UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of
report (Date of earliest event reported): November 19,
2009
|
THE CHILDREN’S PLACE RETAIL STORES,
INC.
|
|
(Exact Name of Registrants as
Specified in Their
Charters)
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Delaware
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(State or Other
Jurisdiction of
Incorporation)
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0-23071
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31-1241495
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(Commission File
Number)
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(IRS Employer Identification
No.)
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915 Secaucus Road, Secaucus, New
Jersey
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07094
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(Address of Principal
Executive Offices)
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(Zip
Code)
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(201) 558-2400
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(Registrant’s Telephone
Number, Including Area
Code)
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Not Applicable
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(Former Name or Former
Address, if Changed Since Last
Report)
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Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General
Instruction A.2. below):
o Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
o Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
o Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item
2.02 Results of Operations and Financial Condition
On November 19, 2009, The Children’s
Place Retail Stores, Inc. (the “Company”) issued a press release containing
results for the Company's third fiscal quarter and fiscal year-to-date ended
October 31, 2009. A copy of the press release is being furnished as
Exhibit 99.1 to this Current Report on Form 8-K.
The information in this report is being
furnished pursuant to Item 2.02 of Form 8-K, insofar as it discloses historical
information regarding the Company's results of operations and financial
condition as of and for the third fiscal quarter and fiscal year-to-date ended
October 31, 2009. In accordance with General Instructions B.2 of Form
8-K, the information in this Current Report on Form 8-K, including Exhibit 99.1,
shall not be deemed “filed” for the purposes of Section 18 of the Securities
Exchange Act of 1934, as amended, or otherwise subject to the liability of that
section, nor shall it be deemed incorporated by reference in any filing under
the Securities Act of 1933, as amended, except as shall be expressly set forth
by specific reference in such a filing.
Forward Looking
Statements
This Current Report on Form 8-K,
including Exhibit 99.1, contains forward-looking statements made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform Act of
1995. Forward-looking statements typically are identified by use of
terms such as “may,” “will,” “should,” “plan,” “expect,” “anticipate,”
“estimate” and similar words, although some forward-looking statements are
expressed differently. Forward-looking statements represent our
management’s judgment regarding future events. Although the Company
believes that the expectations reflected in such forward-looking statements are
reasonable, the Company can give no assurance that such expectations will prove
to be correct. All statements other than statements of historical
fact included in this Current Report on Form 8-K are forward-looking
statements. The Company cannot guarantee the accuracy of the
forward-looking statements, and you should be aware that the Company’s actual
results could differ materially from those contained in the forward-looking
statements due to a number of factors, including the statements under the
heading “Risk Factors” contained in the Company’s filings with the Securities
and Exchange Commission.
Item
9.01 Financial
Statement and Exhibits.
| (d) | Exhibits | |
|
Exhibit 99.1
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Press
release, dated November 19, 2009 (Exhibit 99.1 is furnished as part of
this Current Report on Form
8-K).
|
2
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
Date: November
19, 2009
| THE CHILDREN’S PLACE RETAIL STORES, INC. | |||
|
|
By:
|
/s/ Susan J. Riley | |
| Name: | Susan J. Riley | ||
| Title: | Executive Vice President, Finance and Administration | ||
3
FOR IMMEDIATE
RELEASE
THE
CHILDREN’S PLACE REPORTS THIRD QUARTER 2009 FINANCIAL RESULTS
Secaucus, New Jersey – November 19,
2009 – The Children’s Place Retail Stores, Inc. (Nasdaq: PLCE) today
reported financial results for the third quarter and fiscal year-to-date 2009.
Results from continuing operations for the third quarter and fiscal year-to-date
periods ended October 31, 2009 and November 1, 2008 are based on The Children’s
Place business only. The Disney Store North America (“DSNA”) business has been
classified as discontinued operations in accordance with generally accepted
accounting principles (“GAAP”) reflecting the Company’s decision to exit the
business.
Third
Quarter
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·
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Net
sales from continuing operations for the third quarter of 2009 increased
3% to $463.2 million, compared to $450.6 million in the third quarter of
2008.
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·
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Comparable
retail sales, which include online sales, declined 2% in the third quarter
of 2009 following a 4% increase during the same period last
year.
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·
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Income
from continuing operations was $38.2 million, or $1.38 per diluted share,
in the third quarter of 2009, compared to $28.4 million, or $0.96 per
diluted share, in the third quarter of
2008.
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·
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Net
income, which includes the impact of discontinued operations, was $37.8
million in the third quarter of 2009, or $1.37 per diluted share, compared
to $24.1 million, or $0.81 per diluted share, in the third quarter of
2008.
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·
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Inventory
per square foot increased 3% at the end of the third quarter of 2009
compared to the third quarter of
2008.
