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SECAUCUS, N.J., Aug. 20, 2009 (GLOBE NEWSWIRE) -- The Children's Place Retail Stores, Inc. (Nasdaq:PLCE) today reported financial results for the second quarter and fiscal year-to-date 2009. Results from continuing operations for the second quarters and fiscal year-to-date periods ended August 1, 2009 and August 2, 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.

Second Quarter

• Net sales from continuing operations for the second quarter of 2009 were $315.7 million, a 7% decline compared to the previous year's second quarter net sales of $338.0 million.
• Comparable retail sales, which include online sales, declined 9% in the second quarter of 2009 following a 10% increase during the same period last year.
• The loss from continuing operations after tax was $7.2 million, or $0.24 loss per share, in the second quarter of 2009, compared to income of $2.7 million, or $0.09 earnings per share, in the second quarter of 2008. The Company's second quarter income from continuing operations included several items which the Company deems to be unusual or one-time in nature, including:
  • In the second quarter of 2009, gains due to excess foreign tax credits of $4.8 million after-tax generated by the repatriation of cash from Canada and $4.6 million pre-tax from the favorable settlement of an IRS employment tax audit related to stock options. These gains were partially offset by $2.2 million pre- tax for expenses incurred in connection with the recent proxy contest, $1.5 million pre-tax for expenses associated with the pre-payment of the Company's term loan on August 3, 2009, and $0.3 million pre-tax for expenses associated with previously announced restructuring programs.
  • In the second quarter of 2008, gains from transition services income net of variable expenses of $5.4 million pre-tax for services provided to the acquirer of the DSNA business and $2.3 million pre-tax for the sale of a significant store lease. These gains were partially offset by $1.2 million pre-tax in professional fees associated with the Company's restructuring activities and $0.5 million pre-tax in legal fees related to the Company's 2006 stock-option investigation.
• Excluding the unusual or one-time items mentioned above from the second quarters of both years, adjusted loss from continuing operations after tax was $12.4 million, or $0.42 loss per share, in the second quarter of 2009, compared to an adjusted loss of $0.9 million, or $0.03 loss per share, in the second quarter of 2008. The second quarter loss 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/loss from continuing operations as reported is included in this press release in Table 3.
• Net loss, including the impact of discontinued operations, was $7.1 million in the second quarter of 2009, or $0.24 loss per share, compared to breakeven in the second quarter of 2008.
• During the second quarter of 2009, the Company opened 15 stores.

Fiscal Year-to-Date

• Net sales from continuing operations were $717.6 million for fiscal year-to-date 2009, a 3% decline compared to $738.2 million for the same period of the prior year.
• Comparable store sales declined 3% year-to-date 2009 following an 8% increase last year.
• Income from continuing operations after tax was $16.5 million, or $0.56 earnings per share, year-to-date 2009, compared to $22.2 million, or $0.75 earnings per share, last year.
• Excluding the unusual or one-time items from both years, income from continuing operations after tax was $9.3 million, or $0.31 earnings per share, year-to-date 2009, compared to $19.8 million, or $0.67 earnings per share, last year. As previously noted, this is a non-GAAP measure which the Company is providing as a supplemental disclosure.
• Net income, including the impact of discontinued operations, was $16.5 million, or $0.55 earnings per share, year-to-date 2009, compared to $19.5 million, or $0.66 earnings per share, last year.
• Year-to-date, the Company has opened 21 stores and closed one.

As previously announced, during the second quarter of 2009 the Company entered into an agreement with former Chairman and CEO Ezra Dabah to acquire approximately 2.45 million shares, 50% of the approximate 4.9 million shares owned by Mr. Dabah and his family, for $28.88 per share. The Children's Place funded the purchase with approximately $75 million in cash repatriated from Company subsidiaries in Hong Kong and Canada. The Company closed on the share repurchase on August 3, 2009, and concurrently pre-paid the principal amount of $38 million outstanding, plus accrued and unpaid interest, on its term loan.

