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 15, 2017
THE CHILDREN’S PLACE, INC.
(Exact Name of Registrant as Specified in Charter)
Delaware
(State or Other Jurisdiction of Incorporation)
| 0-23071 | 31-1241495 | |
| (Commission File Number) | (IRS Employer Identification No.) |
| 500 Plaza Drive, 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 (see General Instruction A.2. below):
| ¨ | 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)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
| Item 2.02 | Results of Operations and Financial Condition. |
On November 15, 2017, the Company issued a press release containing the Company’s financial results for the third quarter of the fiscal year ending February 3, 2018 (“Fiscal 2017”), providing an updated estimated range of adjusted net income per diluted share for Fiscal 2017 and providing a preliminary estimated range of adjusted net income per diluted share for the fourth quarter of Fiscal 2017. 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 Current 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 of Fiscal 2017. In accordance with General Instructions B.2 of Form 8-K, such 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 (the “Exchange Act”), 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, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
| Item 8.01 | Other Events. |
On November 15, 2017, the Company issued a press release announcing that its Board of Directors has declared a quarterly cash dividend of $0.40 per share, payable on January 3, 2018 to holders of record of the Company’s common stock on December 13, 2017. A copy of the press release is being furnished as Exhibit 99.2 to this Current Report on Form 8-K.
| Item 9.01 | Financial Statements and Exhibits. |
| (d) | Exhibits |
2
Forward Looking Statements
This Current Report on Form 8-K, including Exhibit 99.1 and Exhibit 99.2, contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to statements relating to the Company’s strategic initiatives and adjusted net income per diluted share. Forward-looking statements typically are identified by use of terms such as “may,” “will,” “should,” “plan,” “project,” “expect,” “anticipate,” “estimate” and similar words, although some forward-looking statements are expressed differently. 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 and performance 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 Annual Report on Form 10-K for the fiscal year ended January 28, 2017. Included among the risks and uncertainties that could cause actual results and performance to differ materially are the risk that the Company will be unsuccessful in gauging fashion trends and changing consumer preferences, the risks resulting from the highly competitive nature of the Company’s business and its dependence on consumer spending patterns, which may be affected by weakness in the economy that continues to affect the Company’s target customer, the risk that the Company’s strategic initiatives to increase sales and margin are delayed or do not result in anticipated improvements, the risk of delays, interruptions and disruptions in the Company’s global supply chain, including resulting from foreign sources of supply in less developed countries or more politically unstable countries, the risk that the cost of raw materials or energy prices will increase beyond current expectations or that the Company is unable to offset cost increases through value engineering or price increases, and the uncertainty of weather patterns. Readers 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.
* * *
3
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: November 15, 2017
| THE CHILDREN’S PLACE, INC. | |||
| By: | /s/ Jane Elfers | ||
| Name: | Jane Elfers | ||
| Title: | President and Chief Executive Officer | ||
4
Exhibit 99.1
THE CHILDREN’S PLACE REPORTS THIRD QUARTER 2017 RESULTS
Delivers Q3 Comparable Retail Sales Increase of 5.1%
Reports Q3 GAAP Earnings per Diluted Share of $2.44 vs $2.36 in Q3 2016, a 3% Increase and
Q3 Adjusted Earnings per Diluted Share of $2.58 vs $2.29 in Q3 2016, a 13% Increase
Repurchases $28 Million in Stock and Pays $7 Million in Dividends in Q3
Increases Adjusted EPS Guidance to a Range of $7.46 to $7.51 for FY 2017 Compared to Previous Guidance of $7.23 to $7.33 and FY 2016 Adjusted EPS of $5.43
Secaucus, New Jersey – November 15, 2017 – The Children’s Place, Inc. (Nasdaq: PLCE), the largest pure-play children’s specialty apparel retailer in North America, today announced financial results for the thirteen weeks ended October 28, 2017.