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·
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At
the end of the third quarter of 2009, the Company had a cash balance of
$104.4 million and no bank
borrowings.
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·
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During
the third quarter of 2009, the Company opened 13 stores, and ended with
950 stores.
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Fiscal
Year-to-Date
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·
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Net
sales from continuing operations were $1,180.8 million for fiscal
year-to-date 2009, a 1% decline compared to $1,188.9 million for the same
period of the prior year.
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·
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Comparable
retail sales declined 3% year-to-date 2009 following a 6% increase last
year.
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·
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Income
from continuing operations was $54.7 million, or $1.88 per diluted share,
fiscal year-to-date 2009, compared to $50.6 million, or $1.72 per diluted
share, last year. The Company’s fiscal year-to-date income from continuing
operations includes the following items which the Company deems to be
unusual or one-time in nature:
|
|
o
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In
fiscal 2009, gains included a $4.8 million income tax benefit from excess
foreign tax credits generated by the repatriation of cash from Canada, a
$4.7 million, pre-tax, favorable settlement of an IRS employment tax audit
related to stock options, and a tax benefit of $4.5 million from the
settlement of an IRS income tax audit. These gains were partially offset
by $2.9 million of pre-tax expenses associated with previously announced
restructuring programs, $2.4 million of pre-tax expenses associated with
the pre-payment of the Company’s term loan, $2.0 million of pre-tax
expenses incurred in connection with the recent proxy contest and an asset
impairment charge of $0.8 million, pre-tax, for an underperforming store
that has been open for less than two
years.
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1
PLCE
– Third Quarter 2009 Financial Results
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o
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In
fiscal 2008, gains included $11.1 million, pre-tax, from transition
services income net of variable expenses for services provided to the
acquirer of the DSNA business, $2.3 million, pre-tax, for the sale of a
store lease and $0.2 million, pre-tax, in recovery of legal fees. These
gains were partially offset by $2.4 million, pre-tax, in professional fees
associated with the Company’s restructuring activities and $1.3 million,
pre-tax, in legal fees related to the Company’s 2006 stock-option
investigation.
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·
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Excluding
the unusual or one-time items mentioned above from both years, adjusted
income from continuing operations was $47.3 million, or $1.63 per diluted
share, fiscal year-to-date 2009, compared to $44.7 million, or $1.52 per
diluted share, for the same period last year. The income from continuing
operations excluding these items is a non-GAAP measure. The Company
believes the excluded items are not indicative of the performance of its
core business and that by providing this supplemental disclosure to
investors it will facilitate comparisons of its past and present
performance. A reconciliation of income from continuing operations as
reported is included in this press release in Table
3.
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·
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Net
income, which includes the impact of discontinued operations, was $54.2
million, or $1.87 per diluted share, fiscal year-to-date 2009, compared to
$43.6 million, or $1.48 per diluted share, last
year.
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·
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Fiscal
year-to-date, the Company has opened 34 stores and closed
one.
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Chuck
Crovitz, interim Chief Executive Officer of The Children’s Place commented, “We
were pleased to have delivered top-line growth and increased profitability in
the third quarter. While the consumer remains cautious, we were encouraged by
the increased number of sales transactions as customers responded favorably to
our fashionable assortment at value price points. In addition, we were able to
protect margins with prudent cost controls and inventory management. Based on
our expectation that the consumer will remain price sensitive during the fourth
quarter, we plan to offer compelling promotions that are designed to create
excitement throughout the holiday season.”
Conference
Call Information
The
Children’s Place will host a conference call to discuss its third quarter
results today at 10:00 a.m. Eastern Time. The call will be broadcast live at
http://investor.childrensplace.com.
An audio archive will be available approximately one hour after the conclusion
of the call.
About
The Children’s Place Retail Stores, Inc.
The Children’s Place Retail Stores,
Inc. is a leading specialty retailer of children's merchandise. The Company
designs, contracts to manufacture and sells high-quality, value-priced
merchandise under the proprietary “The Children's Place” brand name.
As of October 31, 2009,
the Company owned and operated 950 The Children’s Place stores and an online
store at www.childrensplace.com.
This
press release may contain certain forward-looking statements regarding future
circumstances, including statements relating to our future operating plans and
strategies. 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 to differ materially. Some
of these risks and uncertainties are described in the Company's filings with the
Securities and Exchange Commission, including in the “Risk Factors” section of
its annual report on Form 10-K for the fiscal year ended January 31, 2009.
