The Children's Place Retail Stores, Inc. Reports Third Quarter 2008 Financial Results
SECAUCUS, N.J., Nov 20, 2008 (GlobeNewswire via COMTEX News Network) -- The Children's Place Retail Stores, Inc. (Nasdaq:PLCE) today reported financial results for the third quarter and fiscal year-to-date ended November 1, 2008. Results from continuing operations for the third quarters and fiscal year-to-date periods ended November 1, 2008 and November 3, 2007 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.
Third Quarter
- Net sales from continuing operations for the third quarter increased 5% to $450.6 million, compared to $430.6 million in the third quarter of 2007.
- Comparable store sales increased 2% in the third quarter of 2008 on top of a 1% increase for the same period last year.
- Income from continuing operations after tax was $28.4 million, or
$0.96 earnings per share, in the third quarter of 2008, compared to
$14.9 million, or $0.51 per share, in the third quarter of 2007.
The Company's third quarter income from continuing operations
included several items which the Company deems to be unusual or
one-time in nature, including:
- In the third quarter of 2008, income of $5.9 million pre-tax, primarily from transition services being provided to the acquirer of the DSNA business; and
- In the third quarter of 2007, severance expense of $4.0 million pre-tax, professional and legal fees of $2.3 million pre-tax associated with the Company's 2006 stock option investigation and related restatements, stock option tolling expense of $0.3 million pre-tax and fees for the review of strategic alternatives of $0.1 million pre-tax.
- Excluding the unusual or one-time items mentioned above from the third quarters of both years, adjusted income from continuing operations after tax was $24.9 million, or $0.84 earnings per share, in the third quarter of 2008, compared to $19.4 million, or $0.66 per share, in the third quarter of 2007. The third quarter income 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 from continuing operations as reported is included in this press release in Table 3.
- Net income, including the impact of discontinued operations, was $24.1 million in the third quarter of 2008, or $0.81 earnings per share, compared to $12.3 million, or $0.42 per share, for the same period last year.
- During the third quarter, the Company opened 19 stores and closed one.
Fiscal Year-to-Date
- Net sales from continuing operations increased 10% to $1,188.9 million, for fiscal year-to-date 2008, compared to $1,077.1 million for the same period of 2007.
- Comparable store sales increased 5% year-to-date 2008 on top of a 1% increase for the same period last year.
- Income from continuing operations after tax was $50.6 million, or $1.72 earnings per share, year-to-date 2008, compared to $14.2 million, or $0.49 per share, for the same period last year.
- Excluding the unusual or one-time items from both years, income from continuing operations after tax was $44.7 million, or $1.52 earnings per share, year-to-date 2008, compared to $22.1 million, or $0.74 per share, for the same period 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 $43.6 million, or $1.48 earnings per share, year-to-date 2008, compared to a loss of $1.1 million, or $0.04 loss per share, for the same period last year.
- Year-to-date, the Company opened 22 stores and closed six.
Chuck Crovitz, Interim Chief Executive Officer of The Children's Place Retail Stores, Inc., commented, "We were pleased with our sales and earnings growth during the third quarter, in spite of the weakening economic conditions and reduced shopper traffic. We believe our positive results are attributable to the strength of The Children's Place brand -- which offers great color, outfitting and fashion at a tremendous value -- as well as the many actions the Company has taken over the past year to reduce inventory levels, right-size our cost structure, strengthen the balance sheet and refocus efforts on our core The Children's Place brand.
"We believe The Children's Place is uniquely well-positioned for this economy as we offer parents the fashion and value they are looking for, coupled with an excellent customer experience to help expedite and simplify their holiday shopping. However, we expect this holiday season to be a very challenging one as the macroeconomic environment remains weak and is impacting consumers' purchasing power."
The Children's Place will host a conference call to discuss its third quarter results today at 10:00 a.m. Eastern Time. Interested parties are invited to listen to the call by dialing 1-800-894-5910 and providing the Conference ID, PLCE. The call will also be webcast live and can be accessed via the Company's web site, www.childrensplace.com. A replay of the call will be available approximately one hour after the conclusion of the call, until midnight on November 27, 2008. To access the replay, dial 1-800-753-9146, or you may listen to the audio archive on the Company's website.
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 November 1, 2008, the Company owned and operated 920 stores and an online store at www.childrensplace.com.
