The Children's Place Reports Second Quarter 2010 Financial Results
Board of Directors Authorizes $100 Million Share Repurchase Program
Management Raises Fiscal 2010 Earnings Guidance
SECAUCUS, N.J., Aug. 19, 2010 (GLOBE NEWSWIRE) -- The Children's Place Retail Stores, Inc. (Nasdaq:PLCE), the largest pure-play children's specialty apparel retailer in North America, today announced second quarter net sales of $345.3 million for the thirteen weeks ended July 31, 2010, a 9.4% increase compared to $315.7 million in the second quarter of 2009.
Comparable retail sales, which include online sales, increased 4.7% in the second quarter of fiscal 2010 compared to a decline of 8.5% the previous year. During the second quarter of 2010, comparable store sales increased 3.3% in the U.S. and 0.8% in Canada, and comparable online sales increased 30.4%.
The loss from continuing operations after tax was $8.3 million, or $0.30 per share, in the second quarter of 2010, compared to a loss of $7.2 million in the second quarter of 2009, or $0.24 per share, including several transactions affecting comparability between the quarters. Excluding those items that affect comparability, the loss from continuing operations in the second quarter of 2010 narrowed 33% from the second quarter of 2009 when the Company reported an adjusted loss from continuing operations of $12.4 million, or $0.42 per share. Adjusted loss from continuing operations excluding transactions that affect comparability 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 loss from continuing operations as reported is included in Table 3 of this press release.
"We posted solid results for the second quarter, narrowing our seasonal operating loss through a combination of top line growth and disciplined expense management. We also continued to make substantial progress on our longer-term growth initiatives and believe we are well positioned to gain market share," commented Jane Elfers, President and Chief Executive Officer of The Children's Place. "While the economic environment remains uncertain, we are focused on driving improved sales and profitability in our business for the long term."
Elfers continued, "Our Board of Directors has authorized a $100 million share repurchase program. We believe the timing is right and this strategic decision to utilize the significant amount of cash on our balance sheet is aligned with the Company's commitment to increasing returns on capital and creating shareholder value."
During the second quarter of 2010, the Company opened 18 stores and closed three.
Fiscal Year-to-Date
Net sales from continuing operations were $767.4 million fiscal year-to-date 2010, a 6.9% increase compared to $717.6 million for the same period last year. Comparable retail sales increased 1.7% fiscal year-to-date 2010 compared to a 3.3% decline last year.
Income from continuing operations after tax was $19.7 million, or $0.70 per diluted share, fiscal year-to-date 2010, compared to $16.5 million, or $0.56 per diluted share, last year, including several transactions that affect comparability. Excluding those items that affect comparability, income from continuing operations after tax in the first half of 2010 increased 111% compared to the first half of 2009 when the Company reported adjusted income from continuing operations of $9.3 million, or $0.31 per diluted share. 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 of this press release.
Net income, including the impact of discontinued operations, was $19.7 million, or $0.70 per diluted share, fiscal year-to-date 2010, compared to $16.5 million, or $0.55 per diluted share, last year.
Fiscal year-to-date, the Company has opened 34 stores and closed four.
Share Repurchase Program
The Company announced today that the Board of Directors authorized a share repurchase program in the amount of $100.0 million. Under the program, the Company may repurchase shares in the open market over the next twelve months 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 conditions, and the Company may suspend or discontinue the program at any time.
Outlook
The Company updated its guidance for fiscal 2010 and now projects earnings per diluted share from continuing operations will be in the range of $3.08 to $3.18 for fiscal 2010, reflecting its first half results, from its previous guidance of $3.05 to $3.15. The Company provided initial guidance for earnings per diluted share from continuing operations for the third quarter of 2010 to be in the range of $1.38 to $1.43. The earnings guidance assumes flat to positive low-single digit comparable retail sales and assumes that currency exchange rates will remain where they are today. This guidance does not include the impact of a potential share repurchase.
Conference Call Information
The Children's Place will host a conference call to discuss its second quarter 2010 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 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 under the proprietary "The Children's Place" brand name. As of July 31, 2010, the Company owned and operated 977 stores and an online store at www.childrensplace.com.
