Document
000104185902-01Large Accelerated FilerFalseFalse2019Q3FALSESecaucusNJ0.100.100.10100,000100,000100,00015,31015,87316,30315,26015,82716,2561.001.001.001,0001,0001,00050474700010418592019-02-032019-11-02xbrli:shares00010418592019-12-06iso4217:USD00010418592019-11-0200010418592019-02-0200010418592018-11-03iso4217:USDxbrli:shares00010418592019-08-042019-11-0200010418592018-08-052018-11-0300010418592018-02-042018-11-0300010418592018-02-0300010418592017-01-292017-10-28xbrli:pure0001041859plce:A2015250MShareRepurchaseProgramMemberDomainDomainDomain2019-11-020001041859plce:A2015250MShareRepurchaseProgramMemberDomainDomainMember2019-02-032019-11-020001041859plce:A2015250MShareRepurchaseProgramMemberDomainDomainMember2018-02-042018-11-030001041859us-gaap:RetainedEarningsMember2019-02-032019-11-020001041859us-gaap:RetainedEarningsMember2018-02-042018-11-030001041859us-gaap:DividendsDomain2019-02-032019-11-020001041859us-gaap:RestrictedStockUnitsRSUMember2019-08-042019-11-020001041859us-gaap:RestrictedStockUnitsRSUMember2018-08-052018-11-030001041859us-gaap:RestrictedStockUnitsRSUMember2019-02-032019-11-020001041859us-gaap:RestrictedStockUnitsRSUMember2018-02-042018-11-030001041859plce:PerformanceAwardsMember2019-08-042019-11-020001041859plce:PerformanceAwardsMember2018-08-052018-11-030001041859plce:PerformanceAwardsMember2019-02-032019-11-020001041859plce:PerformanceAwardsMember2018-02-042018-11-030001041859us-gaap:CostOfSalesMember2019-08-042019-11-020001041859us-gaap:CostOfSalesMember2018-08-052018-11-030001041859us-gaap:CostOfSalesMember2019-02-032019-11-020001041859us-gaap:CostOfSalesMember2018-02-042018-11-030001041859plce:DeferredAndRestrictedStockDeferredAwardsMember2019-02-020001041859plce:DeferredAndRestrictedStockDeferredAwardsMember2019-02-032019-11-020001041859plce:DeferredAndRestrictedStockDeferredAwardsMember2019-11-020001041859plce:PerformanceAwardsMember2019-02-020001041859plce:PerformanceAwardsMember2019-11-020001041859us-gaap:LandAndLandImprovementsMember2019-11-020001041859us-gaap:LandAndLandImprovementsMember2019-02-020001041859us-gaap:LandAndLandImprovementsMember2018-11-030001041859us-gaap:BuildingAndBuildingImprovementsMember2019-11-020001041859us-gaap:BuildingAndBuildingImprovementsMember2019-02-020001041859us-gaap:BuildingAndBuildingImprovementsMember2018-11-030001041859plce:MaterialHandlingEquipmentMember2019-11-020001041859plce:MaterialHandlingEquipmentMember2019-02-020001041859plce:MaterialHandlingEquipmentMember2018-11-030001041859us-gaap:LeaseholdImprovementsMember2019-11-020001041859us-gaap:LeaseholdImprovementsMember2019-02-020001041859us-gaap:LeaseholdImprovementsMember2018-11-030001041859plce:StoreFixturesAndEquipmentMember2019-11-020001041859plce:StoreFixturesAndEquipmentMember2019-02-020001041859plce:StoreFixturesAndEquipmentMember2018-11-030001041859us-gaap:ComputerSoftwareIntangibleAssetMember2019-11-020001041859us-gaap:ComputerSoftwareIntangibleAssetMember2019-02-020001041859us-gaap:ComputerSoftwareIntangibleAssetMember2018-11-030001041859us-gaap:ConstructionInProgressMember2019-11-020001041859us-gaap:ConstructionInProgressMember2019-02-020001041859us-gaap:ConstructionInProgressMember2018-11-030001041859plce:NumberOfStoresTestedForImpairmentMember2019-11-020001041859plce:NumberOfStoresTestedForImpairmentMember2018-11-030001041859plce:A2008CreditAgreementMember2019-11-020001041859us-gaap:PrimeRateMemberplce:A2008CreditAgreementMember2019-02-032019-11-020001041859plce:LiborMemberplce:A2008CreditAgreementMember2019-02-032019-11-020001041859plce:A2008CreditAgreementMember2019-02-032019-11-020001041859us-gaap:LetterOfCreditMemberplce:A2008CreditAgreementMember2019-02-032019-11-020001041859us-gaap:StandbyLettersOfCreditMemberplce:A2008CreditAgreementMember2019-02-032019-11-020001041859us-gaap:StandbyLettersOfCreditMember2019-11-020001041859us-gaap:StandbyLettersOfCreditMember2019-02-020001041859us-gaap:StandbyLettersOfCreditMember2018-11-0300010418592018-02-042019-02-020001041859plce:ChildrensPlaceUsMember2019-11-020001041859plce:ChildrensPlaceCanadaMember2019-11-020001041859plce:ChildrensPlaceUsMember2018-11-030001041859plce:ChildrensPlaceCanadaMember2018-11-030001041859plce:ChildrensPlaceUsMember2019-08-042019-11-020001041859plce:ChildrensPlaceUsMember2018-08-052018-11-030001041859plce:ChildrensPlaceUsMember2019-02-032019-11-020001041859plce:ChildrensPlaceUsMember2018-02-042018-11-030001041859plce:ChildrensPlaceCanadaMember2019-08-042019-11-020001041859plce:ChildrensPlaceCanadaMember2018-08-052018-11-030001041859plce:ChildrensPlaceCanadaMember2019-02-032019-11-020001041859plce:ChildrensPlaceCanadaMember2018-02-042018-11-030001041859plce:ChildrensPlaceUsMember2019-02-020001041859plce:ChildrensPlaceCanadaMember2019-02-02
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 
______________________________________________________
 FORM 10-Q
 (Mark One)
 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended November 2, 2019
 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from               to              

