UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
FORM
8-K
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(d) OF
THE
SECURITIES EXCHANGE ACT OF 1934
Date
of report (Date of earliest event reported) March 15, 2007
THE
CHILDREN’S PLACE RETAIL STORES, INC.
(Exact
name of registrant as specified in charter)
|
Delaware
(State
or Other Jurisdiction
of
Incorporation)
|
0-23071
(Commission
File
Number)
|
31-1241495
(IRS
Employer
Identification
No.)
|
915
Secaucus Road, Secaucus, New Jersey, 07094
(Address
of Principal Executive Offices) (Zip Code)
(201)
558-2400
(Registrant’s
telephone number, including area code)
Not
applicable
(Former
Name or Former Address, if Changed Since Last Report)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
[
] Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[
] Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[
] Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
[
] Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item
2.02 Results of Operations and Financial Condition
On
March
15, 2007, The Children’s Place Retail Stores, Inc. (the “Company”) issued a
press release regarding the Company’s preliminary financial results for its
fourth quarter and fiscal year ended February 3, 2007, as well as information
regarding certain fourth quarter expenses and write-offs, including a $9.4
million impairment charge relating to the write-down of fixed assets at 28
recently remodeled Disney Stores, which the Company’s Audit Committee has
approved in connection with the preparation of the financial statements to
be
included in the Company’s Form 10-K for fiscal 2006. The Company’s March 15,
2007 press release also provided updated guidance for fiscal year 2007 and
information regarding the Company’s discussions with The Walt Disney
Company.
A
copy of
the Company’s March 15, 2007 press release relating to the foregoing is attached
hereto as Exhibit 99.1
and is
incorporated in this Item 2.02 by reference.
The
information contained under this Item 2.02 shall not be deemed “filed” for
purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), or incorporated by reference in any filing under the Securities
Act of 1933, as amended, or the Exchange Act, except as shall be expressly
set
forth by specific reference in such a filing.
Item
9.01. Financial Statements and Exhibits.
The
following exhibits are furnished herewith:
99.1
Press release of The Children’s Place Retail Stores, Inc. dated March 15,
2007
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
| THE CHILDREN’S PLACE RETAIL STORES, INC. | ||
| |
|
|
| Dated: March 15, 2007 | By: | /s/ SUSAN RILEY |
|
Name:
Susan Riley
|
||
| Title: Executive Vice President, Finance and Administration | ||
FOR
IMMEDIATE RELEASE
THE
CHILDREN’S PLACE RETAIL STORES, INC. REPORTS PRELIMINARY FOURTH
QUARTER
AND FISCAL 2006 FINANCIAL RESULTS
Secaucus,
New Jersey - March 15, 2007 - The Children’s Place Retail Stores, Inc. (Nasdaq:
PLCE)
announced preliminary financial results for its fourth quarter and fiscal year
ended February 3, 2007. These preliminary results may be subject to significant
adjustment as a result of the Company’s restatement of previously issued
financial results to correct the accounting for past stock option grants to
reflect the findings of the investigation into the Company’s stock option
practices, which were announced in a separate press release on January 31,
2007.
As a result, the Company is not providing net income on a per share basis or
full comparative financial results for the fourth quarter and full fiscal year
ended January 28, 2006, and is providing only selected balance sheet data.
Fourth
Quarter
| · |
Consolidated
net sales for the 14 weeks ended February 3, 2007, increased 20%
to $645.2
million compared to $539.7 million for the 13 weeks ended January
28,
2006. Fourth quarter sales were comprised of $416.8 million from
The
Children’s Place brand, a 17% increase over last year, and $228.4 million
from Disney Store, a 24% increase over last
year.
|
| · |
Consolidated
comparable store sales for the 13 weeks ended January 27, 2007, increased
6%. The Children’s Place brand’s comparable store sales increased 3% on
top of last year’s 11% increase. Disney Store’s comparable store sales
increased 14%.
|
| · |
Preliminary
operating income was $54.8 million, or 8.5% of net
sales.
|
| · |
Preliminary
net income was $46.8 million, including approximately $3.3 million,
pre-tax, in equity compensation expense under SFAS 123R. Also included
in
net income are:
|
| · |
the
tax benefit due to certain foreign tax credits which totaled $9.5
million;
|
| · |
$9.4
million, pre-tax, in costs paid or accrued in connection with the
stock
option investigation and tax implications related to certain employee
options;
|
| · |
write-offs
totaling $8.3 million, pre-tax, due primarily to: i.) the Company’s
decision not to proceed with the 42nd
Street store location in New York City; and ii.) infrastructure
investments that had been made in connection with Disneystore.com,
as the
Company is moving forward with the Walt Disney Company to form an
e-commerce alliance in which Disneystore.com would maintain a presence
within Disney.com.
|
| · |
In
addition, preliminary fourth quarter net income includes a pre-tax
impairment charge of approximately $9.4 million, related to the write-down
of fixed assets at 28 recently remodeled Disney Stores.