Included among the risks and uncertainties that could cause actual results,
events and performance to differ materially are the risk that the Company will
be unsuccessful in gauging fashion trends and changing consumer preferences, and
the risks resulting from the highly competitive nature of the Company’s business
and its dependence on consumer spending patterns, which may be affected by the
downturn in the economy. Readers are cautioned not to place undue reliance
on these forward-looking statements, which speak only as of the date they were
made. The Company undertakes no obligation to release publicly any revisions to
these forward-looking statements that may be made to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events. The inclusion of any statement in this release does not
constitute an admission by the Company or any other person that the events or
circumstances described in such statement are material.
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CONTACT:
|
The
Children’s Place Retail Stores, Inc.
Susan
Riley, EVP, Finance & Administration, (201) 558-2400
Jane
Singer, VP, Investor Relations, (201)
453-6955
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(Tables
Follow)
2
Table
1
THE
CHILDREN’S PLACE RETAIL STORES, INC.
CONDENSED
STATEMENTS OF OPERATIONS
(In
thousands, except per share amounts)
(Unaudited)
|
Third
Quarter Ended
|
Fiscal
Year-to-Date
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|||||||||||||||
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October
31, 2009
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November
1, 2008
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October
31, 2009
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November
1, 2008
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|||||||||||||
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Net
sales
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$ | 463,175 | $ | 450,623 | $ | 1,180,752 | $ | 1,188,864 | ||||||||
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Cost
of sales
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261,348 | 254,239 | 707,099 | 692,839 | ||||||||||||
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Gross
profit
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201,827 | 196,384 | 473,653 | 496,025 | ||||||||||||
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Selling,
general and
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||||||||||||||||
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administrative
expenses
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118,579 | 126,716 | 336,565 | 351,919 | ||||||||||||
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Asset
impairment charge
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307 | 954 | 1,721 | 1,081 | ||||||||||||
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Depreciation
and amortization
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18,170 | 17,791 | 53,258 | 53,152 | ||||||||||||
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Income
from continuing operations
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||||||||||||||||
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before
interest and taxes
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64,771 | 50,923 | 82,109 | 89,873 | ||||||||||||
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Interest
(expense), net
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(520 | ) | (1,912 | ) | (5,250 | ) | (2,803 | ) | ||||||||
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Income
from continuing operations
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||||||||||||||||
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before
income taxes
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64,251 | 49,011 | 76,859 | 87,070 | ||||||||||||
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Provision
for income taxes
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26,079 | 20,563 | 22,175 | 36,466 | ||||||||||||
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Income
from continuing operations
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38,172 | 28,448 | 54,684 | 50,604 | ||||||||||||
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Loss
from discontinued operations
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(389 | ) | (4,391 | ) | (440 | ) | (7,018 | ) | ||||||||
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Net
income
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$ | 37,783 | $ | 24,057 | $ | 54,244 | $ | 43,586 | ||||||||
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Basic
income from continuing
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||||||||||||||||
|
operations
per common share
|
$ | 1.39 | $ | 0.97 | $ | 1.90 | $ | 1.73 | ||||||||
|
Loss
from discontinued operations
|
||||||||||||||||
|
per
common share
|
(0.01 | ) | (0.15 | ) | (0.02 | ) | (0.24 | ) | ||||||||
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Basic
net income per common
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||||||||||||||||
|
share
|
$ | 1.38 | $ | 0.82 | $ | 1.88 | $ | 1.49 | ||||||||
|
Basic
weighted average common
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||||||||||||||||
|
shares
outstanding
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27,389 | 29,364 | 28,805 | 29,173 | ||||||||||||
|
Diluted
income from continuing
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||||||||||||||||
|
operations
per common share
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$ | 1.38 | $ | 0.96 | $ | 1.88 | $ | 1.72 | ||||||||
|
Loss
from discontinued
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||||||||||||||||
|
operations
per common share
|
(0.01 | ) | (0.15 | ) | (0.02 | ) | (0.24 | ) | ||||||||
|
Diluted
net income per common
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||||||||||||||||
|
share
|
$ | 1.37 | $ | 0.81 | $ | 1.87 | $ | 1.48 | ||||||||
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Diluted
weighted average common
|
||||||||||||||||
|
shares
outstanding
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27,622 | 29,726 | 29,038 | 29,444 | ||||||||||||
|
Note:
Amounts may not add due to
rounding.
|
3
Table
2
THE
CHILDREN’S PLACE RETAIL STORES, INC.