Commission file number 0-23071
______________________________________________________
 THE CHILDRENS PLACE, INC.
(Exact name of registrant as specified in its charter)
Delaware 31-1241495
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
500 Plaza Drive  
Secaucus, New Jersey 07094
(Address of Principal Executive Offices) (Zip Code)

(201) 558-2400
(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act: Common Stock, $0.10 par value
Trading Symbol: PLCE
Name of each exchange on which registered: Nasdaq Global Select Market
___________________________________________
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one).
Large accelerated filer x
Accelerated filer o
  
Non-accelerated filer o
Smaller reporting company o
(Do not check if a smaller reporting company)
Emerging growth company o
 
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.  o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  No x
 
The number of shares outstanding of the registrant’s common stock with a par value of $0.10 per share, as of December 6, 2019 was 15,064,783 shares.


Table of Contents
THE CHILDREN’S PLACE, INC. AND SUBSIDIARIES
 
QUARTERLY REPORT ON FORM 10-Q
 
FOR THE PERIOD ENDED NOVEMBER 2, 2019
 
TABLE OF CONTENTS
 
  
 
 
 
 
  
  



Table of Contents
PART I. FINANCIAL INFORMATION

Item 1.CONSOLIDATED FINANCIAL STATEMENTS
1

Table of Contents
THE CHILDREN’S PLACE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
November 2,
2019
February 2,
2019
November 3,
2018
(unaudited)(unaudited)
(in thousands, except par value)
ASSETS   
Current assets:   
Cash and cash equivalents$66,059  $69,136  $92,950  
Accounts receivable39,471  35,123  40,111  
Inventories389,815  303,466  376,858  
Prepaid expenses and other current assets20,722  27,670  37,467  
Total current assets516,067  435,395  547,386  
Long-term assets:   
Property and equipment, net246,234  260,357  262,380  
Right-of-use assets418,151      
Tradenames, net73,386      
Deferred income taxes17,615  17,750  12,722  
Other assets14,269  13,544  14,765  
Total assets$1,285,722  $727,046  $837,253  
LIABILITIES AND STOCKHOLDERS’ EQUITY   
LIABILITIES:   
Current liabilities:   
Revolving loan$184,179  $48,861  $65,000  
Accounts payable235,491  194,786  223,607  
Current lease liabilities124,281      
Income taxes payable7,171  997  7,598  
Accrued expenses and other current liabilities109,476  86,755  115,583  
Total current liabilities660,598  331,399  411,788  
Long-term liabilities:   
Deferred rent liabilities  44,329  46,670  
Long-term lease liabilities331,615      
Other tax liabilities5,050  5,080  3,895  
Income taxes payable18,939  18,939  19,074  
Other long-term liabilities15,081  12,862  12,368  
Total liabilities1,031,283  412,609  493,795  
COMMITMENTS AND CONTINGENCIES   
STOCKHOLDERS’ EQUITY:   
Preferred stock, $1.00 par value, 1,000 shares authorized, 0 shares issued and outstanding      
Common stock, $0.10 par value, 100,000 shares authorized; 15,310, 15,873, and 16,303 issued; 15,260, 15,827, and 16,256 outstanding1,531  1,588  1,630  
Additional paid-in capital145,219  146,991  146,811  
Treasury stock, at cost (50, 47, and 47 shares)(2,886) (2,685) (2,622) 
Deferred compensation2,886  2,685  2,622  
Accumulated other comprehensive loss(13,442) (14,934) (15,734) 
Retained earnings121,131  180,792  210,751  
Total stockholders’ equity254,439  314,437  343,458  
Total liabilities and stockholders’ equity$1,285,722  $727,046  $837,253  
See accompanying notes to these consolidated financial statements.
2

Table of Contents
THE CHILDREN’S PLACE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 
 Thirteen Weeks EndedThirty-nine Weeks Ended
 November 2,
2019
November 3,
2018
November 2,
2019
November 3,
2018
(In thousands, except earnings and dividends per share) 
Net sales$524,796  $522,495  $1,357,647  $1,407,526  
Cost of sales (exclusive of depreciation and amortization)326,671  318,129  868,701  888,125  
Gross profit198,125  204,366  488,946  519,401  
Selling, general, and administrative expenses120,514  123,207  364,937  365,933  
Depreciation and amortization18,821  17,404  55,877  51,405  
Asset impairment charges839  396  1,308  5,632  
Other income—  (1,246) —  (1,255) 
Operating income57,951  64,605  66,824  97,686  
Interest expense(2,221) (944) (6,341) (2,641) 
Interest income66  113  197  567  
Income before provision for income taxes55,796  63,774  60,680  95,612  
Provision for income taxes12,748  13,861  11,620  6,675  
Net income $43,048  $49,913  $49,060  $88,937  
Earnings per common share
Basic$2.78  $3.04  $3.12  $5.33  
Diluted$2.77  $3.03  $3.10  $5.24  
Weighted average common shares outstanding
Basic15,497  16,394  15,720  16,677  
Diluted15,546  16,496  15,837  16,982  
Cash dividends declared per common share$0.56  $0.50  $1.68  $1.50  
 
See accompanying notes to these consolidated financial statements.

3

Table of Contents
THE CHILDREN’S PLACE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)



 Thirteen Weeks EndedThirty-nine Weeks Ended
 November 2, 2019November 3, 2018November 2, 2019November 3, 2018
(In thousands) 
Net income$43,048  $49,913  $49,060  $88,937  
Other comprehensive income:
Foreign currency translation adjustment1,773  (369) 1,376  (3,063) 
Change in fair value of cash flow hedges, net of income taxes30  84  116  160  
Total comprehensive income $44,851  $49,628  $50,552  $86,034  
 
See accompanying notes to these consolidated financial statements.

