days with 1 out of 8 covering analysts raising in just the last week.
Value Fundamentals
Gymboree is a Zacks #1 Rank (strong buy) stock. It has a forward P/E of 11.67 and a price-to-book of 2.77. The company also has an outstanding 5-year return on equity of 23.25%.
