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): May 17, 2012
| THE CHILDREN’S PLACE RETAIL STORES, INC. |
| (Exact Name of Registrant as Specified in Charter) |
| Delaware |
| (State or Other Jurisdiction of Incorporation) |
| 0-23071 | 31-1241495 |
| (Commission File Number) | (IRS Employer Identification No.) |
| 500 Plaza Drive, Secaucus, New Jersey | 07094 |
| (Address of Principal Executive Offices) | (Zip Code) |
| (201) 558-2400 |
| (Registrant’s Telephone Number, Including Area Code) |
| Not Applicable |
| (Former Name or Former Address, if Changed Since Last Report) |
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 May 17, 2012, the Company issued a press release containing the Company’s financial results for the first quarter of the fiscal year ending February 2, 2013 (“Fiscal 2012”), and providing an updated estimated range of adjusted earnings per diluted share for Fiscal 2012 and a preliminary range of adjusted loss per share for the second quarter of Fiscal 2012. 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 Current 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 first quarter of Fiscal 2012. In accordance with General Instructions B.2 of Form 8-K, such 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 (the “Exchange Act”), 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, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
| Item 9.01 | Financial Statements and Exhibits. |
| (d) | Exhibits |
| Exhibit 99.1 | Press Release, dated May 17, 2012, issued by the Company (Exhibit 99.1 is furnished as part of this Current Report on Form 8-K). |
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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, including but not limited to statements relating to the Company’s positioning, and forecasts regarding store openings and earnings per diluted share from continuing operations. 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 Securities and Exchange Commission, including in the “Risk Factors” section of its Annual Report on Form 10-K for the fiscal year ended January 28, 2012. Included among the risks and uncertainties that could cause actual results and performance to differ materially are the risk that the Company will be unsuccessful in gauging fashion trends and changing consumer preferences, 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 a further downturn in the economy or by other factors such as increases in the cost of gasoline and food, and the risk that the cost of raw materials or energy prices will increase beyond current expectations or that the Company is unable to offset cost increases through value engineering or price increases, and the uncertainty of weather patterns. 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.
* * *
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Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: May 17, 2012
| THE CHILDREN’S PLACE RETAIL STORES, INC. | |||
| By: | /s/ Jane Elfers | ||
| Name: | Jane Elfers | ||
| Title: | President and Chief Executive Officer | ||
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Exhibit 99.1
FOR IMMEDIATE RELEASE
THE CHILDREN’S PLACE REPORTS FIRST QUARTER 2012 RESULTS
Management Updates Fiscal 2012 Earnings Guidance
Secaucus, New Jersey – May 17, 2012 – The Children’s Place Retail Stores, Inc. (Nasdaq: PLCE), the largest pure-play children’s specialty apparel retailer in North America, today announced net sales increased 2% to $438.5 million for the thirteen weeks ended April 28, 2012, compared to $430.8 million in the first quarter of fiscal 2011. Comparable retail sales declined 0.7% for the quarter.
GAAP net income was $23.6 million, or $0.96 per diluted share, in the first quarter of 2012. As adjusted, net income was $27.1 million, or $1.10 per diluted share, compared to $29.1 million, or $1.10 per diluted share, in the first quarter of 2011.
During the quarter, the Company undertook several actions to reduce operating costs going forward, including consolidating from three to two US distribution centers, streamlining its field workforce and restructuring corporate headquarters, which it expects will result in annual savings of approximately $9 million. The Company incurred expenses of approximately $2.8 million associated with these actions during the quarter which the Company deems to be unusual in nature. Additionally, during the quarter the Company impaired an oversized store, incurred accelerated depreciation for seven Canadian store remodels, and wrote off obsolete supplies and fixture costs.
Adjusted net income is a non-GAAP measure. The Company believes the excluded transactions 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 net income as reported is included in this press release in Table 3.
“We made good progress during the quarter - tightly managing our inventory, reducing expenses and improving operational efficiencies across the organization - and we delivered adjusted earnings per share consistent with last year, in spite of significantly higher product costs,” commented Jane Elfers, President and Chief Executive Officer.
The Company opened 18 stores and closed 5, ending the first quarter with 1,062 stores.
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PLCE – First Quarter Fiscal 2012 Financial Results
Page 2
Share Repurchase Program
During the first quarter of fiscal 2012, the Company repurchased 377 thousand shares for $19.2 million and completed the $100 million share repurchase program announced in March 2011. A new $50 million share repurchase program was authorized by the Board of Directors in March 2012. Under the new program, the Company may repurchase shares in the open market at current market prices at the time of purchase or in privately negotiated transactions. The timing and actual number of shares repurchased under the program will depend on a variety of factors including price, corporate and regulatory requirements, and other market and business conditions, and the Company may suspend or discontinue the program at any time, and may thereafter reinstitute purchases, all without prior announcement.
Outlook
The Company updated its guidance to reflect first quarter results and now projects that non-GAAP adjusted earnings per diluted share will be between $3.15 and $3.30, compared to its initial guidance of $3.10 to $3.30, assuming positive low-single digit comparable retail sales.
The Company provided initial guidance for the second quarter of fiscal 2012, and is forecasting a non-GAAP adjusted loss per share between $0.65 and $0.70, assuming positive low-single digit comparable retail sales.
This earnings guidance assumes that currency exchange rates will remain where they are today and does not include the impact of further potential share repurchases.
Conference Call Information
The Children’s Place will host a conference call to discuss its first quarter fiscal 2012 results today at 8:00 a.m. Eastern Time. The call will be broadcast live at http://investor.childrensplace.com. An audio archive will be available on the Company’s website approximately one hour after the conclusion of the call.
