The Children's Place Q2 net sales drop by 6.3 percent

For its second quarter, the Children’s Place, Inc. reported net sales decrease of 6.3 percent to 420.5 million dollars as a result of a comparable retail sales decrease of 3.8 percent. Net income for the quarter was 1.5 million dollars or 10 cents per diluted share compared to 7.5 million dollars or 45 cents per diluted share, in the three months ended August 4, 2018. Adjusted net income was 3 million dollars or 19 cents per diluted share compared to 11.7 million dollars or 70 cents per diluted share, in the comparable period last year.

Commenting on the performance, Jane Elfers, the company’s President and Chief Executive Officer said in a statement: “Amidst lingering pressure from the Q1 Gymboree liquidation, we delivered a 3.8 percent comp decrease in Q2 versus a 13.2 percent comp increase LY. Sales for the quarter met our expectations, however traffic remained weaker than anticipated which led to a late quarter increase in promotional activity across the sector. Although we exited the quarter with seasonal carryover inventory down double digits, we believe it is prudent to assume an elevated promotional environment for the back half of 2019.”

H1 net sales drop 5.9 percent

Net sales decreased 5.9 percent to 832.9 million dollars in the six months ended August 3, 2019, while comparable retail sales decreased 4.2 percent. Net income was 6 million dollars or 38 cents per diluted share compared to 39 million dollars or 2.27 dollars per diluted share, in the six months ended August 4, 2019. Adjusted net income was 8.8 million dollars or 55 cents per diluted share, compared to 44.9 million dollars or 2.60 dollars per diluted share, in the comparable period last year.

During the quarter under review, the company opened three stores and closed 13 stores and ended the quarter with 961 stores. Since its fleet optimization initiative was announced in 2013, the company has closed 226 stores. The company’s international franchise partners opened 18 new points of distribution and the company ended the quarter with 225 international points of distribution open and operated by its eight franchise partners in 19 countries.

The Children’s Place reveals Q3 and full year outlook

For fiscal 2019, the company updated outlook includes net sales in the range of 1.910 billion dollars to 1.925 billion dollars, comparable retail sales approximately flat to 2018, adjusted operating margin in the range of 6.1 percent to 6.4 percent, adjusted net income per diluted share in the range of 5.40 dollars to 5.75 dollars, including an adverse impact of approximately 8 cents per share from the incremental tariffs scheduled to go into effect on September 1st and December 15th.

For the third quarter of 2019, the company expects net sales in the range of 530 million dollars to 535 million dollars, a comparable retail sales increase in the range of 3 percent to 4 percent, adjusted operating margin in the range of 11.5 percent to 12 percent, adjusted net income per diluted share in the range of 2.90 dollars to 3.05 dollars.

The company’s board declared a quarterly cash dividend of 56 cents per share to be paid October 4, 2019 to shareholders of record at the close of business on September 23, 2019.

Picture:Facebook/The Children's Place

 

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