UPDATE 2-Gymboree Q1 profit tops estimates, sees Q2 comp decline

* Q1 EPS $0.74 vs est. of $0.67

* Lower expenses boost results

* Sees mid- to high-single-digit fall in Q2 same-store sales

* Expects Q2 inventories to fall in the mid-single digits (Adds conference call details, analyst comment, stock activity)

By Amitha Rajan

BANGALORE, May 20 (Reuters) - Children's clothing retailer Gymboree Corp (GYMB.O) posted a quarterly profit above analysts' estimates, helped by lower product costs and operating expenses, but forecast a fall in same-store sales in the second quarter.

Gymboree, on a conference call with analysts, said the second quarter is the most discretionary period of the year because it lacks boosters, unlike the other periods which gain from events such as Easter, back-to-school season and Christmas.

Most apparel companies have been hit hard by the economic recession given that consumers tend to buy essentials and hold back on spending on discretionary items.

The company's forecast for same-store sales decline in the second quarter was likely conservative and cost controls could help offset weak sales, Betty Chen of Wedbush Morgan Securities told Reuters.