4

Table of Contents
THE CHILDREN’S PLACE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(Unaudited)


Thirteen Weeks Ended November 2, 2019
Accumulated
AdditionalOtherTotal
Common StockPaid-InDeferredRetainedComprehensiveTreasury Stock  Stockholders'
(in thousands, except dividends per share)SharesAmountCapitalCompensationEarningsLossShares  Value  Equity
BALANCE, August 3, 201915,719  $1,572  $149,140  $2,816  $113,789  $(15,245) (49) $(2,816) $249,256  
Vesting of stock awards —  —  —  
Stock-based compensation2,351  2,351  
Purchase and retirement of shares(414) (41) (6,640) (26,657) (33,338) 
Dividends declared ($0.56 per share)(8,681) (8,681) 
Unvested dividends368  (368) —  
Change in cumulative translation
adjustment
1,773  1,773  
Change in fair value of cash flow
hedges, net of income taxes
30  30  
Deferral of common stock into
deferred compensation plan
70  (1) (70) —  
Net income43,048  43,048  
BALANCE, November 2, 201915,309  $1,531  $145,219  $2,886  $121,131  $(13,442) (50) $(2,886) $254,439  




Thirty-nine Weeks Ended November 2, 2019
Accumulated
AdditionalOtherTotal
Common StockPaid-InDeferredRetainedComprehensiveTreasury Stock  Stockholders'
(in thousands, except dividends per share)SharesAmountCapitalCompensationEarningsLossShares  Value  Equity
BALANCE, February 2, 201915,873  $1,588  $146,991  $2,685  $180,792  $(14,934) (47) $(2,685) $314,437  
ASC Topic 842 Adjustment(1,667) (1,667) 
Vesting of stock awards470  46  (5) 41  
Stock-based compensation13,622  13,622  
Purchase and retirement of shares(1,034) (103) (16,297) (79,666) (96,066) 
Dividends declared ($0.56 per share)(26,480) (26,480) 
Unvested dividends908  (908) —  
Change in cumulative translation
adjustment
1,376  1,376  
Change in fair value of cash flow
hedges, net of income taxes
116  116  
Deferral of common stock into
deferred compensation plan
201  (3) (201) —  
Net income49,060  49,060  
BALANCE, November 2, 201915,309  $1,531  $145,219  $2,886  $121,131  $(13,442) (50) $(2,886) $254,439  













5

Table of Contents
THE CHILDREN’S PLACE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(Unaudited)


Thirteen Weeks Ended November 3, 2018
Accumulated
AdditionalOtherTotal
Common StockPaid-InDeferredRetainedComprehensiveTreasury Stock  Stockholders'
(in thousands, except dividends per share)SharesAmountCapitalCompensationEarningsLossShares  Value  Equity
BALANCE, August 4, 201816,486  $1,649  $138,342  $2,560  $198,581  $(15,449) (47) $(2,560) $323,123  
Vesting of stock awards  (1) —  
Stock-based compensation4,476  4,476  
Purchase and retirement of shares(192) (20) 3,680  (29,208) (25,548) 
Dividends declared ($0.50 per share)(8,221) (8,221) 
Unvested dividends314  (314) —  
Change in cumulative translation
adjustment
(369) (369) 
Change in fair value of cash flow
hedges, net of income taxes
84  84  
Deferral of common stock into
deferred compensation plan
62  (62) —  
Net income49,913  49,913  
BALANCE, November 3, 201816,301  $1,630  $146,811  $2,622  $210,751  $(15,734) (47) $(2,622) $343,458  