This press release (and above referenced call) may contain certain forward-looking statements regarding future circumstances. 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 report on Form 10-K. The following risks and uncertainties could cause actual results, events and performance to differ materially: the risk that the Company will be unsuccessful in gauging fashion trends and changing consumer preferences, the risk 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, and risks and uncertainties relating to the Company's strategic review. 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
---------------------- ----------------------
Nov. 1, Nov. 3, Nov. 1, Nov. 3,
2008 2007 2008 2007
---------- ---------- ---------- ----------
Net sales $ 450,623 $ 430,572 $1,188,864 $1,077,065
Cost of sales 254,239 258,251 692,839 659,326
---------- ---------- ---------- ----------
Gross profit 196,384 172,321 496,025 417,739
Selling, general and
administrative
expenses 126,716 131,004 351,919 347,998
Asset impairment
charge 954 947 1,081 1,582
Depreciation and
amortization 17,791 17,063 53,152 46,814
---------- ---------- ---------- ----------
Income from continuing
operations before
interest and taxes 50,923 23,307 89,873 21,345
Interest income
(expense), net (1,912) (796) (2,803) 632
---------- ---------- ---------- ----------
Income from continuing
operations before
income taxes 49,011 22,511 87,070 21,977
Provision for income
taxes 20,563 7,586 36,466 7,789
---------- ---------- ---------- ----------
Income from continuing
operations net of
income taxes 28,448 14,925 50,604 14,188
(Loss) from
discontinued
operations net of
income taxes (4,391) (2,622) (7,018) (15,262)
---------- ---------- ---------- ----------
Net income (loss) $ 24,057 $ 12,303 $ 43,586 $ (1,074)
========== ========== ========== ==========
Basic income from
continuing operations
per common share $ 0.97 $ 0.51 $ 1.73 $ 0.49
(Loss) from
discontinued
operations per common
share (0.15) (0.09) (0.24) (0.52)
---------- ---------- ---------- ----------
Basic net income
(loss) per common
share $ 0.82 $ 0.42 $ 1.49 $ (0.04)*
========== ========== ========== ==========
Basic weighted average
common shares
outstanding 29,364 29,084 29,173 29,084
Diluted income from
continuing operations
per common share $ 0.96 $ 0.51 $ 1.72 $ 0.49
(Loss) from
discontinued
operations per common
share (0.15) (0.09) (0.24) (0.52)
---------- ---------- ---------- ----------
Diluted net income
(loss) per common
share
$ 0.81 $ 0.42 $ 1.48 $ (0.04)*
========== ========== ========== ==========
Diluted weighted
average common shares
and common shares
equivalents
outstanding 29,726 29,357 29,440 29,084
* Does not add due to rounding.
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.
Table 2
THE CHILDREN'S PLACE RETAIL STORES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
November 1, February 2, November 3,
2008 2008 2007
---------- ---------- ----------
Current assets:
Cash and investments $ 185,980 $ 81,626 $ 108,291
Accounts receivable 24,213 41,143 43,686
Inventories 232,776 196,606 263,301
Other current assets 104,218 92,910 97,003
Restricted assets in bankruptcy
estate of subsidiary 78,971 -- --
Current assets held for sale -- 98,591 135,312
---------- ---------- ----------
Total current assets 626,158 510,876 647,593
Property and equipment, net 336,921 354,141 374,432
Other assets, net 83,230 128,357 84,582
Non-current assets held for sale -- 4,163 76,065
---------- ---------- ----------
Total assets $1,046,309 $ 997,537 $1,182,672
========== ========== ==========
Current liabilities:
Revolving credit facility $ -- $ 88,976 $ 108,886
Short term portion of term loan 30,000 -- --
Accounts payable 79,913 80,807 163,934
Accrued expenses and other current
liabilities 123,179 140,712 166,602
Liabilities of the bankrupt estate
of subsidiary 107,767 -- --
---------- ---------- ----------
Total current liabilities 340,859 310,495 439,422
Long term portion of term loan 55,000 -- --
Other liabilities 140,984 214,809 207,417
---------- ---------- ----------
Total liabilities 536,843 525,304 646,839
Stockholders' equity 509,466 472,233 535,833
---------- ---------- ----------
Total liabilities and
stockholders' equity $1,046,309 $ 997,537 $1,182,672
========== ========== ==========
Note: The balance sheet as of November 1, 2008, reflects DSNA
restricted assets available to settle its liabilities through
bankruptcy. "Assets held for sale" on the February 2, 2008 and
November 3, 2007 balance sheets reflect the assets sold to an
affiliate of The Walt Disney Company. The remaining assets and
liabilities of the Disney Store business are reflected in their
respective balance sheet categories on the February 2, 2008 and
November 3, 2007 balance sheets.
Table 3
THE CHILDREN'S PLACE RETAIL STORES, INC.
RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION TO GAAP
(In millions, except per share amounts)
(Unaudited)
Third Quarter Ended Year-to-Date Ended
------------------- -------------------
Nov. 1, Nov. 3, Nov. 1, Nov. 3,
2008 2007 2008 2007
-------- -------- -------- --------
Income from continuing
operations net of income
taxes $ 28.4 $ 14.9 $ 50.6 $ 14.2
-------- -------- -------- --------
Significant one-time items
pre-tax:
Net transition services
(income) (5.7) -- (11.1) --
Sale of store lease (income) -- -- (2.3) --
Tolling of stock options -- 0.3 -- 2.0
Severance expense for former
CEO -- 4.0 -- 4.0
Professional fees:
Legal fee recovery (income) (0.2) -- (0.2) --
Stock option/special
investigation fees -- 2.3 1.3 5.6
Strategic alternatives
review -- 0.1 2.4 0.1
-------- -------- -------- --------
Aggregate (income) expense
from significant items (5.9) 6.7 (9.9) 11.7
Income tax provision for
significant items 2.4 (2.2) 4.0 (3.8)
-------- -------- -------- --------
Adjusted (income) expense
from significant items
after taxes (3.5) 4.5 (5.9) 7.9
-------- -------- -------- --------
Adjusted income from
continuing operations net
of income taxes $ 24.9 $ 19.4 $ 44.7 $ 22.1
======== ======== ======== ========
GAAP income from continuing
operations per common share $ 0.96 $ 0.51 $ 1.72 $ 0.49
Adjusted income from
continuing operations per
common share $ 0.84 $ 0.66 $ 1.52 $ 0.74
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SOURCE: The Children's Place Retail Stores, Inc.
The Children's Place Retail Stores, Inc.
Susan Riley, EVP, Finance & Administration
(201) 558-2400
Jane Singer, VP, Investor Relations
(201) 453-6955