The Children's Place Reports First Quarter 2010 Financial Results
Achieves Record First Quarter Net Income
Management Raises Fiscal 2010 Earnings Guidance
SECAUCUS, N.J., May 20, 2010 (GLOBE NEWSWIRE) -- The Children's Place Retail Stores, Inc. (Nasdaq:PLCE), the largest pure-play children's specialty apparel retailer in North America, today announced record first quarter net income from continuing operations of $28.0 million, or $1.00 per diluted share for the thirteen-week period ended May 1, 2010, compared to $23.7 million, or $0.80 per share in the first quarter of 2009.
Net sales increased 5.0% to $422.1 million in the first quarter of 2010, compared to $401.9 in the first quarter of 2009. Comparable retail sales, which include online sales, declined 0.5% in the first quarter of fiscal 2010 compared to a 1.0% increase the previous year. During the first quarter of 2010, comparable store sales declined 1.7% in the U.S. and 4.6% in Canada, while online sales increased 22.0%.
"We delivered record financial results and made significant progress on key initiatives in the first quarter of 2010," commented Jane Elfers, President and Chief Executive Officer of The Children's Place. "We strengthened the senior leadership team with the appointment of five talented and experienced executives to head our merchandising, planning, outlet, information technology and human resources operations. In addition, we accelerated our new store openings, sharpened our marketing programs and continued to drive double-digit online growth."
"Looking ahead, we believe The Children's Place is well positioned to continue growing market share as we execute on our growth initiatives," Elfers added. "We will continue to keep a tight rein on expenses as consumer spending remains constrained by lingering weakness in the economic environment."
The comparability of income from continuing operations is affected by several transactions that occurred in the first quarter of 2009, which were highlighted in the Company's earnings release on May 21, 2009. Excluding those transactions that affect comparability between quarters, adjusted income from continuing operations after tax in the first quarter of 2010 increased 28.7% from $21.8 million, or $0.74 per diluted share, in the first quarter of 2009. Adjusted income from continuing operations excluding transactions that affect comparability 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 $27.9 million, or $1.00 per diluted share, in the first quarter of 2010 compared to net income of $23.5 million, or $0.79 per diluted share, for the same period last year.
During the first quarter of 2010, the Company opened 16 stores and closed one.
Outlook
The Company updated its guidance for fiscal 2010 and now projects earnings per diluted share from continuing operations will be in the range of $3.05 to $3.15, reflecting its first quarter results, from its initial guidance of $2.90 to $3.10. The Company provided initial guidance for the second quarter of 2010, which is forecast to be a loss per share from continuing operations of $(0.38) to $(0.33). Earnings guidance for the second quarter and fiscal 2010 assumes positive low-single digit comparable retail sales and assumes that currency exchange rates will remain where they are today.
Conference Call Information
The Children's Place will host a conference call to discuss its first quarter 2010 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 approximately one hour after the conclusion of the call.
About The Children's Place Retail Stores, Inc.
The Children's Place is the largest pure-play children's specialty apparel retailer in North America. The Company designs, contracts to manufacture and sells fashionable, high-quality merchandise at value-prices under the proprietary "The Children's Place" brand name. As of May 1, 2010, the Company owned and operated 962 The Children's Place stores and an online store at www.childrensplace.com.
Forward-Looking Statements
This press release (and above referenced call) may contain certain forward-looking statements regarding future circumstances, including statements relating to the Company's positioning, and forecasts regarding earnings per diluted share for fiscal 2010 and loss per share for the second quarter of 2010. 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 annual report on Form 10-K for the fiscal year ended January 30, 2010. Included among the risks and uncertainties that could cause actual results, events and performance to differ materially are the risk that the Company will be unsuccessful in gauging fashion trends and changing consumer preferences, and 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 the downturn in the economy. 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.