Jane Elfers, President and Chief Executive Officer, said, “We delivered exceptional operating results in the third quarter with comparable retail sales, gross margin, operating margin and earnings per diluted share all exceeding last year. Our third quarter comparable retail sales increased 5.1%, our eighth consecutive quarter of positive comps, on top of a positive 4.6% comp in the third quarter of 2016. Merchandise margin expanded for the 11th consecutive quarter. Our store traffic has experienced sequential improvement for each of the past six quarters and all of our key retail metrics increased - AUR, ADS, UPT, transactions and conversion. And, we repurchased $28 million in stock and paid $7 million in dividends in the quarter.”
Ms. Elfers continued, “Our results are impressive on their own, but given the impact of three major hurricanes, Gymboree’s bankruptcy and inventory liquidation sales, the record October heat across most of the country, and the anniversary of our very successful private label credit card and loyalty program launches in the third quarter of last year, our results are outstanding.”
Ms. Elfers concluded, “Looking ahead, while we are only a couple of weeks into the fourth quarter, our business is strong. We continue to make significant progress against each of our strategic growth initiatives - superior product, business transformation through technology, global growth through alternate channels of distribution and fleet optimization - all of which are supported by a best-in-class management team.”
Financial Results
The Company’s results are reported in this press release on a GAAP and as adjusted, non-GAAP basis. A reconciliation of non-GAAP to GAAP financial information is provided at the end of this press release.
Third Quarter 2017 Results
Net sales increased 3.4% to $490.0 million in the third quarter of 2017. Comparable retail sales increased 5.1% in the third quarter of 2017.
Net income was $44.1 million, or $2.44 per diluted share, in the third quarter of 2017, compared to net income of $44.2 million, or $2.36 per diluted share, the previous year. Adjusted net income was $46.7 million, or $2.58 per diluted share, compared to adjusted net income of $42.8 million, or $2.29 per diluted share, in the third quarter last year. This $0.29 increase in adjusted net income per diluted share includes a $0.03 benefit resulting from the new accounting rules for the income tax impact on share-based compensation.
Gross profit was $202.4 million in the third quarter, compared to $194.5 million in the third quarter of 2016. Adjusted gross profit was $202.4 million in the third quarter, compared to $194.4 million last year, and leveraged 30 basis points to 41.3% of sales, driven by increases in AUR and merchandise margin resulting from strong product acceptance and inventory management, inclusive of the impact of the increased penetration of our ecommerce business which runs at a lower gross margin rate.
Selling, general and administrative expenses were $118.3 million compared to $115.4 million in the third quarter of 2016. Adjusted SG&A was $117.3 million compared to $115.4 million in the third quarter last year and leveraged 50 basis points as a percentage of net sales primarily as a result of the positive comparable retail sales, in addition to decreased store expenses which were driven by lower credit card fees, and lower incentive compensation expenses, partially offset by the investment in our transformation initiatives.
Operating income was $64.1 million, compared to operating income of $62.1 million in the third quarter of 2016. Adjusted operating income in the third quarter of 2017 was $68.4 million, or 14.0% of net sales, compared to adjusted operating income of $62.4 million in the third quarter last year, leveraging 80 basis points compared to last year.
For the third quarter, the Company’s adjusted net income excludes net expenses of approximately $2.6 million, compared to excluded net income of approximately $1.4 million in the third quarter of 2016, in each case comprising certain items which the Company believes are not reflective of the performance of its core business. For the third quarter of 2017, these excluded items are primarily related to expenses associated with asset impairment charges and restructuring costs. For the third quarter of 2016, these excluded items related primarily to income due to the release of reserves for prior year uncertain tax positions, partially offset by asset impairment charges.
Fiscal Year to Date
Net sales increased 2.8% to $1,300.3 million in the first nine months of fiscal 2017. Comparable retail sales increased 4.8% in the first nine months of fiscal 2017.
Net income was $94.6 million, or $5.19 per diluted share, in the first nine months of fiscal 2017, compared to net income of $68.1 million, or $3.56 per diluted share, the previous year. Adjusted net income was $98.3 million, or $5.39 per diluted share, compared to $68.4 million, or $3.57 per diluted share. This $1.82, or 51%, increase in adjusted net income per diluted share includes a $0.90 benefit resulting from the new accounting rules for the income tax impact on share-based compensation. Excluding this $0.90 benefit from the new accounting rules, adjusted net income per diluted share increased 26%.
