The Children's Place Reports Third Quarter 2010 Financial Results
Management Updates Fiscal 2010 Earnings Guidance
SECAUCUS, N.J., Nov 18, 2010 (GlobeNewswire via COMTEX) -- The Children's Place Retail Stores, Inc. (Nasdaq:PLCE),the largest pure-play children's specialty apparel retailer in North America, today announced third quarter net sales of $453.4 million for the thirteen weeks ended October 30, 2010, a 2.1% decline compared to $463.2 million in the third quarter of fiscal 2009.
Comparable retail sales, which include online sales, declined 5.7% in the third quarter of fiscal 2010 compared to a decline of 1.6% the previous year. During the third quarter of fiscal 2010, comparable store sales declined 8.8% in the U.S. and 7.9% in Canada, while comparable online sales increased 33.0%.
Income from continuing operations after tax was $31.2 million, or $1.14 per diluted share, in the third quarter of fiscal 2010, including a $0.04 per share benefit resulting from the Company's repurchase of 1.7 million shares during the quarter. In the third quarter of fiscal 2009, income from continuing operations after tax was $38.2 million, or $1.38 per diluted share.
"As we announced mid-October, third quarter sales and profits for The Children's Place were impacted by poorly performing fashion in the back-to-school line as well as unseasonably warm temperatures," commented Jane Elfers, President and Chief Executive Officer of The Children's Place. "While short-term market conditions remain challenging for our business, we are making significant progress on our longer-term growth initiatives which we believe will lead to enhanced sales and profitability in 2011 and beyond."
During the third quarter of fiscal 2010, the Company opened 28 stores.
Fiscal Year-to-Date
Net sales from continuing operations were $1,220.8 million fiscal year-to-date 2010, a 3.4% increase compared to $1,180.8 million for the same period last year. Comparable retail sales declined 1.1% fiscal year-to-date 2010 compared to a 2.7% decline last year.
Income from continuing operations after tax was $50.9 million, or $1.83 per diluted share, fiscal year-to-date 2010, including a $0.02 per share benefit from the share repurchase program announced on August 19, 2010. This compares to income from continuing operations after tax of $54.7 million, or $1.88 per diluted share, fiscal year-to-date 2009, which included several transactions that affect comparability between the years. Excluding those items that affect comparability from fiscal year-to-date 2009, adjusted income from continuing operations after tax was $47.3 million, or $1.63 per share. Adjusted income from continuing operations is a non-GAAP measure which the Company is providing as a supplemental disclosure. A reconciliation of income from continuing operations as reported is included in Table 3 of this press release.
Fiscal year-to-date, the Company has opened 62 stores and closed four.
Share Repurchase Program
On August 19, 2010, the Company announced that the Board of Directors had authorized a share repurchase program in the amount of $100.0 million. Under the program, the Company may repurchase shares in the open market at current market prices at the time of purchase or in privately negotiated transactions. The timing and actual number of shares repurchased under the program depends on a variety of factors including price, corporate and regulatory requirements, and other market conditions, and the Company may suspend or discontinue the program at any time.
During the third quarter, the Company repurchased 1.7 million shares for approximately $80.0 million. Subsequent to the third quarter and through November 17, 2010, the Company repurchased an additional 0.2 million shares for approximately $8.5 million, which brought the year-to-date total under the share repurchase program to approximately $88.5 million.
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 $2.78 to $2.83 for fiscal 2010, including a $0.07 per share benefit from the 1.9 million shares repurchased through November 17, 2010, down from its previous guidance of $3.08 to $3.18. The Company provided initial guidance for earnings per diluted share from continuing operations for the fourth quarter of 2010 to be in the range of $0.98 to $1.03, including a $0.07 per share benefit from the 1.9 million shares repurchased through November 17, 2010. The earnings guidance assumes negative low-single digit comparable retail sales during the fourth quarter and assumes that currency exchange rates will remain where they are today. This guidance does not include the impact of further potential share repurchases during the fourth quarter.
