The Children's Place Reports First Quarter 2024 Results
First Quarter 2024 Results
Net sales decreased
Gross profit decreased
Selling, general, and administrative expenses, which included several unusual charges associated with the recent change of control of the Company, due to the investment in the Company by
Operating loss was
Net interest expense was
As previously announced, the Company has established a valuation allowance against the Company’s net deferred tax assets and, as such, continues to adjust the allowance based upon the ongoing operating results. The provision for income taxes which is reflected net of these adjustments was
Net loss, which reflected several unusual charges associated with the recent change of control of the Company, due to the investment in the Company by Mithaq, and the Company’s new financing initiatives, was
Store Update
The Company closed 5 stores in the three months ended
Balance Sheet and Cash Flow
As of
Inventories were
As previously announced, the Company recently secured a total of
Non-GAAP Reconciliation
The Company’s results are reported in this press release on a GAAP and as adjusted, non-GAAP basis. Adjusted net income (loss), adjusted net income (loss) per diluted share, adjusted gross profit, adjusted selling, general, and administrative expenses and adjusted operating income (loss) are non-GAAP measures, and are not intended to replace GAAP financial information, and may be different from non-GAAP measures reported by other companies. The Company believes the income and expense items excluded as non-GAAP adjustments are not reflective of the performance of its core business, and that providing this supplemental disclosure to investors will facilitate comparisons of the past and present performance of its core business.
Please refer to the “Reconciliation of Non-GAAP Financial Information to GAAP” later in this press release, which sets forth the non-GAAP operating adjustments for the 13-week periods ended
About The Children’s Place
The Children’s Place is an omni-channel children’s specialty portfolio of brands with an industry-leading digital-first model. Its global retail and wholesale network includes two digital storefronts, more than 500 stores in
Forward-Looking Statements
This press release contains or may contain forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to statements relating to the Company’s strategic initiatives and results of operations, including adjusted net income (loss) per diluted share. Forward-looking statements typically are identified by use of terms such as “may,” “will,” “should,” “plan,” “project,” “expect,” “anticipate,” “estimate” and similar words, although some forward-looking statements are expressed differently. These forward-looking statements are based upon the Company’s current expectations and assumptions and are subject to various risks and uncertainties that could cause actual results and performance to differ materially. Some of these risks and uncertainties are described in the Company’s filings with the
Contact: Investor Relations (201) 558-2400 ext. 14500
THE CHILDREN’S PLACE, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) (Unaudited) |
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First Quarter Ended | |||||||
2024 |
2023 |
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Net sales | $ | 267,878 | $ | 321,640 | |||
Cost of sales | 175,137 | 225,178 | |||||
Gross profit | 92,741 | 96,462 | |||||
Selling, general and administrative expenses | 109,094 | 112,931 | |||||
Depreciation and amortization | 11,635 | 11,848 | |||||
Asset impairment charges | — | 1,750 | |||||
Operating loss | (27,988 | ) | (30,067 | ) | |||
Interest expense, net | (7,721 | ) | (5,903 | ) | |||
Loss before provision (benefit) for income taxes | (35,709 | ) | (35,970 | ) | |||
Provision (benefit) for income taxes | 2,086 | (7,136 | ) | ||||
Net loss | $ | (37,795 | ) | $ | (28,834 | ) | |
Loss per common share | |||||||
Basic | $ | (2.99 | ) | $ | (2.33 | ) | |
Diluted | $ | (2.99 | ) | $ | (2.33 | ) | |
Weighted average common shares outstanding | |||||||
Basic | 12,643 | 12,374 | |||||
Diluted | 12,643 | 12,374 |
THE CHILDREN’S PLACE, INC. RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION TO GAAP (In thousands, except per share amounts) (Unaudited) |
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First Quarter Ended | |||||||
2024 |
2023 |
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Net loss | $ | (37,795 | ) | $ | (28,834 | ) | |
Non-GAAP adjustments: | |||||||
Change of control | 14,589 | — | |||||
Broken financing and restructuring fees | 6,661 | — | |||||
Accelerated depreciation | 1,557 | — | |||||
781 | — | ||||||
Credit agreement | 750 | — | |||||
Fleet optimization | 585 | 1,087 | |||||
Restructuring costs | 264 | 269 | |||||
Reversal of legal settlement accrual | (2,279 | ) | — | ||||
Asset impairment charges | — | 1,750 | |||||
Contract termination costs | — | 2,415 | |||||
Aggregate impact of non-GAAP adjustments | 22,908 | 5,521 | |||||
Income tax effect (1) | — | (1,436 | ) | ||||
Net impact of non-GAAP adjustments | 22,908 | 4,085 | |||||
Adjusted net loss | $ | (14,887 | ) | $ | (24,749 | ) | |
GAAP net loss per common share | $ | (2.99 | ) | $ | (2.33 | ) | |
Adjusted net loss per common share | $ | (1.18 | ) | $ | (2.00 | ) |
(1) The tax effects of the non-GAAP items are calculated based on the statutory rate of the jurisdiction in which the discrete item resides, adjusted for the impact of any valuation allowance.