Gross profit was $501.4 million in the first nine months of fiscal 2017, compared to $483.7 million last year. Adjusted gross profit was $502.1 million, or 38.6% of net sales, leveraging 40 basis points compared to last year.
Selling, general and administrative expenses in the first nine months of fiscal 2017 were $338.6 million, compared to $332.6 million last year. Adjusted SG&A was $331.7 million, compared to $332.9 million last year, leveraging 80 basis points compared to last year.
Operating income was $109.7 million, compared to operating income of $98.8 million in fiscal 2016. Adjusted operating income was $121.9 million, or 9.4% of net sales, compared to $101.7 million, or 8.0% of net sales last year, leveraging 140 basis points.
During the first nine months of fiscal 2017, the Company’s adjusted net income excludes net expenses of approximately $3.7 million, compared to excluded net expenses of approximately $0.2 million during the first nine months of fiscal 2016, in each case comprising certain items which the Company believes are not reflective of the performance of its core business. For the first nine months of fiscal 2017, these excluded items are primarily related to charges due to a provision for a legal settlement resulting from a pricing litigation, asset impairment charges, restructuring costs, a state sales and use tax audit settlement, a provision for foreign exchange control penalties, and an insurance claim deductible, partially offset by income associated with the release of reserves for prior year uncertain tax positions. For the first nine months of fiscal 2016, these excluded items primarily related to asset impairment charges, partially offset by income related to the release of reserves for prior year uncertain tax positions.
Store Openings and Closures
The Company opened one store and did not close any stores during the third quarter of 2017. The Company ended the quarter with 1,027 stores and square footage of 4.81 million, a decrease of 3.2% compared to the prior year. Since our fleet optimization initiative was announced in 2013, we have closed 156 stores.
The Company’s international franchise partners opened 10 points of distribution and closed 3 in the third quarter, and the Company ended the quarter with 168 international points of distribution open and operated by its 7 franchise partners in 19 countries.
Capital Return Program
During the third quarter of 2017, the Company repurchased 258,669 shares for approximately $28 million, inclusive of shares repurchased and surrendered to cover tax withholdings associated with the vesting of equity awards held by management. The Company also paid a quarterly dividend of approximately $7 million, or $0.40 per share, in the quarter.
For the first nine months of 2017, the Company repurchased 766,037 shares for approximately $85 million, inclusive of shares repurchased and surrendered to cover tax withholdings associated with the vesting of equity awards held by management. The Company also paid quarterly dividends totaling approximately $21 million in the first nine months of 2017.
Since 2009, the Company has returned over $863 million to its investors through share repurchases and dividends. At the end of the third quarter of 2017, approximately $278 million remained available for future share repurchases under the Company’s existing share repurchase programs.
Additionally, the Company’s Board of Directors authorized a quarterly dividend of $0.40 per share. The dividend for the fourth quarter is payable on January 3, 2018 to shareholders of record at the close of business on December 13, 2017.
Outlook
The Company is updating its outlook for fiscal 2017 and now expects adjusted net income per diluted share to be in the range of $7.46 to $7.51, inclusive of a $0.91 benefit resulting from new accounting rules for the income tax impact on share-based compensation. This compares to the Company’s previous guidance for adjusted net income per diluted share of $7.23 to $7.33, inclusive of an $0.89 benefit resulting from new accounting rules for the income tax impact on share-based compensation. Excluding the benefit from the new accounting rules, full year adjusted net income per diluted share guidance is projected to increase 20% to 21% compared to adjusted net income per diluted share of $5.43 last year.
This guidance for adjusted net income per diluted share excludes charges of approximately $3.7 million related to a provision for a legal settlement resulting from a pricing litigation, asset impairment charges, restructuring costs, a state sales and use tax audit settlement, a provision for foreign exchange control penalties, and an insurance claim deductible, partially offset by income associated with the release of reserves for prior year uncertain tax positions, as the Company believes these items are not reflective of the performance of its core business.