|
| · |
Excluding
the four unusual items above, preliminary fourth quarter net income
was
$53.6 million, which is above previous guidance. The Company has
excluded
these items because it does not believe they are indicative of the
core
business and that
it is a beneficial supplemental disclosure to investors in analyzing
its
past and future performance.
|
| · |
Preliminary
net income does not reflect any adjustments that may be required
as a
result of the Company’s review of the appropriate accounting for its
previous issuance of stock options and related discussions with the
staff
of the Securities and Exchange Commission. In addition, the tax costs
are
subject to adjustment pending clarification of the application of
certain
tax laws.
|
| · |
Preliminary
diluted shares outstanding in the fourth quarter is estimated at
approximately 30 million shares.
|
| · |
During
the fourth quarter, the Company opened 17 Children’s Place stores and
closed two. In addition, the Company opened three Disney Stores and
closed
six.
|
-more-
PLCE
- Fourth Quarter & Full Year 2006 Financial Results
Page
2
Fiscal
Year 2006
| · |
Consolidated
sales for the fiscal year, or 53 weeks ended February 3, 2007, increased
21% to $2,017.7 million, compared to $1,668.7 million for the 52
weeks
ended January 28, 2006. Fiscal 2006 sales were comprised of $1,405.4
million from The Children’s Place, a 20% increase over last year, and
$612.3 million in sales from Disney Store, a 23% increase over last
year.
|
| · |
Consolidated
comparable store sales, for the 52 weeks ended January 27, 2007,
increased
11% for the year. The Children’s Place brand’s comparable store sales
increased 10% on top of last year’s 9% increase. Disney Store’s comparable
store sales increased 14%.
|
| · |
Preliminary
operating income was $114.2 million, or 5.7% of net
sales.
|
| · |
Preliminary
net income was $84.6 million, including approximately $12.3 million,
pre-tax, in equity compensation expense under SFAS 123R, approximately
$14.3 million, pre-tax, in stock option investigation and related
expenses, and the previously mentioned tax benefit, write-offs and
asset
impairment charge.
|
| · |
Excluding
the tax benefit, stock option investigation costs and related tax
implications, write-offs and asset impairment charge, preliminary
fiscal
2006 net income was $94.3 million.
|
| · |
Preliminary
diluted shares outstanding in the fourth quarter is estimated at
approximately 30 million
shares.
|
|
·
|
During
fiscal 2006, the Company opened 69 Children’s Place stores and closed
five. In addition, the Company opened 19 Disney Stores and closed
eight.
|
Fiscal
Year 2007 Guidance
The
Company now anticipates fiscal 2007 earnings per share of approximately $3.63
to
$3.73, $0.08 higher than previous guidance due to an approximate $4 million
reduction in the Company’s previously anticipated $6 million pre-tax expense for
fiscal 2007 to address issues with certain recently remodeled Disney Stores.
The
Company anticipates a tax rate of 38% and diluted shares outstanding of 31
million. This guidance does not reflect any residual expenses the Company may
incur as a result of the conclusion of the stock option investigation.
As
previously reported, the Company is in discussions with the Walt Disney Company
regarding potential modifications to certain terms of the Company’s long-term
license agreement to operate the Disney Store retail chain in North America,
some of which may be material. These discussions began after the Company was
notified by Disney that the Company had failed to comply with certain of its
obligations under the license agreement, including, among others, obligations
with respect to renovation of stores and store maintenance. Disney has asserted
that these failures constitute material breaches of the license agreement.
The
Company and Disney have engaged in a dialogue and have exchanged proposals
regarding the resolution of these issues. To date, no agreement has been
reached. Accordingly, the Company cannot predict the specific nature of any
modifications to be made to the license agreement and no assurances can be
made
as to the outcome of these negotiations. If the Company is unable to reach
agreement with Disney on the modifications, Disney may exercise its rights
and
remedies under the agreement.
-
more
-
PLCE
- Fourth Quarter & Full Year 2006 Financial Results
Page
3
The
Children’s Place will host a conference call to discuss its preliminary fourth
quarter and fiscal 2006 results today at 10:00 a.m. Eastern Time. Interested
parties are invited to listen to the call by dialing (785) 830-7975 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 March 22, 2007. To access the replay, please
dial
(402) 220-0428, or you may listen to the audio archive on the Company’s website,
www.childrensplace.com.