Thirty-nine Weeks Ended November 3, 2018
Accumulated
AdditionalOtherTotal
Common StockPaid-InDeferredRetainedComprehensiveTreasury Stock  Stockholders'
(in thousands, except dividends per share)SharesAmountCapitalCompensationEarningsLossShares  Value  Equity
BALANCE, February 3, 201817,257  $1,726  $258,501  $2,436  $226,303  $(12,831) (47) $(2,436) $473,699  
ASC Topic 606 Adjustment875  875  
Vesting of stock awards709  71  (75) (4) 
Stock-based compensation20,693  20,693  
Capitalized stock-based compensation176  176  
Purchase and retirement of shares(1,665) (167) (133,517) (79,392) (213,076) 
Dividends declared ($0.50 per share)(24,939) (24,939) 
Unvested dividends1,033  (1,033) —  
Change in cumulative translation
adjustment
(3,063) (3,063) 
Change in fair value of cash flow
hedges, net of income taxes
160  160  
Deferral of common stock into
deferred compensation plan
186  (186) —  
Net income88,937  88,937  
BALANCE, November 3, 201816,301  $1,630  $146,811  $2,622  $210,751  $(15,734) (47) $(2,622) $343,458  













6

Table of Contents
THE CHILDREN’S PLACE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
 Thirty-nine Weeks Ended
 November 2,
2019
November 3,
2018
(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:  
Net income$49,060  $88,937  
Reconciliation of net income to net cash provided by operating activities:  
Non-cash portion of operating lease expense112,316  —  
Depreciation and amortization55,877  51,405  
Stock-based compensation13,622  20,693  
Deferred taxes745  (244) 
Asset impairment charges1,308  5,632  
Other175  631  
Changes in operating assets and liabilities:
Inventories(86,440) (53,891) 
Accounts receivable and other assets(3,027) (14,082) 
Prepaid expenses and other current assets2,622  (1,322) 
Income taxes payable, net of prepayments10,888  (6,399) 
Accounts payable and other current liabilities63,641  495  
Other long-term liabilities(120,221) (8,377) 
Net cash provided by operating activities100,566  83,478  
CASH FLOWS FROM INVESTING ACTIVITIES:  
Capital expenditures(42,396) (55,504) 
Acquisition of assets(76,951) —  
Proceeds from sale of short-term investments  15,000  
Change in deferred compensation plan222  (617) 
Net cash used in investing activities(119,125) (41,121) 
CASH FLOWS FROM FINANCING ACTIVITIES:  
Repurchase of common stock, including shares surrendered for tax withholdings and transaction costs(93,763) (213,073) 
Payment of dividends(26,480) (24,939) 
Borrowings under revolving loan750,981  628,096  
Repayments under revolving loan(615,663) (584,555) 
Net cash provided by (used in) financing activities15,075  (194,471) 
Effect of exchange rate changes on cash and cash equivalents407  545  
Net decrease in cash and cash equivalents(3,077) (151,569) 
Cash and cash equivalents, beginning of period69,136  244,519  
Cash and cash equivalents, end of period$66,059  $92,950  
 
See accompanying notes to these consolidated financial statements.
7

Table of Contents
THE CHILDREN’S PLACE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
 Thirty-nine Weeks Ended
 November 2,
2019
November 3,
2018
(In thousands)
OTHER CASH FLOW INFORMATION:  
Net cash paid during the period for income taxes$74  $14,585  
Cash paid during the period for interest6,233  2,277  
Increase in accrued purchases of property and equipment797  5,660  
 
See accompanying notes to these consolidated financial statements.

8

Table of Contents
THE CHILDREN’S PLACE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 
1.BASIS OF PRESENTATION
Description of Business
The Children's Place, Inc. and subsidiaries (the “Company”) is the largest pure-play children's specialty apparel retailer in North America. The Company provides apparel, footwear, accessories, and other items for children. The Company designs, contracts to manufacture, sells at retail and wholesale, and licenses to sell trend right, high-quality merchandise at value prices, the substantial majority of which is under its proprietary “The Children's Place”, "Place", and "Baby Place" brand names.