CONDENSED
BALANCE SHEETS
(In
thousands)
(Unaudited)
|
October
31, 2009
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January
31, 2009
|
November
1, 2008
|
||||||||||
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Cash
and investments
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$ | 104,364 | $ | 226,206 | $ | 185,980 | ||||||
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Accounts
receivable
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16,739 | 19,639 | 24,213 | |||||||||
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Inventories
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250,599 | 211,227 | 232,776 | |||||||||
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Other
current assets
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87,965 | 62,518 | 104,218 | |||||||||
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Restricted
assets in bankruptcy estate
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||||||||||||
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of
subsidiary
|
-- | -- | 78,971 | |||||||||
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Total
current assets
|
459,667 | 519,590 | 626,158 | |||||||||
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Property
and equipment, net
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311,113 | 318,116 | 336,921 | |||||||||
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Other
assets, net
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64,536 | 102,051 | 83,230 | |||||||||
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Total
assets
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$ | 835,316 | $ | 939,757 | $ | 1,046,309 | ||||||
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Current
liabilities:
|
||||||||||||
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Revolving
credit facility
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$ | -- | $ | -- | $ | -- | ||||||
|
Short
term portion of term loan
|
-- | 30,000 | 30,000 | |||||||||
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Accounts
payable
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62,612 | 73,333 | 79,913 | |||||||||
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Accrued
expenses and
|
||||||||||||
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other
current liabilities
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104,886 | 103,662 | 123,179 | |||||||||
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Liabilities
in bankruptcy estate
|
||||||||||||
| of subsidiary | -- | -- | 107,767 | |||||||||
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Total
current liabilities
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167,498 | 206,995 | 340,859 | |||||||||
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Long
term portion of term loan
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-- | 55,000 | 55,000 | |||||||||
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Other
liabilities
|
114,584 | 129,883 | 140,984 | |||||||||
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Total
liabilities
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282,082 | 391,878 | 536,843 | |||||||||
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Stockholders’
equity
|
553,234 | 547,879 | 509,466 | |||||||||
|
Total
liabilities and stockholders’ equity
|
$ | 835,316 | $ | 939,757 | $ | 1,046,309 |
4
|
Table
3
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THE
CHILDREN’S PLACE RETAIL STORES, INC.
|
|||||||
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RECONCILIATION
OF NON-GAAP FINANCIAL INFORMATION TO GAAP
|
|||||||
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(In
millions, except per share amounts)
|
|||||||
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(Unaudited)
|
|||||||
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Third
Quarter Ended
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Fiscal
Year-to-Date Ended
|
|||||||||||||||
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October
31, 2009
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November
1, 2008
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October
31, 2009
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November
1, 2008
|
|||||||||||||
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Income
from continuing
operations
net of income taxes
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$ | 38.2 | $ | 28.4 | $ | 54.7 | $ | 50.6 | ||||||||
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Unusual
or one-time items pre-tax:
|
||||||||||||||||
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Gains:
|
||||||||||||||||
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Favorable
settlement of IRS
employment
tax audit related to
stock
options
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(0.1 | ) | - | (4.7 | ) | - | ||||||||||
|
Net
transition services income
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- | (5.7 | ) | - | (11.1 | ) | ||||||||||
|
Sale
of store lease
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- | - | - | (2.3 | ) | |||||||||||
|
Legal
fee recovery
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- | (0.2 | ) | - | (0.2 | ) | ||||||||||
|
Expenses:
|
||||||||||||||||
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Proxy
contest fees
|
(0.2 | ) | - | 2.0 | - | |||||||||||
|
Company
restructuring fees
|
- | - | 2.9 | 2.4 | ||||||||||||
|
Prepayment
of term loan expenses/
deferred
financing fees
|
- | - | 2.4 | - | ||||||||||||
|
Impairment
charge
|
- | - | 0.8 | - | ||||||||||||
|
Stock
option/special investigation fees
|
- | - | - | 1.3 | ||||||||||||
|
Aggregate
(income) impact of unusual or one-time items
|
(0.3 | ) | (5.9 | ) | 3.4 | (9.9 | ) | |||||||||
|
Income
tax effect of unusual or one-time
items
|
0.1 | 2.4 | (1.5 | ) | 4.0 | |||||||||||
|
Excess
foreign tax credits from
repatriation
of cash
|
- | - | (4.8 | ) | - | |||||||||||
|
One-time
tax benefit from resolution of
IRS
income tax audit
|
- | - | (4.5 | ) | - | |||||||||||
|
Adjusted
(gain) impact from unusual or one-time items after taxes
|
(0.2 | ) | (3.5 | ) | (7.4 | ) | (5.9 | ) | ||||||||
|
Adjusted
income from continuing
operations
net of income taxes
|
$ | 38.0 | $ | 24.9 | $ | 47.3 | $ | 44.7 | ||||||||
|
GAAP
income from continuing
operations
per common share
|
$ | 1.38 | $ | 0.96 | $ | 1.88 | $ | 1.72 | ||||||||
|
Adjusted
income from continuing
operations
per common share
|
$ | 1.38 | $ | 0.84 | $ | 1.63 | $ | 1.52 | ||||||||
###
5