"Second quarter 2009 financial results were pressured by the economic environment and the negative impact of foreign exchange. In addition, we faced a challenging comparison as last year's second quarter was the best in the Company's history," commented Chuck Crovitz, interim Chief Executive Officer of The Children's Place Retail Stores, Inc. "Despite these headwinds, we were pleased to have made significant progress on various initiatives including further growth in our e-commerce business, acceleration of our cost cutting efforts and the successful rollout of a new value-engineered store format. Looking ahead, we plan to continue to operate our business conservatively while the recession lingers, but remain confident that we have the right strategies in place to drive long-term growth."

Conference Call Information

The Children's Place will host a conference call to discuss its second quarter results today at 10:00 a.m. Eastern Time. The call will be broadcast live and can be accessed through the Investor Relations section of www.childrensplace.com. An audio archive will be available approximately one hour after the conclusion of the call, until midnight on August 27, 2009.

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 August 1, 2009, the Company owned and operated 937 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.

                                           Table 1
                           THE CHILDREN'S PLACE RETAIL STORES, INC.
                              CONDENSED STATEMENTS OF OPERATIONS
                           (In thousands, except per share amounts)
                                          (Unaudited)


                           Second Quarter Ended   Year-to-Date Ended
                           --------------------  --------------------
                           August 1,  August 2,  August 1,  August 2,
                             2009       2008       2009       2008
                           ---------  ---------  ---------  ---------


 Net sales                 $ 315,676  $ 338,029  $ 717,577  $ 738,241
 Cost of sales               210,377    209,480    445,751    438,600
                           ---------  ---------  ---------  ---------
 Gross profit                105,299    128,549    271,826    299,641
 Selling, general and
  administrative expenses    106,093    105,793    217,986    225,203
 Asset impairment charge         315        127      1,414        127
 Depreciation and
  amortization                17,564     17,709     35,088     35,361
                           ---------  ---------  ---------  ---------
 Income (loss) from
  continuing operations
  before interest and
  taxes                     (18,673)      4,920     17,338     38,950
 Interest (expense), net     (1,462)      (398)    (4,730)      (891)
                           ---------  ---------  ---------  ---------
 Income (loss) from
  continuing operations
  before income taxes       (20,135)      4,522     12,608     38,059
 Provision (benefit) for
  income taxes              (12,906)      1,786    (3,904)     15,903
                           ---------  ---------  ---------  ---------
 Income (loss) from
  continuing operations
  net of income taxes        (7,229)      2,736     16,512     22,156
 Income (loss) from
  discontinued operations
  net of income taxes            178    (2,725)       (51)    (2,627)
                           ---------  ---------  ---------  ---------
 Net income (loss)         $ (7,051)  $      11  $  16,461  $  19,529
                           =========  =========  =========  =========
 Basic income (loss) from
  continuing operations
  per common share         $  (0.24)  $    0.09  $    0.56  $    0.76
 Income (loss) from
  discontinued operations
  per common share              0.01     (0.09)     (0.00)     (0.09)
                           ---------  ---------  ---------  ---------
 Basic net income (loss)
  per common share         $  (0.24)  $    0.00  $    0.56  $    0.67
                           =========  =========  =========  =========
 Basic weighted average
  common shares
  outstanding                 29,552     29,255     29,514     29,177

 Diluted income (loss)
  from continuing
  operations per common
  share                    $  (0.24)  $    0.09  $    0.56  $    0.75
 Income (loss) from
  discontinued operations
  per common share              0.01     (0.09)     (0.00)     (0.09)
                           ---------  ---------  ---------  ---------
 Diluted net income
  (loss) per common share  $  (0.24)  $    0.00  $    0.55  $    0.66
                           =========  =========  =========  =========
 Diluted weighted average
  common shares
  outstanding                 29,552     29,599     29,746     29,395

Note: Amounts may not add due to rounding.

