Gymboree Refines Site Selection

Gymboree, which operates 647 stores, is updating its real estate strategy, according to Blair Lambert, COO, who told the CIBC conference that the company is "mapping customers back to where they live" in order to develop a better understanding of its core customer base. Armed with this information about customers, which it is gathering on an MSA-by-MSA basis, Lambert said, "We are going to update and identify the optimal size of our market, with the goal to get a clearly defined idea of where our stores should be." The ultimate objective of the real estate strategy is to determine where the company should expand and where it might have too many stores in order to add or close stores as necessary to cover all markets adequately.

Matt McCauley, Gymboree's president, said the company also sees an opportunity to expand its outlet division, which operates 10 stores. "We look for 10 (new outlets) between September of this year and year-end," McCauley said. The 10 new outlets will be among 16 new Gymboree stores that the chain expects to open in the US throughout the year. It expects to close approximately eight locations and to remodel, relocate, or expand a total of 20 stores throughout the rest of the fiscal year.

Another expansion opportunity he mentioned is the company's Janeville stores, a chain geared toward women in their mid-30's, the first of which opened in April of 2004. Gymboree now operates 15 of the Janeville locations and plans to open two additional storesduring the rest of the year. Besides the Gymboree stores, the outlets and the Janeville stores, Gymboree operates the Gymboree Play & Music chain and the Janie and Jack retail shops.

Among the other corporate initiatives the McCauley discussed was reducing product costs. Since costs have been putting pressure on margins, he said, the company has taken a number of steps to reduce its product costs. The effects of those cost-cutting measures should show up soon but will have their greatest impact toward the end of the year, the Gymboree president said.