First Quarter Ended | |||||||
2024 |
2023 |
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Operating loss | $ | (27,988 | ) | $ | (30,067 | ) | |
Non-GAAP adjustments: | |||||||
Change of control | 14,589 | — | |||||
Broken financing and restructuring fees | 6,661 | — | |||||
Accelerated depreciation | 1,557 | — | |||||
781 | — | ||||||
Credit agreement | 750 | — | |||||
Fleet optimization | 585 | 1,087 | |||||
Restructuring costs | 264 | 269 | |||||
Reversal of legal settlement accrual | (2,279 | ) | — | ||||
Asset impairment charges | — | 1,750 | |||||
Contract termination costs | — | 2,415 | |||||
Aggregate impact of non-GAAP adjustments | 22,908 | 5,521 | |||||
Adjusted operating loss | $ | (5,080 | ) | $ | (24,546 | ) |
THE CHILDREN’S PLACE, INC. RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION TO GAAP (In thousands, except per share amounts) (Unaudited) |
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First Quarter Ended | |||||
2024 |
2023 |
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Gross profit | $ | 92,741 | $ | 96,462 | |
Non-GAAP adjustments: | |||||
Change of control | 905 | — | |||
Aggregate impact of non-GAAP adjustments | 905 | — | |||
Adjusted gross profit | $ | 93,646 | $ | 96,462 |
First Quarter Ended | |||||||
2024 |
2023 |
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Selling, general and administrative expenses | $ | 109,094 | $ | 112,931 | |||
Non-GAAP adjustments: | |||||||
Reversal of legal settlement accrual | 2,279 | — | |||||
Restructuring costs | (264 | ) | (269 | ) | |||
Fleet optimization | (585 | ) | (1,087 | ) | |||
Credit agreement | (750 | ) | — | ||||
(781 | ) | — | |||||
Broken financing and restructuring fees | (6,661 | ) | — | ||||
Change of control | (13,684 | ) | — | ||||
Contract termination costs | — | (2,415 | ) | ||||
Aggregate impact of non-GAAP adjustments | (20,446 | ) | (3,771 | ) | |||
Adjusted selling, general and administrative expenses | $ | 88,648 | $ | 109,160 |
THE CHILDREN’S PLACE, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) |
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2024 |
2024* |
2023 |
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Assets: | ||||||||||
Cash and cash equivalents | $ | 12,960 | $ | 13,639 | $ | 18,242 | ||||
Accounts receivable | 28,286 | 33,219 | 25,659 | |||||||
Inventories | 425,156 | 362,099 | 504,194 | |||||||
Prepaid expenses and other current assets | 43,210 | 43,169 | 58,504 | |||||||
Total current assets | 509,612 | 452,126 | 606,599 | |||||||
Property and equipment, net | 116,779 | 124,750 | 146,315 | |||||||
Right-of-use assets | 173,987 | 175,351 | 144,781 | |||||||
Tradenames, net | 41,000 | 41,123 | 70,691 | |||||||
Other assets, net | 6,957 | 6,958 | 46,484 | |||||||
Total assets | $ | 848,335 | $ | 800,308 | $ | 1,014,870 | ||||
Liabilities and Stockholders' (Deficit) Equity: | ||||||||||
Revolving loan | $ | 226,100 | $ | 226,715 | $ | 300,835 | ||||
Accounts payable | 193,100 | 225,549 | 223,244 | |||||||
Current portion of operating lease liabilities | 70,668 | 69,235 | 74,741 | |||||||
Accrued expenses and other current liabilities | 83,348 | 94,905 | 120,467 | |||||||
Total current liabilities | 573,216 | 616,404 | 719,287 | |||||||
Long-term debt | 166,635 | 49,818 | 49,768 | |||||||
Long-term portion of operating lease liabilities | 118,363 | 118,073 | 87,905 | |||||||
Other long-term liabilities | 24,971 | 25,032 | 32,089 | |||||||
Total liabilities | 883,185 | 809,327 | 889,049 | |||||||
Stockholders' (deficit) equity | (34,850 | ) | (9,019 | ) | 125,821 | |||||
Total liabilities and stockholders' (deficit) equity | $ | 848,335 | $ | 800,308 | $ | 1,014,870 |
* Derived from the audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended
THE CHILDREN’S PLACE, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) |
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First Quarter Ended | |||||||
2024 |
2023 |
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Net loss | $ | (37,795 | ) | $ | (28,834 | ) | |
Non-cash adjustments | 43,818 | 35,383 | |||||
Working capital | (116,779 | ) | (1,415 | ) | |||
Net cash (used in) provided by operating activities | (110,756 | ) | 5,134 | ||||
Net cash used in investing activities | (4,694 | ) | (11,037 | ) | |||
Net cash provided by financing activities | 114,889 | 7,757 | |||||
Effect of exchange rate changes on cash and cash equivalents | (118 | ) | (301 | ) | |||
Net (decrease) increase in cash and cash equivalents | (679 | ) | 1,553 | ||||
Cash and cash equivalents, beginning of period | 13,639 | 16,689 | |||||
Cash and cash equivalents, end of period | $ | 12,960 | $ | 18,242 |
Source: The Children's Place, Inc.