The Children's Place Reports Third Quarter 2011 Financial Results
Management Updates Fiscal 2011 Earnings Guidance
SECAUCUS, N.J., Nov 17, 2011 (GlobeNewswire via COMTEX) -- The Children's Place Retail Stores, Inc. (Nasdaq:PLCE),the largest pure-play children's specialty apparel retailer in North America, today announced third quarter net sales of $484.1 million for the thirteen weeks ended October 29, 2011, a 7% increase compared to $453.4 million in the third quarter of fiscal 2010. Comparable retail sales increased 0.9% in the quarter.
Gross margin expanded 110 basis points to 41.3% for the third quarter of 2011, compared to 40.2% the prior year. Income from continuing operations after tax was $33.7 million, or $1.33 per diluted share, in the third quarter of 2011, compared to $31.2 million, or $1.14 per diluted share, in the third quarter of 2010.
Jane Elfers, President and Chief Executive Officer, commented, "The Children's Place delivered solid financial results for the quarter, including positive comparable retail sales, accelerated total sales growth, continued gross margin expansion and a strong earnings per share increase. We attribute these results to a combination of our enhanced merchandise offerings, our intense focus on inventory management and the momentum from our other strategic growth initiatives which enabled us to drive sales and expand margin despite significantly higher product costs and a difficult macroeconomic environment."
Fiscal Year-to-Date
Net sales increased 3% to $1,258.4 million fiscal year-to-date 2011, compared to $1,220.8 million for the same period last year. Comparable retail sales declined 2.4% fiscal year-to-date.
Gross margin expanded 70 basis points to 39.7%, compared to 39.0% fiscal year-to-date 2010. Income from continuing operations after tax was $53.0 million, or $2.05 per diluted share, fiscal year-to-date 2011, compared to $50.9 million, or $1.83 per diluted share, last year.
Store Openings and Closures
During the third quarter of 2011, The Children's Place opened 18 stores and closed two. Fiscal year-to-date 2011, the Company has opened 88 stores and closed seven.
Share Repurchase Program
During the third quarter of fiscal 2011, the Company repurchased 647 thousand shares for approximately $27.9 million. Fiscal year-to-date 2011, the Company repurchased 1.6 million shares for approximately $74.5 million. At the end of the third quarter, $35.6 million of the $100 million share repurchase program authorized in March 2011 remained available for future share repurchases. Under the 2011 share repurchase 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. 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 for fiscal 2011 and now projects earnings per diluted share from continuing operations will be in the range of $3.24 to $3.29 for fiscal 2011, compared to its previous guidance of $3.13 to $3.25. The Company is providing initial guidance for earnings per diluted share from continuing operations for the fourth quarter of 2011 to be in the range of $1.19 to $1.24, assuming flat to slightly positive comparable retail sales.
The Company expects gross margin expansion of 30 to 50 basis points in fiscal 2011 due to a higher IMU, lower markdowns and disciplined inventory management. SG&A is expected to deleverage 60 to 80 basis points, as the Company anticipates higher variable and equity compensation payout in fiscal 2011. In addition, the Company plans to remodel 12 stores in January 2012 which is expected to negatively impact earnings by approximately 4 cents per diluted share for the fourth quarter and fiscal 2011.
The earnings guidance for the fourth quarter and fiscal 2011 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 third quarter 2011 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 October 29, 2011, the Company operated 1,076 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 sales, gross margin 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 29, 2011. 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. 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)
Third Quarter Ended Year-to-Date Ended
---------------------- --------------------------
October October
29, 30, October 29, October 30,
2011 2010 2011 2010
---------- ---------- ------------ ------------
Net sales $ 484,085 $ 453,395 $ 1,258,399 $ 1,220,829
Cost of sales 284,034 271,052 759,136 745,208
---------- ---------- ------------ ------------
Gross profit 200,051 182,343 499,263 475,621
Selling, general and administrative
expenses 126,741 114,210 355,348 334,946
Asset impairment charges 369 354 1,747 2,506
Depreciation and amortization 18,493 17,738 54,722 53,562
---------- ---------- ------------ ------------
Operating income 54,448 50,041 87,446 84,607
Interest (expense), net (70) (390) (655) (1,227)
---------- ---------- ------------ ------------
Income from continuing operations
before income taxes 54,378 49,651 86,791 83,380
Provision for income taxes 20,686 18,493 33,792 32,483
---------- ---------- ------------ ------------
Income from continuing operations 33,692 31,158 52,999 50,897
Income from discontinued operations,
net of income taxes -- 151 -- 81
---------- ---------- ------------ ------------
Net income $ 33,692 $ 31,309 $ 52,999 $ 50,978
========== ========== ============ ============
Basic earnings per share amounts
Income from continuing operations $ 1.34 $ 1.16 $ 2.07 $ 1.86
Income from discontinued operations -- 0.01 -- --
---------- ---------- ------------ ------------
Net income $ 1.34 $ 1.16 $ 2.07 $ 1.86
========== ========== ============ ============
Basic weighted average common shares
outstanding 25,121 26,907 25,657 27,415
Diluted earnings per share amounts
Income from continuing operations $ 1.33 $ 1.14 $ 2.05 $ 1.83
Income from discontinued operations -- 0.01 -- --
---------- ---------- ------------ ------------
Net income $ 1.33 $ 1.15 $ 2.05 $ 1.84
========== ========== ============ ============
Diluted weighted average common shares
outstanding 25,279 27,238 25,868 27,764
Note: Table may not add due to rounding
Table 2
THE CHILDREN'S PLACE RETAIL STORES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
October January October
29, 29, 30,
2011 2011* 2010
---------- ---------- ----------
Assets:
Cash and investments $ 152,621 $ 185,915 $ 172,745
Accounts receivable 25,867 16,121 20,945
Inventories 256,425 210,523 232,902
Other current assets 54,448 65,142 71,326
---------- ---------- ----------
Total current assets 489,361 477,701 497,918
Property and equipment,
net 326,623 320,601 317,564
Other assets, net 58,196 56,029 59,961
---------- ---------- ----------
Total assets $ 874,180 $ 854,331 $ 875,443
========== ========== ==========
Liabilities and
Stockholders' Equity:
Accounts payable $ 54,960 $ 50,730 $ 79,626
Accrued expenses and
other current
liabilities 94,161 79,666 97,853
---------- ---------- ----------
Total current
liabilities 149,121 130,396 177,479
Other liabilities 118,418 116,208 118,291
---------- ---------- ----------
Total liabilities 267,539 246,604 295,770
Stockholders' equity 606,641 607,727 579,673
---------- ---------- ----------
Total liabilities and
stockholders' equity $ 874,180 $ 854,331 $ 875,443
========== ========== ==========
* Derived from the audited consolidated financial statements
included in the Company's Annual Report on Form 10-K for the
fiscal year ended January 29, 2011.
This news release was distributed by GlobeNewswire, www.globenewswire.com
SOURCE: The Children's Place Retail Stores, Inc.
CONTACT: Jane Singer, VP, Investor Relations, (201) 453-6955