The Children's Place Reports Second Quarter 2009 Financial Results
SECAUCUS, N.J.,
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 fromCanada 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 onAugust 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.
- In the second quarter of 2009, gains due to excess foreign tax
credits of
- 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
"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
Conference Call Information
The Children's Place will host a conference call to discuss its second quarter results today at
About The
The
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
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
(201) 558-2400
(201) 453-6955