The Children's Place Retail Stores, Inc. Reports Fourth Quarter and Fiscal Year 2009 Financial Results
Projects Earnings Per Diluted Share for First Quarter and Fiscal Year 2010
SECAUCUS, N.J., Mar 10, 2010 (GlobeNewswire via COMTEX) -- The Children's Place Retail Stores, Inc. (Nasdaq:PLCE) today reported financial results for the fourth quarter and fiscal year 2009. Results from continuing operations for the fourth quarter and fiscal year periods ended January 30, 2010 and January 31, 2009 are based on The Children's Place business only. The Disney Store North America ("DSNA") business has been classified as a discontinued operation in accordance with generally accepted accounting principles ("GAAP") reflecting the Company's exit of the business during fiscal year 2008.
Jane Elfers, President and Chief Executive Officer of The Children's Place Retail Stores, Inc., commented, "The Children's Place has a unique and enviable position as the largest pure-play children's specialty apparel retailer in North America, and the brand brings an unparalleled combination of fashion, value and convenience to the marketplace. I believe the opportunities to expand our business and increase market share are clear.
"We have been working to identify and begin implementation on five key growth initiatives: (1) strengthening the merchandise, (2) accelerating new store growth with a focus on value centers, (3) optimizing inventory management, (4) sharpening our marketing message and (5) driving e-commerce growth," Elfers continued. "Over the past two years, the management team has done a great job of strengthening operational efficiencies and managing expenses in a difficult economic environment. This gives us a solid base upon which to build our business going forward."
Fourth Quarter Financial Results
- Net sales from continuing operations for the fourth quarter of 2009 were $462.8 million, an increase of 5% compared to $441.5 million for the fourth quarter of 2008.
- Comparable retail sales were flat in the fourth quarter of 2009 compared to a 1% increase in the fourth quarter of 2008.
- Income from continuing operations after tax was $34.2 million, or $1.23 per diluted share, in the fourth quarter of 2009, compared to $23.3 million, or $0.79 per diluted share, in the fourth quarter of 2008.
- The comparability of income from continuing operations between the fourth quarter of 2009 and 2008 is affected by the following transactions:
- In the fourth quarter of 2009, a tax benefit of $5.5 million in excess foreign tax credits generated by the repatriation of cash and a benefit of $0.3 million, pre-tax, resulting from an accrual reversal related to the settlement of an IRS employment tax audit related to stock options.
- In the fourth quarter of 2008, an asset impairment charge of $4.9 million, pre-tax, for underperforming stores that had been open for less than two years; income of $0.5 million, pre-tax, from the recovery of legal fees; income of $0.4 million, pre-tax, from transition services provided to the acquirer of the DSNA business; and a tax benefit of $4.5 million from the resolution of a state tax issue.
Fourth Quarter Financial Results (cont'd)
- Excluding these transactions that affect comparability, adjusted income from continuing operations after tax was $28.5 million, or $1.03 per diluted share, in the fourth quarter of 2009, compared to $21.3 million, or $0.72 per diluted share, in the fourth quarter of 2008. Adjusted income from continuing operations 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 income from continuing operations as reported is included in this press release in Table 3.
- Net income, including the impact of discontinued operations, was $34.1 million, or $1.23 per diluted share, in the fourth quarter of fiscal 2009, compared to $38.8 million, or $1.31 per diluted share, for the fourth quarter of fiscal 2008.
- During the fourth quarter of 2009, the Company opened four stores and closed seven.
Fiscal Year Financial Results
- Net sales from continuing operations for fiscal 2009 increased 1% to $1,643.6 million, compared to $1,630.3 million for fiscal 2008.
- Comparable retail sales for fiscal 2009 declined 2% following a 5% increase for fiscal 2008.
- Income from continuing operations after tax was $88.8 million, or $3.09 per diluted share, for fiscal 2009, compared to $73.9 million, or $2.50 per diluted share, for fiscal 2008.
- Excluding transactions affecting comparability between both years, adjusted income from continuing operations after tax was $75.8 million, or $2.64 per diluted share, for fiscal 2009, compared to $66.0 million, or $2.23 per diluted share, for fiscal 2008. As previously noted, this is a non-GAAP measure which the Company is providing as a supplemental disclosure. A reconciliation of income from continuing operations as reported is included in Table 3.
- Net income, including the impact of discontinued operations, was $88.4 million, or $3.08 per diluted share, for fiscal 2009, compared to $82.4 million, or $2.79 per diluted share, for fiscal 2008.
- During fiscal 2009, the Company opened 38 stores and closed eight.
Outlook
While there is still uncertainty in the economic environment, the Company is projecting that earnings per diluted share from continuing operations for fiscal 2010 will be between $2.90 and $3.10, assuming positive low-single digit comparable retail sales. For the first quarter of fiscal 2010, the Company is forecasting that earnings per diluted share from continuing operations will be between $0.85 and $0.90, assuming flat comparable retail sales. Earnings guidance assumes that currency exchange rates will remain where they are today.
Conference Call Information
The Children's Place will host a conference call to discuss its fourth quarter and fiscal year 2009 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 apparel. The Company designs, contracts to manufacture and sells high-quality, value-priced merchandise under the proprietary "The Children's Place" brand name. As of January 30, 2010, the Company owned and operated 947 stores and an online store at www.childrensplace.com.
This press release and above referenced conference call may contain certain forward-looking statements regarding future circumstances, including statements relating to our future operating plans and strategies, and forecasts regarding 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 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 (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.
