May 23, 2001

Gymboree Reports First-Quarter Results

Burlingame, CA, May 23, 2001 – The Gymboree Corporation (Nasdaq: GYMB) today reported a net loss of $369,000 or $(0.01) per share for the first fiscal quarter ended May 5, 2001. In 2000, Gymboree reported a net loss of $13.8 million or $(0.56) per share for the first quarter.

As previously reported, net sales for the first fiscal quarter were $124.0 million, compared with sales of $100.6 million for the same period last year, a 23% increase. Comparable store sales for the thirteen weeks ended May 5, 2001, increased 25% over the comparable period last year.

"Our turnaround is on track, and we are pleased with the recovery in revenues and gross margins this quarter. We believe we can sustain these improving trends, and layer in operating efficiencies to improve profitability," said Lisa Harper, Gymboree’s Vice-Chair and Chief Executive Officer. "The lion’s share of the progress to date can be attributed to improvements in merchandise assortment and to appropriate inventory levels. We are continually evaluating every aspect of our operations and working to improve productivity from our store base and our inventory."

Ms. Harper added, "The results this quarter include about $(0.02) per share in related to our discontinued Zutopia operation. Our ongoing Gymboree operations produced positive results."

Business Outlook
Today, Gymboree also provided guidance to investors regarding the company’s expectations of future results. The following statements are based on current expectations. These statements are forward-looking, and actual results may differ materially.

For May, comparable store sales on a comparable calendar basis are expected to increase 34%-38% over May 2000. The company anticipates comparable store sales in the second quarter to be up 18%-21% over the second quarter of 2000.

Gymboree expects second quarter results of a net loss in a range of $(0.18)-$(0.21) per share. Management expects full-year 2001 results between $0.20 and $0.24 in earnings per fully diluted share compared with a loss of $(1.38) per share last year.

"The earnings expectation this year reflects investments in systems and people that we believe will allow us to achieve our strategic operating goals and continuing improvement in our profit margins," said Ms. Harper.

Management Presentation
Interested parties are invited to listen to a discussion of the first-quarter results on a live broadcast over the Internet today beginning at 1:45 pm (PDT). To listen, please log on to, and click on "Our Company," then "Investor Relations," and then follow the link. (Minimum requirements for the broadcast are a sound card and RealPlayer software, which is downloadable free from the web site.) A replay of the webcast will be available at the same web site shortly after the call and will remain available through midnight PST on May 30, 2001. A telephonic replay of the call is available by calling (703) 925-2533, and entering the passcode 5241057. This replay will also be available through midnight PST on May 30, 2001.

The Gymboree Corporation designs, manufactures and retails unique, high-quality apparel and accessories for children. As of May 5, 2001, Gymboree operated 576 stores, including 524 stores in the United States, 21 stores in Canada and 31 in Europe, as well as an online store at The company also offers directed parent-child developmental play programs at more than 440 franchised and company-operated centers in the United States and 21 other countries.

The foregoing sales figures for February, the fourth fiscal quarter and fiscal year 2000 are unaudited and subject to adjustment, and could differ materially from those indicated. The foregoing paragraphs contain forward-looking statements within the meaning of the Federal Securities laws including statements about future sales expectations and financial performance. Actual results could differ materially as a result of a number of factors, including the successful execution of our merchandising plans, consumer acceptance of our products, our success in achieving anticipated sales levels, general economic conditions, competitive market conditions, and our ability to control our costs and expenses. Other factors that may cause actual results to differ materially include those set forth in the reports that the company files from time to time with the Securities and Exchange Commission.


(In thousands, except per share and store data)

14 Weeks Ended
Feb.3, Jan.29, %
2001 2000 Change
---------- ---------- --------
Net sales $153,328 $104,208 47%
Cost of goods sold, buying
    & occupancy expenses (98,656) (68,395) 44%
       Gross profit 54,672 35,813 53%
S,G & A (50,079) (44,140) 13%
Play and music income, net 629 566 11%
     Operating loss (1,325) (9,303) -86%
Foreign Exchange gains(losses) (79) (5) -
Net interest income (expense) (655) 488 -
     Loss before income taxes (1,901) (8,820) -78%
Income tax benefit 732 3,522 -79%
     Net loss ($1,169) ($5,298) -78%
---------- --------- --------
Income(loss) per share excluding special charges
    Basic $0.10 ($0.18)
    Diluted $0.10 ($0.18)
Loss per share
    Basic ($0.04) ($0.22)
    Diluted ($0.04) ($0.22)
Weighted average shares outstanding
    Basic 27,831 24,364
    Diluted 27,831 24,364
Number of stores at end of period 599 605
53 Weeks Ended
Feb.3, Jan 29, %
2001 2000 Change
---------- ---------- --------
Net sales $448,607 $437,076 3%
Cost of goods sold, buying
    & occupancy expenses (323,910) (281,273) 15%
       Gross profit 124,697 155,803 -20%
S,G & A (178,854) (168,632) 6%
Play and music income, net 2,163 2,324 -7%
     Operating loss (58,541) (18,057) 224%
Foreign Exchange gains(losses) 131 (55) -
Net interest income (expense) (1,538) 877 -
     Loss before income taxes (59,948) (17,235) 248%
Income tax benefit 23,080 6,635 248%
     Net loss ($36,868) ($10,600) 248%
---------- --------- --------
Loss per share excluding special charges
    Basic ($1.23) ($0.24)
    Diluted ($1.23) ($0.24)
Loss per share
    Basic ($1.38) ($0.44)
    Diluted ($1.38) ($0.44)
Weighted average shares outstanding
    Basic 26,686 24,315
    Diluted 26,686 24,315
Number of stores at end of period 599 605

(In thousands)

Feb. 3, Jan. 29,
2001 2000
---------- ----------
Current Assets
     Cash and investments $5,363 $40,274
     Accounts receivable 8,391 4,920
     Merchandise inventories 77,633 47,103
     Prepaids and other 5,259 7,382
          Total current assests 96,646 99,679
Property and Equipment, net 117,852 137,445
Lease Rights, Deferred Taxes 28,387 3,794
    and Other Assets
Total Assets $242,885 $240,918
---------- ----------
Current Liabilities
     Borrowings on revolving line of credit $16,225 -
     current portion of long term debt 630 583
     Accounts payable 27,387 18,596
     Accrued liabilities 22,500 23,275
          Total current liabilities 66,742 42,454
Long Term Liabilities
     Long term debt, net of current     9447 10,877
     Deferred rent and other liabilities 26,264 29,125
     Notes payable 7,000 -
Stockholders' Equity 133,432 158,462
      Total Liabilities and
          Stockholders' Equity $242,885 $240,918