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Non-Tech : Gymboree "GYMB"
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To: Stephen McCullough who wrote (71)11/20/1997 8:50:00 AM
From: JAG  Read Replies (1) of 189
 
Stephen

I was just getting ready to post the release and you bet me to it.

I think the Company must be listening to my prior post which I will restate below. I hope the security analysts will wake up and give this Company the upgrade that it deserves, i.e. Strong Buy.

Gymboree is one of the most profitable retailers in the United States.
Payback on the intial store opening cost, including fixtures and
inventory is something like 9 months. Sales per square foot lead the
industry. I believe the brand image can be extended to niche overseas
markets, and top line growth will continue at 20%. Compare the valuation
on this stock to Gap, Abercrombe, and others. The Company deserves a
multiple at least equal to 20x earnings, i.e. the growth rate. Buy a
certificate of deposit at 5% and you get a PE ratio of 20x without any
earnings growth. Valued at 20x this years earnings ending 1/98, then you
have a value of $30. Assuming growth of 20% for FYE 1/99 and a 20 PE,
the value is $36.
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