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” and licensed “Disney Store” brand names. As of March 3, 2007, the Company
owned and operated 865 The Children’s Place stores and 328 Disney Stores in
North America and The Children’s Place 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 from those contemplated in such forward-looking statements including,
in particular, the risks and uncertainties described in the Company’s filings
with the Securities and Exchange Commission, as well as the risks and
uncertainties relating to the Company's stock option grants and procedures
and
the recently completed investigation by the special committee of the Company’s
Board of Directors, the previously announced pending restatement of the
Company’s historical financial statements, the delays in filing the Company’s
periodic reports with the Securities and Exchange Commission, the outcome of
the
informal investigation of the Company being conducted by the Securities and
Exchange Commission, potential other governmental proceedings, the
shareholder litigation commenced against the Company and certain of its officers
and directors,
and
the potential impact of each
of these matters on the Company, as well as matters relating to the Company’s
discussions with The Walt Disney Company. Actual
results, events, and performance may differ. 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 hereof. 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.
|
Contact:
|
The
Children’s Place Retail Stores, Inc.
|
|
Susan
Riley, EVP, Finance & Administration, 201/558-2400
|
|
|
Heather
Anthony, Senior Director, Investor Relations, 201/558-2865
|
(Tables
Follow)
THE
CHILDREN’S PLACE RETAIL STORES, INC.
PRELIMINARY
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(In
thousands)
(Unaudited)
|
14
Weeks Ended:
|
53
Weeks Ended:
|
||||||||||||
|
February
3,
2007
|
%
of Sales
|
February
3,
2007
|
%
of Sales
|
||||||||||
|
Net
sales
|
$
|
645,180
|
100.0
|
%
|
$
|
2,017,713
|
100.0
|
%
|
|||||
|
Cost
of sales
|
358,149
|
55.5
|
%
|
1,188,272
|
58.9
|
%
|
|||||||
|
Gross
profit
|
287,031
|
44.5
|
%
|
829,441
|
41.1
|
%
|
|||||||
|
Selling,
general and administrative
expenses
|
203,626
|
31.5
|
%
|
640,338
|
31.7
|
%
|
|||||||
|
Asset
impairment charge
|
9,589
|
1.5
|
%
|
10,006
|
0.5
|
%
|
|||||||
|
Depreciation
and amortization
|
19,036
|
3.0
|
%
|
64,873
|
3.2
|
%
|
|||||||
|
Operating
income
|
54,780
|
8.5
|
%
|
114,224
|
5.7
|
%
|
|||||||
|
Interest
income, net
|
(1,557
|
)
|
(0.2
|
)%
|
(3,900
|
)
|
(0.2
|
)%
|
|||||
|
Income
before income taxes
|
56,337
|
8.7
|
%
|
118,124
|
5.9
|
%
|
|||||||
|
Provision
for income taxes
|
9,557
|
1.4
|
%
|
33,558
|
1.7
|
%
|
|||||||
|
Net
income
|
$
|
46,780
|
7.3
|
%
|
$
|
84,566
|
4.2
|
%
|
|||||
THE
CHILDREN’S PLACE RETAIL STORES, INC.
SELECTED
CONSOLIDATED BALANCE SHEET DATA
(In
thousands)
(Unaudited)
|
February
3, 2007
|
January
28, 2006
|
||||||
|
Cash
and short term investments
|
$
|
192,038
|
$
|
173,323
|
|||
|
Inventories
|
241,717
|
214,702
|
|||||
|
Revolving
credit facility
|
0
|
0
|
|||||
|
Accounts
payable
|
85,360
|
82,825
|
|||||
THE
CHILDREN’S PLACE RETAIL STORES, INC.
PRELIMINARY
SEGMENT INFORMATION
(In
millions)
(Unaudited)
|
Fourteen
Weeks Ended February 3, 2007
|
|||||||||||||
|
The
Children’s
Place
|
Disney
Store
|
Shared
Services
|
Total
Company
|
||||||||||
|
Net
sales
|
$
|
416.8
|
$
|
228.4
|
$
|
-
|
$
|
645.2
|
|||||
|
Segment
operating profit (loss)
|
73.8
|
10.8
|
1 |
(29.8)
|
2 |
54.8
|
|||||||
|
Operating
profit as a percent of net sales
|
17.7
|
%
|
4.7
|
%
|
N/A
|
8.5
|
%
|
||||||
|
53
Weeks Ended February 3, 2007
|
|||||||||||||
|
The
Children’s
Place
|
Disney
Store
|
Shared
Services
|
Total
Company
|
||||||||||
|
Net
sales
|
$
|
1,405.4
|
$
|
612.3
|
$
|
-
|
$
|
2,017.7
|
|||||
|
Segment
operating profit (loss)
|
207.8
|
10.0
|
1 |
(103.6)
|
2 |
114.2
|
|||||||
|
Operating
profit as a percent of net sales
|
14.8
|
%
|
1.6
|
%
|
N/A
|
5.7
|
%
|
||||||
1
Includes
$9.4 million in asset impairment charges and $8.3 million in write-offs related
to the Company’s decision not to move forward with the 42nd
Street
store location in New York City and infrastructure investments made in
connection with Disneystore.com, as the Company is moving forward with an
alliance with the Walt Disney Company in which Disneystore.com would maintain
a
presence within Disney.com.
2
Includes
costs paid or accrued in connection with the stock option investigation and
tax
implications related to certain employee stock options totaling $9.4 million
for
the fourteen weeks and $14.3 million for the fifty-three weeks ended February
3,
2007.
###