Burlingame, CA, January 4, 2001. The Gymboree Corporation (Nasdaq: GYMB) today announced it has agreed in principle to sell its Zutopia store chain to The Wet Seal, Inc. (Nasdaq: WTSLA).
"As we focus on building shareholder value and expanding our core Gymboree brand, we determined that Zutopia would be best served under new stewardship," said Stuart Moldaw, Gymboree’s Chairman and Chief Executive Officer. "We believe the concept makes sense in the marketplace, and that Wet Seal’s expertise in the women’s and girls’ markets aligns exactly with the Zutopia concept."
Mr. Moldaw added, "Gymboree’s future growth will leverage our expertise in child-related businesses."
Closing the transaction is subject to the execution of a definitive agreement and certain conditions being met, including obtaining landlord agreement to transfer the existing store leases to Wet Seal. The sale is expected to close on April 7, 2001.
During the fourth quarter, Gymboree expects to take a before-tax charge of approximately $6.5 million, reflecting the loss on the sale of the Zutopia assets and accrual for Zutopia operating losses which are anticipated prior to the sale date. Of this amount, approximately $4 million is non-cash.
The Gymboree Corporation designs, manufactures and retails unique, high-quality apparel and accessories for children. As of December 30, 2000, Gymboree operated 601 stores, including 549 stores in the United States, 20 stores in Canada and 32 in Europe, as well as an online store at www.gymboree.com. The company also offers directed parent-child developmental play programs at more than 430 franchised and company-operated centers in the United States and 15 other countries.
The foregoing November and year-to-date sales figures are unaudited and subject to quarter-end and year-end adjustment and could differ materially from those indicated. The foregoing paragraphs contain forward-looking statements relating to Gymboree’s 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 and marketing activity, success in meeting our delivery targets, the level of our promotional activity, our ability to maintain appropriate inventory aging, general economic conditions, 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.