Table 1
THE CHILDREN'S PLACE RETAIL STORES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Fourth Quarter Fiscal Fiscal Year
Ended Ended
------------------ ----------------------
Jan 30, Jan 31, Jan 30, Jan 31,
2010 2009 2010 2009
-------- -------- ---------- ----------
Net sales $462,835 $441,459 $1,643,587 $1,630,323
Cost of sales 276,987 265,671 984,086 958,510
-------- -------- ---------- ----------
Gross profit 185,848 175,788 659,501 671,813
Selling, general and administrative expenses 119,217 119,561 455,782 471,302
Asset impairment charge 479 5,410 2,200 6,491
Other costs -- 35 -- 213
Depreciation and amortization 18,189 18,258 71,447 71,410
-------- -------- ---------- ----------
Income from continuing operations before
interest and taxes 47,963 32,524 130,072 122,397
Interest (expense), net (481) (2,136) (5,731) (4,939)
-------- -------- ---------- ----------
Income from continuing operations before
income taxes 47,482 30,388 124,341 117,458
Provision for income taxes 13,325 7,057 35,500 43,523
-------- -------- ---------- ----------
Income from continuing operations net of
income taxes 34,157 23,331 88,841 73,935
Income (loss) from discontinued operations
net of income taxes (47) 15,453 (487) 8,435
-------- -------- ---------- ----------
Net income $34,110 $38,784 $88,354 $82,370
======== ======== ========== ==========
Basic income from continuing operations per
common share $1.24 $0.79 $3.12 $2.52
Income (loss) from discontinued operations
per common share (0.00) 0.53 (0.02) 0.29
-------- -------- ---------- ----------
Basic net income per common share $1.24 $1.32 $3.10 $2.81
======== ======== ========== ==========
Basic weighted average common shares
outstanding 27,436 29,428 28,463 29,307
Diluted income from continuing operations per
common share $1.23 $0.79 $3.09 $2.50
Income (loss) from discontinued operations
per common share (0.00) 0.52 (0.02) 0.29
-------- -------- ---------- ----------
Diluted net income per common share $1.23 $1.31 $3.08 $2.79
======== ======== ========== ==========
Diluted weighted average common shares and
common shares equivalents outstanding 27,713 29,575 28,707 29,548
Note: All 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 only.
Numbers may not add due to rounding.
Table 2
THE CHILDREN'S PLACE RETAIL STORES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
January January
30, 2010 31, 2009
-------- --------
Current assets:
Cash and investments $170,492 $226,206
Accounts receivable 16,910 19,639
Inventories 206,227 211,227
Other current assets 63,253 62,518
-------- --------
Total current assets 456,882 519,590
Property and equipment,
net 312,801 318,116
Other assets, net 84,377 102,051
-------- --------
Total assets $854,060 $939,757
======== ========
Current liabilities:
Revolving credit facility $ -- $ --
Short term portion of
term loan -- 30,000
Accounts payable 55,547 73,333
Accrued expenses and
other current
liabilities 89,969 103,662
-------- --------
Total current liabilities 145,516 206,995
Long term portion of term
loan -- 55,000
Other liabilities 119,574 129,883
-------- --------
Total liabilities 265,090 391,878
Stockholders' equity 588,970 547,879
-------- --------
Total liabilities and
stockholders' equity $854,060 $939,757
======== ========
Table 3
THE CHILDREN'S PLACE RETAIL STORES, INC.
RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION TO GAAP
(In millions, except per share amounts)
(Unaudited)
Fourth Quarter Fiscal Year
Ended Ended
-------------- --------------
Jan Jan Jan
Jan 30, 31, 30, 31,
2010 2009 2010 2009
------- ----- ------ ------
Income from continuing operations net of
income taxes $34.2 $23.3 $88.8 $73.9
------- ----- ------ ------
Transactions affecting comparability pre-tax:
Gains:
Favorable settlement of IRS
Employment tax audit related to stock options (0.3) -- (5.0) --
Net transition services income -- (0.4) -- (11.6)
Sale of store lease -- -- -- (2.3)
Professional fees (income recovery) -- (0.5) -- 3.1
Expenses:
Proxy contest fees -- -- 2.0 --
Company restructuring fees -- -- 2.9 --
Prepayment of term loan expenses/deferred
financing fees -- -- 2.4 --
Impairment charge -- 4.9 0.8 5.1
------- ----- ------ ------
Aggregate (income) impact of transactions
affecting comparability (0.3) 4.0 3.1 (5.7)
Income tax effect of transactions affecting
comparability 0.1 (1.6) (1.3) 2.3
Excess foreign tax credits from repatriation
of cash (5.5) -- (10.3) --
Tax benefit from resolution of IRS income tax
audit -- -- (4.5) --
Tax benefit from resolution of state tax issue -- (4.5) -- (4.5)
------- ----- ------ ------
Adjusted (gain) impact from transactions
affecting comparability (5.7) (2.0) (13.0) (7.9)
------- ----- ------ ------
Adjusted income from continuing operations net
of income taxes $28.5 $21.3 $75.8 $66.0
======= ===== ====== ======
GAAP income from continuing operations per
common share $1.23 $0.79 $3.09 $2.50
Adjusted income from continuing operations per
common share $1.03 $0.72 $2.64 $2.23
Note: Numbers may not add due to rounding
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SOURCE: The Children's Place Retail Stores, Inc.
CONTACT: The Children's Place Retail Stores, Inc.
Susan Riley, EVP, Finance & Administration
(201) 558-2400
Jane Singer, VP, Investor Relations
(201) 453-6955