The Company expects adjusted net income per diluted share in the fourth quarter of 2017 will be between $2.07 and $2.12. This compares to adjusted net income per diluted share of $1.88 in the fourth quarter of 2016. This guidance assumes a low single digit increase in comparable retail sales.
Financial Results
The Company’s results are reported in this press release on a GAAP and as adjusted, non-GAAP basis. Adjusted net income, adjusted net income per diluted share, adjusted gross profit, adjusted SG&A, and adjusted operating income are non-GAAP measures, and are not intended to replace GAAP financial information and may be different from non-GAAP measures reported by other companies. The Company believes the income and expense items excluded as non-GAAP adjustments are not reflective of the performance of its core business and that providing this supplemental disclosure to investors will facilitate comparisons of the past and present performance of its core business. The Company uses non-GAAP measures to evaluate and measure operating performance, including, to measure performance for purposes of the Company’s annual bonus and long-term incentive compensation plans. A reconciliation of non-GAAP to GAAP financial information is provided at the end of this press release.
Conference Call Information
The Children’s Place will host a conference call to discuss its third quarter 2017 results today at 8:00 a.m. Eastern Time. The call will be broadcast live at http://investor.childrensplace.com. An audio archive will be available on the Company’s website approximately one hour after the conclusion of the call.
About The Children’s Place, Inc.
The Children’s Place is the largest pure-play children’s specialty apparel retailer in North America. The Company designs, contracts to manufacture, sells at retail and wholesale, and licenses to sell fashionable, high-quality merchandise at value prices, primarily under the proprietary “The Children’s Place,” “Place” and “Baby Place” brand names. As of October 28, 2017, the Company operated 1,027 stores in the United States, Canada and Puerto Rico, an online store at www.childrensplace.com, and had 168 international points of distribution open and operated by its 7 franchise partners in 19 countries.
Forward Looking Statement
This press release contains, and the above referenced conference call may contain, forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to statements relating to the Company’s strategic initiatives and adjusted net income per diluted share. Forward-looking statements typically are identified by use of terms such as “may,” “will,” “should,” “plan,” “project,” “expect,” “anticipate,” “estimate” and similar words, although some forward-looking statements are expressed differently. 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 and performance 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 Annual Report on Form 10-K for the fiscal year ended January 28, 2017. Included among the risks and uncertainties that could cause actual results and performance to differ materially are the risk that the Company will be unsuccessful in gauging fashion trends and changing consumer preferences, the risks resulting from the highly competitive nature of the Company’s business and its dependence on consumer spending patterns, which may be affected by weakness in the economy that continues to affect the Company’s target customer, the risk that the Company’s strategic initiatives to increase sales and margin are delayed or do not result in anticipated improvements, the risk of delays, interruptions and disruptions in the Company’s global supply chain, including resulting from foreign sources of supply in less developed countries or more politically unstable countries, the risk that the cost of raw materials or energy prices will increase beyond current expectations or that the Company is unable to offset cost increases through value engineering or price increases, and the uncertainty of weather patterns. Readers 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.
Contact: Robert Vill, Group Vice President, Finance, (201) 453-6693
(Tables Follow)
THE CHILDREN’S PLACE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
| Third Quarter Ended | Year-to-Date Ended | |||||||||||||||
| October 28, | October 29, | October 28, | October 29, | |||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Net sales | $ | 490,026 | $ | 473,777 | $ | 1,300,303 | $ | 1,264,544 | ||||||||
| Cost of sales | 287,593 | 279,260 | 798,874 | 780,805 | ||||||||||||
| Gross profit | 202,433 | 194,517 | 501,429 | 483,739 | ||||||||||||
| Selling, general and administrative expenses | 118,288 | 115,442 | 338,642 | 332,557 | ||||||||||||
| Asset impairment charges | 3,203 | 392 | 4,661 | 3,218 | ||||||||||||
| Other costs | 4 | 17 | 14 | 276 | ||||||||||||
| Depreciation and amortization | 16,789 | 16,586 | 48,460 | 48,938 | ||||||||||||
| Operating income | 64,149 | 62,080 | 109,652 | 98,750 | ||||||||||||
| Interest expense | (100 | ) | (158 | ) | (429 | ) | (408 | ) | ||||||||
| Income before taxes | 64,049 | 61,922 | 109,223 | 98,342 | ||||||||||||
| Provision for income taxes | 19,972 | 17,756 | 14,627 | 30,202 | ||||||||||||
| Net income | $ | 44,077 | $ | 44,166 | $ | 94,596 | $ | 68,140 | ||||||||
| Earnings per common share | ||||||||||||||||
| Basic | $ | 2.50 | $ | 2.41 | $ | 5.36 | $ | 3.63 | ||||||||
| Diluted | $ | 2.44 | $ | 2.36 | $ | 5.19 | $ | 3.56 | ||||||||
| Weighted average common shares outstanding | ||||||||||||||||
| Basic | 17,617 | 18,342 | 17,645 | 18,785 | ||||||||||||
| Diluted | 18,090 | 18,703 | 18,223 | 19,139 | ||||||||||||
THE CHILDREN’S PLACE, INC.
RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION TO GAAP
(In thousands, except per share amounts)
(Unaudited)
| Third Quarter Ended | Year-to-Date Ended | |||||||||||||||
| October 28, | October 29, | October 28, | October 29, | |||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Net income | $ | 44,077 | $ | 44,166 | $ | 94,596 | $ | 68,140 | ||||||||
| Non-GAAP adjustments: | ||||||||||||||||
| Provision for legal settlement | - | - | 5,000 | - | ||||||||||||
| Restructuring costs | 1,016 | (56 | ) | 1,578 | (527 | ) | ||||||||||
| Asset impairment charges | 3,203 | 392 | 4,661 | 3,218 | ||||||||||||
| Sales tax audit | - | - | 418 | - | ||||||||||||
| Foreign exchange penalties | - | - | 300 | - | ||||||||||||
| Insurance claim deductible | - | - | 250 | - | ||||||||||||
| Proxy costs | - | - | - | 12 | ||||||||||||
| DC exit costs (income) | - | 17 | - | 276 | ||||||||||||
| Aggregate impact of Non-GAAP adjustments | 4,219 | 353 | 12,207 | 2,979 | ||||||||||||
| Income tax effect (1) | (1,611 | ) | (141 | ) | (4,503 | ) | (1,153 | ) | ||||||||
| Prior year uncertain tax positions (2) | - | (1,580 | ) | (4,048 | ) | (1,580 | ) | |||||||||
| Net impact of Non-GAAP adjustments | 2,608 | (1,368 | ) | 3,656 | 246 | |||||||||||
| Adjusted net income | $ | 46,685 | $ | 42,798 | $ | 98,252 | $ | 68,386 | ||||||||
| GAAP net income per diluted share | $ | 2.44 | $ | 2.36 | $ | 5.19 | $ | 3.56 | ||||||||
| Adjusted net income per diluted share | $ | 2.58 | $ | 2.29 | $ | 5.39 | $ | 3.57 | ||||||||
(1) The tax effects of the non-GAAP items are calculated based on the statutory rate of the jurisdiction in which the discrete item resides.
(2) Prior year tax related to uncertain tax positions.
| Third Quarter Ended | Year-to-Date Ended | |||||||||||||||
| October 28, | October 29, | October 28, | October 29, | |||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Operating income | $ | 64,149 | $ | 62,080 | $ | 109,652 | $ | 98,750 | ||||||||
| Non-GAAP adjustments: | ||||||||||||||||
| Provision for legal settlement | - | - | 5,000 | - | ||||||||||||
| Restructuring costs | 1,016 | (56 | ) | 1,578 | (527 | ) | ||||||||||
| Asset impairment charges | 3,203 | 392 | 4,661 | 3,218 | ||||||||||||
| Sales tax audit | - | - | 418 | - | ||||||||||||
| Foreign exchange penalties | - | - | 300 | - | ||||||||||||
| Insurance claim deductible | - | - | 250 | - | ||||||||||||
| Proxy costs | - | - | - | 12 | ||||||||||||
| DC exit costs (income) | - | 17 | - | 276 | ||||||||||||
| Aggregate impact of Non-GAAP adjustments | 4,219 | 353 | 12,207 | 2,979 | ||||||||||||
| Adjusted operating income | $ | 68,368 | $ | 62,433 | $ | 121,859 | $ | 101,729 | ||||||||
THE CHILDREN’S PLACE, INC.
RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION TO GAAP
(In thousands, except per share amounts)
(Unaudited)
| Third Quarter Ended | Year-to-Date Ended | |||||||||||||||
| October 28, | October 29, | October 28, | October 29, | |||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Gross Profit | $ | 202,433 | $ | 194,517 | $ | 501,429 | $ | 483,739 | ||||||||
| Non-GAAP adjustments: | ||||||||||||||||
| Restructuring costs | - | (75 | ) | 377 | (125 | ) | ||||||||||
| Insurance claim deductible | - | - | 250 | - | ||||||||||||
| Aggregate impact of Non-GAAP adjustments | - | (75 | ) | 627 | (125 | ) | ||||||||||
| Adjusted Gross Profit | $ | 202,433 | $ | 194,442 | $ | 502,056 | $ | 483,614 | ||||||||
| Third Quarter Ended | Year-to-Date Ended | |||||||||||||||
| October 28, | October 29, | October 28, | October 29, | |||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Selling, general and administrative expenses | $ | 118,288 | $ | 115,442 | $ | 338,642 | $ | 332,557 | ||||||||
| Non-GAAP adjustments: | ||||||||||||||||
| Provision for legal settlement | - | - | (5,000 | ) | - | |||||||||||
| Restructuring costs | (1,016 | ) | (19 | ) | (1,201 | ) | 402 | |||||||||
| Sales tax audit | - | - | (418 | ) | - | |||||||||||
| Foreign exchange penalties | - | - | (300 | ) | - | |||||||||||
| Proxy costs | - | - | - | (12 | ) | |||||||||||
| Aggregate impact of Non-GAAP adjustments | (1,016 | ) | (19 | ) | (6,919 | ) | 390 | |||||||||
| Adjusted Selling, general and administrative expenses | $ | 117,272 | $ | 115,423 | $ | 331,723 | $ | 332,947 | ||||||||
THE CHILDREN’S PLACE, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
| October 28, | January 28, | October 29, | ||||||||||
| 2017 | 2017* | 2016 | ||||||||||
| Assets: | ||||||||||||
| Cash and cash equivalents | $ | 257,743 | $ | 193,709 | $ | 192,243 | ||||||
| Short-term investments | 15,000 | 49,300 | 75,100 | |||||||||
| Accounts receivable | 32,432 | 31,413 | 30,605 | |||||||||
| Inventories | 363,788 | 286,343 | 325,463 | |||||||||
| Other current assets | 22,690 | 30,822 | 33,934 | |||||||||
| Total current assets | 691,653 | 591,587 | 657,345 | |||||||||
| Property and equipment, net | 266,230 | 264,280 | 274,747 | |||||||||
| Other assets, net | 55,541 | 35,056 | 31,992 | |||||||||
| Total assets | $ | 1,013,424 | $ | 890,923 | $ | 964,084 | ||||||
| Liabilities and Stockholders' Equity: | ||||||||||||
| Revolving loan | $ | 56,400 | $ | 15,380 | $ | 65,600 | ||||||
| Accounts payable | 249,562 | 158,632 | 170,192 | |||||||||
| Accrued expenses and other current liabilities | 123,216 | 135,609 | 146,127 | |||||||||
| Total current liabilities | 429,178 | 309,621 | 381,919 | |||||||||
| Other liabilities | 73,780 | 85,015 | 87,850 | |||||||||
| Total liabilities | 502,958 | 394,636 | 469,769 | |||||||||
| Stockholders' equity | 510,466 | 496,287 | 494,315 | |||||||||
| Total liabilities and stockholders' equity | $ | 1,013,424 | $ | 890,923 | $ | 964,084 | ||||||
| * | Derived from the audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended January 28, 2017. |
THE CHILDREN’S PLACE, INC.
