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Gymboree Soars on Report of Buyout Talk

Gymboree jumped in extended trading Thursday following a report that the San Francisco-based children's apparel retailer may be in play.

NEW YORK (

TheStreet

) -- Shares of

Gymboree

(GYMB)

jumped in extended trading Thursday following a report that the San Francisco-based children's apparel retailer may be in play.

According to the

Wall Street Journal

, the company is considering a sale to private equity firms. The article, which cites "people familiar with the matter," says bankers for Gymboree have been soliciting bids from the buyout world, which is sitting on a massive amount of dry powder.

The

WSJ

added that there was no auction process going on at this time, and that Gymboree, which is also known for hosting children's parties, could decide not to sell itself. The stock leapt 21.8% to $50.19 on volume of more than 540,000 in afterhours action. A company spokesperson wasn't immediately available for comment.

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Based on Wednesday's regular session close at $41.54, Gymboree shares were down about 3% so far in 2010. The stock reached a 52-week high of $55.27 on April 7 but has come down 21% since then.

Wall Street is pretty evenly split on the company at the moment. Of the 13 analysts covering the stock, a slim majority are bullish at either strong buy (6) or buy (2) with the remainder sitting at hold. The median 12-month price target for the shares sits at $52.

Gymboree reported its fiscal second-quarter results on August 18, posting a profit of $12.3 million, or 44 cents a share, on net sales of $219.3 million for the three months ended July 31 as same-store sales fell 3%. The performance was slightly ahead of Wall Street's consensus view but essentially flat with its year-ago results.

At that time, it forecast flat to slightly negative comparable sales for the current third quarter, ending in October, with earnings of between $1.25 to $1.30 a share. The company's next expected news event is the release of its September sales results on Oct. 7.

--

Written by Michael Baron in New York.

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