Table 1
THE CHILDREN'S PLACE RETAIL STORES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
First Quarter Ended
--------------------------------
May 1, 2010 May 2, 2009
--------------- ---------------
Net sales $422,133 $401,901
Cost of sales 242,429 235,374
--------------- ---------------
Gross profit 179,704 166,527
Selling, general and administrative expenses 113,455 111,893
Asset impairment charge 930 1,099
Depreciation and amortization 17,625 17,524
--------------- ---------------
Income from continuing operations before
interest and
taxes 47,694 36,011
Interest (expense), net (456) (3,268)
--------------- ---------------
Income from continuing operations before
income taxes 47,238 32,743
Provision for income taxes 19,231 9,002
--------------- ---------------
Income from continuing operations net of
income taxes 28,007 23,741
(Loss) from discontinued operations net of
income taxes (105) (229)
--------------- ---------------
Net income $27,902 $23,512
=============== ===============
Basic income from continuing operations per
common share $1.02 $0.81
(Loss) from discontinued operations per
common share -- (0.01)
--------------- ---------------
Basic net income per common share $1.01 $0.80
=============== ===============
Basic weighted average common shares
outstanding 27,583 29,475
Diluted income from continuing operations per
common share $1.00 $0.80
(Loss) from discontinued operations per
common share -- (0.01)
--------------- ---------------
Diluted net income per common share $1.00 $0.79
=============== ===============
Diluted weighted average common shares and
common
shares equivalents outstanding 27,930 29, 605
Note: Amounts may not add due to rounding.
Table 2
THE CHILDREN'S PLACE RETAIL STORES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
January 30,
May 1, 2010 2010 May 2, 2009
------------ -------------- -------------
Assets:
Cash and investments $225,731 $170,492 $224,275
Accounts receivable 16,260 16,910 19,299
Inventories 182,356 206,227 181,984
Other current assets 73,999 63,253 84,880
------------ -------------- -------------
Total current assets 498,346 456,882 510,438
Property and equipment,
net 315,567 312,801 314,331
Other assets, net 60,667 84,377 67,151
------------ -------------- -------------
Total assets $874,580 $854,060 $891,920
============ ============== =============
Liabilities and
Stockholder Equity:
Short term portion of
term loan $-- $-- $15,000
Accounts payable 45,588 55,547 58,155
Accrued expenses and
other current
liabilities 81,099 89,969 98,811
------------ -------------- -------------
Total current liabilities 126,687 145,516 171,966
Long term portion of term
loan -- -- 23,000
Other liabilities 117,959 119,574 117,565
------------ -------------- -------------
Total liabilities 244,646 265,090 312,531
Stockholders' equity 629,934 588,970 579,389
------------ -------------- -------------
Total liabilities and
stockholders' equity $874,580 $854,060 $891,920
============ ============== =============
Table 3
THE CHILDREN'S PLACE RETAIL STORES, INC.
RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION TO GAAP
(In millions, except per share amounts)
(Unaudited)
First Quarter Ended
---------------------------------
May 1, 2010 May 2, 2009
-------------- -----------------
Income from continuing operations net of
income taxes $28.0 $23.7
-------------- -----------------
Transactions affecting comparability:
Restructuring costs -- 2.6
Deferred financing fees write-off -- 0.9
Impairment charge -- 0.8
-------------- -----------------
Aggregate impact of transactions affecting
comparability -- 4.3
Income tax effect -- (1.7)
Benefit resulting from resolution of an IRS
income tax audit -- (4.5)
-------------- -----------------
Adjusted (gain) from transactions affecting
comparability -- (1.9)
-------------- -----------------
Adjusted income from continuing operations
net of income taxes $28.0 $21.8
============== =================
GAAP income from continuing operations per
diluted share $1.00 $0.80
Adjusted income from continuing operations
per diluted share $1.00 $0.74
This news release was distributed by GlobeNewswire, www.globenewswire.com
SOURCE: The Children's Place Retail Stores, Inc.
CONTACT: The Children's Place Retail Stores, Inc. Susan Riley, EVP, Finance & Administration (201) 558-2400 Jane Singer, VP, Investor Relations (201) 453-6955