                                Table 2
                   THE CHILDREN'S PLACE RETAIL STORES, INC.
                         CONDENSED BALANCE SHEETS
                               (In thousands)
                                 (Unaudited)

                                 August 1,   January 31,   August 2,
                                   2009         2009         2008
                                -----------  -----------  -----------
 Current assets:

 Cash and investments           $   152,198  $   226,206  $   146,704
 Accounts receivable                 21,792       19,639       26,150
 Inventories                        262,986      211,227      219,100
 Other current assets               100,143       62,518      100,316
 Restricted assets in
  bankruptcy estate of
  subsidiary                             --           --       85,265
                                -----------  -----------  -----------
 Total current assets               537,119      519,590      577,535

 Property and equipment, net        310,795      318,116      333,783
 Other assets, net                   74,960      102,051       97,868
                                -----------  -----------  -----------
 Total assets                   $   922,874  $   939,757  $ 1,009,186
                                ===========  ===========  ===========

 Current liabilities:

 Revolving credit facility      $        --  $        --  $       --
 Short term portion of term
  loan                               38,000       30,000      30,000
 Accounts payable                    89,249       73,333      80,287
 Accrued expenses and
  other current liabilities          93,088      103,662      99,145
 Liabilities in bankruptcy
  estate of subsidiary                   --           --     108,409
                                -----------  -----------  -----------
 Total current liabilities          220,337      206,995     317,841

 Long term portion of term loan          --       55,000      55,000
 Other liabilities                  119,304      129,883     140,119
                                -----------  -----------  -----------
 Total liabilities                  339,641      391,878     512,960

 Stockholders' equity               583,233      547,879     496,226
                                -----------  -----------  -----------

 Total liabilities and
  stockholders' equity          $   922,874  $   939,757  $ 1,009,186
                                ===========  ===========  ===========

                                   Table 3
                     THE CHILDREN'S PLACE RETAIL STORES, INC.
            RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION TO GAAP
                     (In millions, except per share amounts)
                                   (Unaudited)

                           Second Quarter Ended  Year-to-Date Ended
                          --------------------- ---------------------
                           August 1,  August 2,  August 1,  August 2,
                             2009       2008       2009       2008
                          ---------- ---------- ---------- ----------
 Income (loss) from
  continuing operations
  net of income taxes     $    (7.2) $      2.7 $     16.5 $      22.2
                          ---------- ---------- ---------- ----------
 Unusual or one-time
  items pre-tax:
 Gains:
  Favorable settlement
   of IRS employment tax
   audit related to stock
   options                     (4.6)        --       (4.6)         --
  Net transition services
   income                        --       (5.4)        --       (5.4)
  Sale of store lease            --       (2.3)        --       (2.3)

 Expenses:
  Proxy contest fees            2.2         --        2.2         --
  Prepayment of term loan
   expenses/ deferred
   financing fees               1.5         --        2.4         --
  Company restructuring
   fees                         0.3        1.2        2.9        2.5
  Impairment Charge              --         --        0.8         --
  Stock option/special
   investigation fees            --        0.5         --        1.3
                          ---------- ---------- ---------- ----------
 Aggregate impact of
  unusual or one-time
  items                        (0.6)      (6.0)       3.7       (3.9)
 Income tax effect of
  unusual or one-time
  items                         0.2        2.4       (1.6)       1.5
 Excess foreign tax
  credits from
  repatriation of cash         (4.8)        --       (4.8)        --
 One-time tax benefit
  from resolution of IRS
  income tax audit               --         --       (4.5)        --
                          ---------- ---------- ---------- ----------
 Adjusted gain from
  unusual or one-time
  items after taxes            (5.2)      (3.6)      (7.2)      (2.4)

 Adjusted income (loss)
  from continuing
  operations net of
  income taxes                (12.4)      (0.9)       9.3       19.8
                          ========== ========== ========== ==========
 GAAP income (loss) from
  continuing operations
  per common share        $   (0.24) $    0.09  $    0.56  $    0.75

 Adjusted income (loss)
  from continuing
  operations per common
  share                   $   (0.42) $   (0.03) $    0.31  $    0.67

CONTACT: The Children's Place Retail Stores, Inc.
Susan Riley, EVP, Finance & Administration
(201) 558-2400
Jane Singer, VP, Investor Relations
(201) 453-6955