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) May 22, 2007
THE
CHILDREN’S PLACE RETAIL STORES, INC.
(Exact
name of registrant as specified in charter)
|
Delaware
|
0-23071
|
31-1241495
|
|
(State
or Other Jurisdiction
of
Incorporation)
|
(Commission
File
Number)
|
(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:
o Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
o Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
o Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o 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
May
22, 2007, we issued a press release regarding our preliminary financial results
for the fiscal first quarter ended May 5, 2007. The
press
release also provided updated information regarding our discussions with The
Walt Disney Company.
A
copy of
our 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 May 22,
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. | ||
| |
|
|
| By: | /s/ Susan Riley | |
|
Name:
Susan Riley
Title:
Executive Vice President, Finance and Administration
|
||
| Dated: May 22, 2007 | ||
FOR
IMMEDIATE RELEASE
THE
CHILDREN’S PLACE RETAIL STORES, INC. REPORTS PRELIMINARY FIRST QUARTER 2007
FINANCIAL RESULTS
~
Company Provides Update on Discussions with The Walt Disney Company
~
Secaucus,
New Jersey - May 22, 2007 - The Children’s Place Retail Stores, Inc. (Nasdaq:
PLCE)
today
reported preliminary financial results for the fiscal first quarter ended
May 5,
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 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
first
quarter ended April 29, 2006, and is providing only selected balance sheet
data.
|
·
|
Consolidated
net sales for the thirteen weeks ended May 5, 2007, increased 12%
to
$478.9 million, compared to $426.5 million for the thirteen weeks
ended
April 29, 2006. First quarter sales were comprised of $356.0 million
from
The Children’s Place brand, an 11% increase over last year’s sales of
$322.0 million, and $122.9 million from Disney Store, an 18% increase
compared to $104.5 million last year.
|
|
·
|
Due
to the 53rd
week in fiscal 2006, comparable store sales are compared to the
13 week
period ended May 6, 2006. On that basis, consolidated comparable
store
sales increased 4% in the quarter. The Children’s Place brand’s comparable
store sales increased 2% on top of last year’s 9% increase and Disney
Store’s comparable store sales increased 8% on top of last year’s 16%
increase.
|
|
·
|
Preliminary
net income was $13.1 million, which included approximately $2.5
million,
pre-tax, in expenses associated with the Company’s stock option
investigation, of which $0.9 million is non-cash.
|
|
·
|
Excluding
the costs associated with the stock option investigation, preliminary
net
income would have been $14.7 million. The Company has excluded
this item
because it does not believe it is an on-going expense of its core
business. The Company believes it is a beneficial supplemental
disclosure
to investors in analyzing past and future performance.
|
|
·
|
Preliminary
net income does not reflect any final 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.
|
|
·
|
Preliminary
diluted shares outstanding in the first quarter are estimated at
approximately 30 million.
|
|
·
|
During
the first quarter, the Company opened six Children’s Place stores and
closed four.
|
As
previously reported, the Company has been in discussions with The Walt Disney
Company (Disney) regarding potential modifications to certain terms of the
Company's long-term license agreement to operate the Disney Store retail
chain
in North America. 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.
-more-
PLCE
- Preliminary First Quarter 2007 Financial Results
Page
2
The
Company believes that the discussions between the Company and Disney are
nearing
conclusion and the parties have exchanged drafts of a letter agreement which
contemplates that various modifications would be made to the license agreement.
Among other things, it is expected that the Company would commit to renovate
or
upgrade a substantial number of Disney Stores over the next five years,
beginning immediately, and to expend approximately $175 million for this
purpose. If the Company fails to adhere to the new schedule of compliance
and
renovations or otherwise comply with the modified terms, the agreement is
expected to require the Company to pay Disney a significant fee. Disney would
continue to retain all its other rights and remedies under the license
agreement.
As
the
final agreement is still pending, the terms are subject to change. Further,
there is no assurance that the Company and Disney will enter into a definitive
agreement with respect to these matters. If the Company is unable to reach
agreement with Disney on the new terms, the Company anticipates that Disney
may
exercise its rights and remedies under the license agreement. The Company
will
provide a further update once the agreement is executed or other developments
occur.
The
Children’s Place will host a conference call to discuss its preliminary first
quarter results today at 10:00 a.m. Eastern Time. Interested parties are
invited
to listen to the call by dialing (785) 424-1053 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 May 29, 2007. To access the replay, please
dial
(402) 220-1182, 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 May 5, 2007, the Company
owned and operated 868 The Children’s Place stores and 328 Disney Stores in
North America and its online store, 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
Sue
LaBar, Manager, Investor Relations, 201/453-6955
|
(Tables
Follow)
THE
CHILDREN’S PLACE RETAIL STORES, INC.
PRELIMINARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In
thousands)
(Unaudited)
|
13
Weeks Ended:
May
5,
2007
|
%
of
Sales
|
||||||
|
|
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||||||
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Net
sales
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$
|
478,863
|
100.0
|
%
|
|||
|
Cost
of sales
|
288,393
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60.2
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%
|
||||
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Gross
profit
|
190,470
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39.8
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%
|
||||
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Selling,
general and administrative expenses
|
153,335
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32.0
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%
|
||||
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Depreciation
and amortization
|
17,284
|
3.6
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%
|
||||
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Operating
income
|
19,851
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4.1
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%
|
||||
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Interest
(income)
|
(1,318
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)
|
(0.3
|
)%
|
|||
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Income
before income taxes
|
21,169
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4.4
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%
|
||||
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Provision
for income taxes
|
8,087
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1.7
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%
|
||||
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Net
income
|
$
|
13,082
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2.7
|
%
|
|||
THE
CHILDREN’S PLACE RETAIL STORES, INC.
SELECTED
CONSOLIDATED BALANCE SHEET DATA
(In
thousands)
(Unaudited)
|
May
5, 2007
|
April
29, 2006
|
||||||
|
Cash
and short term investments
|
$
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177,171
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$
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175,752
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|||
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Inventories
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235,646
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215,326
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|||||
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Revolving
credit facility
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0
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0
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|||||
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Accounts
payable
|
92,133
|
92,300
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|||||
THE
CHILDREN’S PLACE RETAIL STORES, INC.
PRELIMINARY
SEGMENT INFORMATION
(In
millions)
(Unaudited)
|
Thirteen
Weeks Ended May 5, 2007
|
|||||||||||||
|
The
Children’s
Place
|
Disney
Store
|
Shared
Services
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Total
Company
|
||||||||||
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Net
sales
|
$
|
356.0
|
$
|
122.9
|
$
|
---
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$
|
478.9
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|||||
|
Segment
operating profit (loss)
|
53.6
|
(4.5
|
)
|
(29.3)
1
|
19.8
|
||||||||
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Operating
profit as a percent of net sales
|
15.1
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%
|
(3.7
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)%
|
N/A
|
4.1
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%
|
||||||
1
Includes
approximately $2.5 million in expenses associated with the Company's stock
option investigation, of which $0.9 million is non-cash.
###