About The Children’s Place Retail Stores, Inc.
The Children’s Place is the largest pure-play children’s specialty apparel retailer in North America. The Company designs, contracts to manufacture and sells fashionable, high-quality merchandise at value prices, primarily under the proprietary “The Children’s Place” brand name. As of April 28, 2012, the Company operated 1,062 stores and an online store at www.childrensplace.com.
Forward Looking Statements
This press release (and the above referenced call) may contain certain forward-looking statements regarding future circumstances, including statements relating to the Company’s positioning, and forecasts regarding store openings and earnings per diluted share from continuing operations. 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 Securities and Exchange Commission, including in the “Risk Factors” section of its annual report on Form 10-K for the fiscal year ended January 28, 2012. Included among the risks and uncertainties that could cause actual results and performance to differ materially are the risk that the Company will be unsuccessful in gauging fashion trends and changing consumer preferences, 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 continued weakness in the economy or by other factors such as increases in the cost of gasoline and food, the risk that the cost of raw materials or energy prices will increase beyond current expectations or that the Company is unable to offset cost increases through value engineering or price increases, and the uncertainty of weather patterns. 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.
Contact: Jane Singer, Vice President, Investor Relations, (201) 453-6955
(Tables Follow)
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Table 1
THE
CHILDREN’S PLACE RETAIL STORES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
| First Quarter Ended | ||||||||
| April 28, | April 30, | |||||||
| 2012 | 2011 | |||||||
| Net sales | $ | 438,508 | $ | 430,806 | ||||
| Cost of sales | 261,721 | 247,159 | ||||||
| Gross profit | 176,787 | 183,647 | ||||||
| Selling, general and administrative expenses | 122,152 | 116,722 | ||||||
| Asset impairment charges | 1,250 | 398 | ||||||
| Other costs | 834 | - | ||||||
| Depreciation and amortization | 17,218 | 17,751 | ||||||
| Operating income | 35,333 | 48,776 | ||||||
| Interest (expense), net | (51 | ) | (271 | ) | ||||
| Income before taxes | 35,282 | 48,505 | ||||||
| Provision for income taxes | 11,690 | 19,421 | ||||||
| Net income | $ | 23,592 | $ | 29,084 | ||||
| Earnings per common share | ||||||||
| Basic | $ | 0.96 | $ | 1.11 | ||||
| Diluted | $ | 0.96 | $ | 1.10 | ||||
| Weighted average common shares outstanding | ||||||||
| Basic | 24,535 | 26,120 | ||||||
| Diluted | 24,691 | 26,387 | ||||||
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Table 2
THE CHILDREN’S PLACE
RETAIL STORES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
| April 28, | January 28, | April 30, | ||||||||||
| 2012 | 2012* | 2011 | ||||||||||
| Assets: | ||||||||||||
| Cash and cash equivalents | $ | 204,826 | $ | 176,655 | $ | 212,347 | ||||||
| Accounts receivable | 18,656 | 17,382 | 21,269 | |||||||||
| Inventories | 193,852 | 212,916 | 192,714 | |||||||||
| Other current assets | 55,788 | 66,372 | 53,962 | |||||||||
| Total current assets | 473,122 | 473,325 | 480,292 | |||||||||
| Property and equipment, net | 329,058 | 323,863 | 327,017 | |||||||||
| Other assets, net | 54,423 | 53,461 | 57,653 | |||||||||
| Total assets | $ | 856,603 | $ | 850,649 | $ | 864,962 | ||||||
| Liabilities and Stockholders' Equity: | ||||||||||||
| Accounts payable | $ | 34,784 | $ | 55,516 | $ | 23,635 | ||||||
| Accrued expenses and other current liabilities | 91,990 | 76,039 | 83,485 | |||||||||
| Total current liabilities | 126,774 | 131,555 | 107,120 | |||||||||
| Other liabilities | 110,606 | 109,728 | 122,241 | |||||||||
| Total liabilities | 237,380 | 241,283 | 229,361 | |||||||||
| Stockholders' equity | 619,223 | 609,366 | 635,601 | |||||||||
| Total liabilities and stockholders' equity | $ | 856,603 | $ | 850,649 | $ | 864,962 |
| * | Derived from the audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended January 28, 2012. |
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Table 3
THE CHILDREN’S PLACE RETAIL STORES, INC.
RECONCILIATION OF NON-GAAP FINANCIAL
INFORMATION TO GAAP
(In thousands, except per share amounts)
(Unaudited)
| First Quarter Ended | ||||||||||
| April 28, | April 30, | |||||||||
| 2012 | 2011 | |||||||||
| Net income | $ | 23,592 | $ | 29,084 | ||||||
| Non-GAAP adjustments: | ||||||||||
| Expenses: | ||||||||||
| Store impairment | 1,250 | - | ||||||||
| West Coast DC exit costs | 834 | - | ||||||||
| Restructuring severance costs | 1,971 | - | ||||||||
| Obsolete supply and fixture costs | 719 | - | ||||||||
| Accelerated depreciation for Canadian store remodels | 893 | - | ||||||||
| Aggregate impact of Non-GAAP items | 5,667 | - | ||||||||
| Income tax effect | (2,147 | ) | - | |||||||
| Adjusted impact from Non-GAAP items | 3,520 | - | ||||||||
| Adjusted net income | $ | 27,112 | $ | 29,084 | ||||||
| GAAP net income per diluted share | $ | 0.96 | $ | 1.10 | ||||||
| Adjusted net income per diluted share | $ | 1.10 | $ | 1.10 | ||||||
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