The Children's Place Retail Stores, Inc. Reports First Quarter 2008 Financial Results
SECAUCUS, N.J., May 22, 2008 (PRIME NEWSWIRE) -- The Children's Place Retail Stores, Inc. (Nasdaq:PLCE) today reported financial results for the fiscal first quarter ended May 3, 2008. 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. Results from continuing operations for both the first quarter of 2008 and 2007 reflect The Children's Place business only.
- Net sales of The Children's Place business for the thirteen-weeks ended May 3, 2008, increased 12% to $400.2 million, compared to $356.0 million last year.
- Comparable store sales of The Children's Place business increased 5% in the quarter, on top of last year's 2% comparable store sales increase.
- Income from continuing operations before interest and taxes increased 15% to $34.0 million from $29.6 million last year.
- Income from continuing operations was $19.4 million compared to income from continuing operations of $19.1 million last year.
- Diluted earnings per share from continuing operations were $0.66 compared to diluted earnings per share from continuing operations of $0.64 last year.
- Net income including the impact of discontinued operations was $19.5 million, or $0.67 per diluted share, compared to $14.7 million, or $0.49 per diluted share last year.
- The effective tax rate for continuing operations in the first quarter was 42% compared to 38% last year, as the Company is no longer permanently invested in its Asian subsidiary.
- During the first quarter, the Company opened three The Children's Place stores and closed one.
Chuck Crovitz, Interim Chief Executive Officer of The Children's Place Retail Stores, Inc., commented, "Our first quarter results show progress toward our goal of returning the Company to its historical level of profitability. During the quarter, we exited the Disney Store business at cash costs that are expected to be at the low end of our previously disclosed range of $50 million to $100 million. In addition, we began the reduction of our cost structure, announced lower capital spending for 2008 and expect our inventory position to be below last year's level at the end of the second quarter. Further, we continue to be encouraged by the customer response to our summer merchandise and believe that The Children's Place, as a leading value player in the children's apparel market, is well-positioned in this difficult economic environment."
The Children's Place will host a conference call to discuss its first quarter results today at 10:00 a.m. Eastern Time. Interested parties are invited to listen to the call by dialing (800) 862-9098 and providing the Conference ID, PLCE. The call will also be webcast live and can be accessed via the Company's web site, www.childrensplace.com. A replay of the call will be available approximately one hour after the conclusion of the call, until midnight on May 29, 2008. To access the replay, please dial (800) 753-6121, or you may listen to the audio archive on the Company's website, www.childrensplace.com.
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 May 3, 2008, the Company owned and operated 906 The Children's Place stores and its online store at www.childrensplace.com.
This press release (and above referenced call) may contain certain forward-looking statements regarding future circumstances. 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 the "Risk Factors" section of its reports on Forms 10-K and 10-Q. Risks and uncertainties relating to the exit of the DSNA business, including the risk that claims may be asserted against the Company or its subsidiaries other than Hoop, whether or not such claims have any merit, and the Company's ability to successfully defend such claims, in addition to the risk that the Company may not be able to access, if necessary, additional sources of liquidity or obtain financing on commercially reasonable terms or at all, the risk that the Company will be unsuccessful in gauging fashion trends and changing consumer preferences, 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, failure to lower its expense structure, achieve inventory management objectives or other components of its strategy to improve operations, as well as risks and uncertainties relating to other elements of the Company's strategic review, could cause actual results, events and performance, to differ materially. Readers (or listeners on the call) 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.
THE CHILDREN'S PLACE RETAIL STORES, INC.
CONDENSED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
13 Weeks Ended:
--------------------
May 3, May 5,
2008 2007
-------- --------
Net sales $400,212 $355,995
Cost of sales 229,120 204,021
-------- --------
Gross profit 171,092 151,974
Selling, general and administrative expenses 119,410 107,775
Depreciation and amortization 17,652 14,597
-------- --------
Income from continuing operations before
interest and taxes 34,030 29,602
Interest (expense) income (493) 1,000
-------- --------
Income from continuing operations before
income taxes 33,537 30,602
Provision for income taxes 14,117 11,533
-------- --------
Income from continuing operations 19,420 19,069
Income (loss) from discontinued operations,
net of income taxes 98 (4,355)
-------- --------
Net income $ 19,518 $ 14,714
======== ========
Basic income from continuing operations
per common share $ 0.67 $ 0.66
Income (loss) from discontinued operations
per common share 0.00 (0.15)
-------- --------
Basic net income per common share $ 0.67 $ 0.51
======== ========
Basic weighted average common shares
outstanding 29,182 29,084
Diluted income from continuing operations
per common share $ 0.66 $ 0.64
Income (loss) from discontinued operations
per common share 0.00 (0.15)
-------- --------
Diluted net income per common share* $ 0.67 $ 0.49
======== ========
Diluted weighted average common shares and
common share equivalents outstanding 29,275 30,002
* Does not add due to rounding.
Note: Both periods presented above reflect the exit of the DSNA
business, which has been classified as a discontinued operation
in accordance with GAAP. Continuing operations, as presented
above, includes the operations of The Children's Place
business.
THE CHILDREN'S PLACE RETAIL STORES, INC.
CONDENSED BALANCE SHEETS
(In thousands)
(Unaudited)
May 3, February 2, May 5,
2008 2008 2007
-------- -------- --------
Current assets:
Cash and investments $118,315 $ 81,626 $172,994
Accounts receivable 34,661 41,143 33,524
Inventories 179,065 196,606 159,570
Other current assets 92,406 92,910 53,332
Restricted assets in bankruptcy
estate of subsidiary 99,068 -- --
Current assets held for sale -- 98,591 79,550
-------- -------- --------
Total current assets 523,515 510,876 498,970
Property and equipment, net 338,450 354,141 306,630
Other assets, net 91,911 128,357 86,474
Non-current assets held for sale -- 4,163 61,509
-------- -------- --------
Total assets $953,876 $997,537 $953,583
======== ======== ========
Current liabilities:
Revolving credit facility $ 27,936 $ 88,976 $ --
Accounts payable 59,303 80,807 85,538
Accrued expenses and other
current liabilities 109,273 140,712 136,864
Liabilities subject to compromise 123,694 -- --
-------- -------- --------
Total current liabilities 320,206 310,495 222,402
Other liabilities 141,504 214,809 196,505
-------- -------- --------
Total liabilities 461,710 525,304 418,907
Stockholders' equity 492,166 472,233 534,676
-------- -------- --------
Total liabilities and
stockholders' equity $953,876 $997,537 $953,583
======== ======== ========
Note: The balance sheet as of May 3, 2008, reflects DSNA restricted
assets available to settle its liabilities through bankruptcy.
"Assets held for sale" on the February 2, 2008, and May 5,
2007, balance sheets reflect the assets sold to an affiliate
of The Walt Disney Company. The remaining assets and
liabilities of the DSNA business are reflected in their
respective balance sheet categories on the February 2, 2008,
and May 5, 2007, balance sheets.
CONTACT: The Children's Place Retail Stores, Inc.
Susan Riley, EVP, Finance & Administration
201/558-2400
Rich Paradise, Chief Financial Officer
201/558-2400
FD
Media:
Diane Zappas
Evan Goetz
212/850-5600