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):
November
20, 2008
|
THE
CHILDREN’S PLACE RETAIL STORES, INC.
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(Exact
Name of Registrants as Specified in Their Charters)
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Delaware
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(State
or Other Jurisdiction of
Incorporation)
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0-23071
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31-1241495
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(Commission
File Number)
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(IRS
Employer Identification No.)
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915
Secaucus Road, Secaucus, New Jersey
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07094
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(Address
of Principal Executive Offices)
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(Zip
Code)
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(201)
558-2400
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(Registrant’s
Telephone Number, Including Area Code)
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Not
Applicable
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(Former
Name or Former Address, if Changed Since Last
Report)
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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 (see
General
Instruction A.2. below):
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
November 20, 2008, The Children’s Place Retail Stores, Inc. (the “Company”)
issued a press release containing results for the Company's third and fiscal
year-to-date ended November 1, 2008. A copy of the press release is being
furnished as Exhibit 99.1 to this Current Report on Form 8-K.
The
information in this report is being furnished pursuant to Item 2.02 of Form
8-K,
insofar as it discloses historical information regarding the Company's results
of operations and financial condition as of, and for the third quarter and
fiscal year-to-date ended November 1, 2008. In accordance with General
Instructions B.2 of Form 8-K, the information in this Current Report on Form
8-K, including Exhibit 99.1, shall not be deemed “filed” for the purposes of
Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise
subject to the liability of that section, nor shall it be deemed incorporated
by
reference in any filing under the Securities Act of 1933, as amended, except
as
shall be expressly set forth by specific reference in such a
filing.
Forward
Looking Statements
This
Current Report on Form 8-K, including Exhibit 99.1, contains forward-looking
statements made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements typically are
identified by use of terms such as “may,” “will,” “should,” “plan,” “expect,”
“anticipate,” “estimate” and similar words, although some forward-looking
statements are expressed differently. Forward-looking statements represent
our
management’s judgment regarding future events. Although the Company believes
that the expectations reflected in such forward-looking statements are
reasonable, the Company can give no assurance that such expectations will prove
to be correct. All statements other than statements of historical fact included
in this Current Report on Form 8-K are forward-looking statements. The Company
cannot guarantee the accuracy of the forward-looking statements, and you should
be aware that the Company’s actual results could differ materially from those
contained in the forward-looking statements due to a number of factors,
including the statements under the heading “Risk Factors” contained in the
Company’s filings with the Securities and Exchange Commission.
Item
9.01 Financial
Statement and Exhibits.
| (d) |
Exhibit
|
| Exhibit 99.1 |
Press
release, dated November 20, 2008, issued by the Company regarding
results
for its third quarter and fiscal year-to-date ended November 1, 2008
(Exhibit 99.1 is furnished as part of this Current Report on Form
8-K).
|
2
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.
Date:
November 20, 2008
| THE CHILDREN’S PLACE RETAIL STORES, INC. | ||
| By: | /s/ Susan J. Riley | |
| Name: | Susan J. Riley | |
|
Title:
|
Executive Vice President, Finance and
Administration
|
|
FOR
IMMEDIATE RELEASE
THE
CHILDREN’S PLACE RETAIL STORES, INC. REPORTS
THIRD
QUARTER 2008 FINANCIAL RESULTS
Secaucus,
New Jersey - November 20, 2008 - 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.
|
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·
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Comparable
store sales increased 2% in the third quarter of 2008 on top of a
1%
increase for the same period last year.
|
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·
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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.
|
-more-
1
PLCE
- Third Quarter 2008 Financial Results
Page
2
Fiscal
Year-to-Date
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·
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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.
|
|
·
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Comparable
store sales increased 5% year-to-date 2008 on top of a 1% increase
for the
same period last year.
|
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·
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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.
|
|
·
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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.
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·
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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.
-more-
2
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.
| Contact: |
The
Children’s Place Retail Stores,
Inc.
|
Susan
Riley, EVP, Finance & Administration, (201) 558-2400
Jane
Singer, VP, Investor Relations, (201) 453-6955
(Tables
Follow)
3
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
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||||||||||||
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Nov.
1, 2008
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Nov.
3, 2007
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Nov.
1, 2008
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Nov.
3, 2007
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||||||||||
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Net
sales
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$
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450,623
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$
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430,572
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$
|
1,188,864
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$
|
1,077,065
|
|||||
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Cost
of sales
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254,239
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258,251
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692,839
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659,326
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|||||||||
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Gross
profit
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196,384
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172,321
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496,025
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417,739
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|||||||||
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Selling,
general and administrative expenses
|
126,716
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131,004
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351,919
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347,998
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|||||||||
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Asset
impairment charge
|
954
|
947
|
1,081
|
1,582
|
|||||||||
|
Depreciation
and amortization
|
17,791
|
17,063
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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.
|
4
Table
2
THE
CHILDREN’S PLACE RETAIL STORES, INC.
CONDENSED
CONSOLIDATED BALANCE SHEETS
(In
thousands)
(Unaudited)
|
November
1, 2008
|
February
2, 2008
|
|
November
3, 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.
|
5
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, 2008
|
|
Nov.
3, 2007
|
Nov.
1, 2008
|
Nov.
3, 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
|
|||||
|
###
|
6