Forward-Looking Statements
This press release (and above referenced call) may contain certain forward-looking statements regarding future circumstances, including statements relating to the Company's positioning, and forecasts regarding earnings per diluted share for the third quarter and fiscal 2010. 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 30, 2010. 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 a 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)
Second Quarter Ended Year-to-Date Ended
---------------------- ------------------------
July 31, August 1, July 31, August 1,
2010 2009 2010 2009
---------- ---------- ------------ ----------
Net sales $ 345,301 $ 315,676 $ 767,434 $ 717,577
Cost of sales 231,727 210,377 474,156 445,751
---------- ---------- ------------ ----------
Gross profit 113,574 105,299 293,278 271,826
Selling, general and administrative expenses 107,281 106,093 220,736 217,986
Asset impairment charge 1,222 315 2,152 1,414
Depreciation and amortization 18,199 17,564 35,824 35,088
---------- ---------- ------------ ----------
Income (loss) from continuing operations
before interest and taxes (13,128) (18,673) 34,566 17,338
Interest (expense), net (381) (1,462) (837) (4,730)
---------- ---------- ------------ ----------
Income (loss) from continuing operations
before income taxes (13,509) (20,135) 33,729 12,608
Provision (benefit) for income taxes (5,241) (12,906) 13,990 (3,904)
---------- ---------- ------------ ----------
Income (loss) from continuing operations, net
of income taxes (8,268) (7,229) 19,739 16,512
Income (loss) from discontinued operations,
net of income taxes 35 178 (70) (51)
---------- ---------- ------------ ----------
Net income (loss) $ (8,233) $ (7,051) $ 19,669 $ 16,461
========== ========== ============ ==========
Basic earnings (loss) per share amounts
---------------------------------------------
Income (loss) from continuing operations $ (0.30) $ (0.24) $ 0.71 $ 0.56
Income (loss) from discontinued operations 0.00 0.01 (0.00) (0.00)
---------- ---------- ------------ ----------
Net income (loss) $ (0.30) $ (0.24) $ 0.71 $ 0.56
========== ========== ============ ==========
Basic weighted average common shares
outstanding 27,755 29,552 27,669 29,514
Diluted earnings (loss) per share amounts
---------------------------------------------
Income (loss) from continuing operations $ (0.30) $ (0.24) $ 0.70 $ 0.56
Income (loss) from discontinued operations 0.00 0.01 (0.00) (0.00)
---------- ---------- ------------ ----------
Net income (loss) $ (0.30) $ (0.24) $ 0.70 $ 0.55
========== ========== ============ ==========
Diluted weighted average common shares
outstanding 27,755 29,552 28,027 29,746
Note: Table may not add due to rounding
Table 2
THE CHILDREN'S PLACE RETAIL STORES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
January
July 31, 30, August 1,
2010 2010* 2009
---------- ---------- ----------
Assets:
Cash and investments $ 198,228 $ 170,492 $ 152,198
Accounts receivable 18,905 16,910 21,792
Inventories 214,301 206,227 262,986
Other current assets 82,160 63,253 100,143
---------- ---------- ----------
Total current assets 513,594 456,882 537,119
Property and equipment,
net 318,255 312,801 310,795
Other assets, net 60,676 84,377 74,960
---------- ---------- ----------
Total assets $ 892,525 $ 854,060 $ 922,874
========== ========== ==========
Liabilities and
Stockholder Equity:
Short term portion of
term loan $ -- $ -- $ 38,000
Accounts payable 68,564 55,547 89,249
Accrued expenses and
other current
liabilities 81,878 89,969 93,088
---------- ---------- ----------
Total current
liabilities 150,442 145,516 220,337
Other liabilities 116,931 119,574 119,304
---------- ---------- ----------
Total liabilities 267,373 265,090 339,641
Stockholders' equity 625,152 588,970 583,233
---------- ---------- ----------
Total liabilities and
stockholders' equity $ 892,525 $ 854,060 $ 922,874
========== ========== ==========
* Derived from the audited financial statements included in
the Company's 10K filing for the year ended January 30,
2010.
Table 3
THE CHILDREN'S PLACE RETAIL STORES, INC.
RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION TO GAAP
(In thousands, except per share amounts)
(Unaudited)
Second Quarter Ended Year-to-Date Ended
----------------------- -----------------------
July 31, August 1, July 31, August 1,
2010 2009 2010 2009
---------- ----------- ------------ ---------
Income (loss) from continuing operations, net of income
taxes $ (8,268) $ (7,229) $ 19,739 $ 16,512
---------- ----------- ------------ ---------
Transactions affecting comparability:
Gains:
Favorable settlement of IRS employment tax audit
related to stock options -- (4,563) -- (4,563)
Expenses:
Proxy contest fees -- 2,200 -- 2,200
Prepayment of term loan expenses/ deferred financing
fees -- 1,530 -- 2,390
Company restructuring fees -- 250 -- 2,805
Impairment charge -- -- -- 852
---------- ----------- ------------ ---------
Aggregate impact of transactions affecting comparability -- (583) -- 3,684
Income tax effect -- 233 -- (1,474)
Excess foreign tax credits from repatriation of cash -- (4,834) -- (4,834)
Tax benefit from resolution of IRS income tax audit -- -- -- (4,540)
---------- ----------- ------------ ---------
Adjusted (gain) from transactions affecting
comparability -- (5,184) -- (7,164)
Adjusted income (loss) from continuing operations, net
of income taxes $ (8,268) $ (12,413) $ 19,739 $ 9,348
========== =========== ============ =========
GAAP income (loss) from continuing operations per
diluted share $ (0.30) $ (0.24) $ 0.70 $ 0.56
Adjusted income (loss) from continuing operations per
diluted share $ (0.30) $ (0.42) $ 0.70 $ 0.31
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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