Despite being almost 40 years old, The Gymboree Corp. is still a retail toddler, stumbling periodically, learning quickly, and growing fast. The company sells clothes and accessories for kids in the US, Puerto Rico, Canada, and Australia at about 625 Gymboree stores that carry colorful, fashionable playsuits and rompers for kids up to 12 years old. It also operates some 140 Janie and Jack (better newborn and toddler apparel) and 165-plus Gymboree Outlet stores and corresponding e-commerce sites. Its youngest chain is value-priced Crazy 8. The company also provides parent-child play programs (designed to enhance child development) for newborns to age five. Founded in 1976, Gymboree is owned by Bain Capital.
San Francisco-based Gymboree has about 1,325 stores in the US and more than 40 shops in Canada. It also has about a half a dozen locations in Australia, as well as stores in China, the Middle East, and South Korea.
The youngest and fastest growing of Gymboree's retail concepts is Crazy 8 (launched in 2007), with some 390 locations throughout the US. Crazy 8 stores offer discounted apparel in sizes ranging from newborn up to size 14. The chain's focus on value-priced apparel was a good fit for the thrifty times of the recent recession. The Gymboree and Janie and Jack retail concepts span the price-range of children's clothing; Janie and Jack sells higher-priced apparel than Gymboree stores, and the Gymboree Outlet shops sell lower-priced clothing.
Gymboree Play & Music operates more than 700 franchised and company-operated centers in the US and some 40 other countries, contributing just 2% of annual sales. The Play & Music business also sells developmental toys, books, and music for young children.
The company sources its apparel from more than 230 independent suppliers located primarily in China, which accounts for about a third of the total, Indonesia, Bangladesh, Vietnam, and Cambodia.
Gymboree's sales fell 2% in fiscal 2014 (ended January) versus the prior year, to $1.24 billion, and the company posted a net loss of $203 million. The retailer blamed the decline, which reversed years of steady growth, on lower same-store sales, partially offset by sales from about 60 new locations. (Retail stores account for 96% of the company's sales.) Indeed, same-store sales fell by 6%. Gymboree Play & Music's sales grew 7% to $25.7 million on increased equipment and product sales. Sales from the company's retail franchises increased 30% year over year.
Gymboree has been unprofitable for three consecutive years on increasing operating costs related to its retail operations.
Gymboree relies on its multi-tiered portfolio of brands -- from value-priced Crazy 8 to upscale Janie and Jack -- to connect with its target customers -- moms. To that end, the retailer plans to add about 25 new stores (net of closings) in fiscal 2015 (ends January), distributed fairly evenly across its brands. The company expects its international franchise partners to open about 15 to 20 locations over the same period.
Gymboree's private-equity parent paid a rich price for the chain's growth and strong sales: $1.8 billion ($64.50 per share), about 20% above its market value in late 2010.