CONSOLIDATED CASH FLOWS
(In thousands)
(Unaudited)
| 39 Weeks Ended | ||||||||
| October 28, | October 29, | |||||||
| 2017 | 2016 | |||||||
| Net income | $ | 94,596 | $ | 68,140 | ||||
| Non-cash adjustments | 64,906 | 55,266 | ||||||
| Working Capital | (29,557 | ) | 2,144 | |||||
| Net cash provided by operating activities | 129,945 | 125,550 | ||||||
| Net cash used in investing activities | (4,218 | ) | (61,753 | ) | ||||
| Net cash used in financing activities | (65,510 | ) | (62,088 | ) | ||||
| Effect of exchange rate changes on cash | 3,817 | 3,000 | ||||||
| Net increase in cash and cash equivalents | 64,034 | 4,709 | ||||||
| Cash and cash equivalents, beginning of period | 193,709 | 187,534 | ||||||
| Cash and cash equivalents, end of period | $ | 257,743 | $ | 192,243 | ||||
###
Exhibit 99.2
THE CHILDREN’S PLACE CONTINUES CAPITAL RETURN PROGRAM, DECLARES QUARTERLY DIVIDEND
Company Has Returned Over $863 Million to Shareholders Since 2009
Secaucus, New Jersey – November 15, 2017 – The Children’s Place, Inc. (Nasdaq: PLCE), the largest pure-play children’s specialty apparel retailer in North America, today announced that its Board of Directors has declared a quarterly dividend.
Jane Elfers, President and Chief Executive Officer, commented, “We continued to deliver outstanding operating results in the third quarter and the continuation of our quarterly dividend is a further reflection of our confidence in our ability to execute on our strategic initiatives and our continuing commitment to return excess capital to shareholders. The Children’s Place has a profitable business model which generates strong cash flow. Since 2009, we have returned over $863 million to shareholders through share repurchases and dividends.”
The Board declared a quarterly cash dividend of $0.40 per share to be paid January 3, 2018 to shareholders of record at the close of business on December 13, 2017. Future declarations of quarterly dividends and the establishment of future record and payment dates are subject to approval by the Company’s Board of Directors based on a number of factors, including business and market conditions, the Company’s future financial performance and other investment priorities.
About The Children’s Place, Inc.
The Children’s Place is the largest pure-play children’s specialty apparel retailer in North America. The Company designs, contracts to manufacture, sells at retail and wholesale, and licenses to sell fashionable, high-quality merchandise at value prices, primarily under the proprietary “The Children’s Place,” “Place” and “Baby Place” brand names. As of October 28, 2017, the Company operated 1,027 stores in the United States, Canada and Puerto Rico, an online store at www.childrensplace.com, and had 168 international points of distribution open and operated by its 7 franchise partners in 19 countries.
Forward Looking Statement
This press release may contain forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to statements relating to the Company’s strategic initiatives and adjusted net income per diluted share. Forward-looking statements typically are identified by use of terms such as “may,” “will,” “should,” “plan,” “project,” “expect,” “anticipate,” “estimate” and similar words, although some forward-looking statements are expressed differently. 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 and performance 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 Annual Report on Form 10-K for the fiscal year ended January 28, 2017. Included among the risks and uncertainties that could cause actual results and performance to differ materially are the risk that the Company will be unsuccessful in gauging fashion trends and changing consumer preferences, the risks resulting from the highly competitive nature of the Company’s business and its dependence on consumer spending patterns, which may be affected by weakness in the economy that continues to affect the Company’s target customer, the risk that the Company’s strategic initiatives to increase sales and margin are delayed or do not result in anticipated improvements, the risk of delays, interruptions and disruptions in the Company’s global supply chain, including resulting from foreign sources of supply in less developed countries or more politically unstable countries, the risk that the cost of raw materials or energy prices will increase beyond current expectations or that the Company is unable to offset cost increases through value engineering or price increases, and the uncertainty of weather patterns. Readers 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.
Contact: Robert Vill, Group Vice President, Finance, (201) 453-6693