Gymboree Cuts Forecast as After-Christmas Sales Decline

Gymboree Corp. on Tuesday cut its profit forecast for the fourth quarter as sales for the retailer of children’s clothing were less than expected in the 10 days after Christmas.

The stock dropped 12% on the news. It had fallen as much as 18% earlier in the day.

Profit in the fourth quarter ending in February will be 33 cents to 36 cents a share, below an earlier forecast of 38 cents to 40 cents, the firm said.

Sales at stores open at least a year declined 6% in the five weeks ended Jan. 4. In the year-ago period, same-store sales rose 8%, the company said. Net sales fell 4% to $64.5 million.

Gymboree, which operates 584 stores, said it postponed an incentive program that offers discounts on purchases to repeat customers after labor strikes at West Coast ports delayed shipments of clothing for the spring season.

The 20% discount that Gymboree offered in its place “didn’t drive enough excitement, especially for very loyal customers that were waiting” for the incentive program, Merrill Lynch analyst Marni Shapiro said in a note to investors. Shapiro has a “buy” rating on Gymboree shares.

Shares of Burlingame, Calif.-based Gymboree fell $1.98 to $13.92 on Nasdaq. The stock had gained 38% in the last year.

Bloomberg News and Reuters were used in compiling this report.