Conference Call Information
The Children's Place will host a conference call to discuss its third 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 October 30, 2010, the Company owned and operated 1,005 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 the fourth quarter and fiscal 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 a 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)
Third Quarter Ended Year-to-Date Ended
---------------------- --------------------------
October October
30, 31, October 30, October 31,
2010 2009 2010 2009
---------- ---------- ------------ ------------
Net sales $ 453,395 $ 463,175 $ 1,220,829 $ 1,180,752
Cost of sales 271,052 261,348 745,208 707,099
---------- ---------- ------------ ------------
Gross profit 182,343 201,827 475,621 473,653
Selling, general and administrative
expenses 114,210 118,579 334,946 336,565
Asset impairment charges 354 307 2,506 1,721
Depreciation and amortization 17,738 18,170 53,562 53,258
---------- ---------- ------------ ------------
Operating income 50,041 64,771 84,607 82,109
Interest (expense), net (390) (520) (1,227) (5,250)
---------- ---------- ------------ ------------
Income from continuing operations
before income taxes 49,651 64,251 83,380 76,859
Provision for income taxes 18,493 26,079 32,483 22,175
---------- ---------- ------------ ------------
Income from continuing operations 31,158 38,172 50,897 54,684
Income (loss) from discontinued
operations, net of income taxes 151 (389) 81 (440)
---------- ---------- ------------ ------------
Net income $ 31,309 $ 37,783 $ 50,978 $ 54,244
========== ========== ============ ============
Basic earnings (loss) per share amounts
Income from continuing operations $ 1.16 $ 1.39 $ 1.86 $ 1.90
Income (loss) from discontinued
operations 0.01 (0.01) 0.00 (0.02)
---------- ---------- ------------ ------------
Net income $ 1.16 $ 1.38 $ 1.86 $ 1.88
========== ========== ============ ============
Basic weighted average common shares
outstanding 26,907 27,389 27,415 28,805
Diluted earnings (loss) per share
amounts
Income from continuing operations $ 1.14 $ 1.38 $ 1.83 $ 1.88
Income (loss) from discontinued
operations 0.01 (0.01) 0.00 (0.02)
---------- ---------- ------------ ------------
Net income $ 1.15 $ 1.37 $ 1.84 $ 1.87
========== ========== ============ ============
Diluted weighted average common shares
outstanding 27,238 27,622 27,764 29,038
Note: Table may not add due to
rounding.
Table 2
THE CHILDREN'S PLACE RETAIL STORES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
October January October
30, 30, 31,
2010 2010* 2009
---------- ---------- ----------
Assets:
Cash and investments $ 172,745 $ 170,492 $ 104,364
Accounts receivable 20,945 16,910 16,739
Inventories 232,902 206,227 250,599
Other current assets 71,326 63,253 87,965
---------- ---------- ----------
Total current assets 497,918 456,882 459,667
Property and equipment,
net 317,564 312,801 311,113
Other assets, net 59,961 84,377 64,536
---------- ---------- ----------
Total assets $ 875,443 $ 854,060 $ 835,316
========== ========== ==========
Liabilities and
Stockholders' Equity:
Accounts payable $ 79,626 $ 55,547 $ 62,612
Accrued expenses and
other current
liabilities 97,853 89,969 104,886
---------- ---------- ----------
Total current
liabilities 177,479 145,516 167,498
Other liabilities 118,291 119,574 114,584
---------- ---------- ----------
Total liabilities 295,770 265,090 282,082
Stockholders' equity 579,673 588,970 553,234
---------- ---------- ----------
Total liabilities and
stockholders' equity $ 875,443 $ 854,060 $ 835,316
========== ========== ==========
* Derived from the audited consolidated financial statements
included in the Company's Annual Report on Form 10-K
for the fiscal year ended January 30, 2010.
Table 3
THE CHILDREN'S PLACE RETAIL STORES, INC.
RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION TO GAAP
(In thousands, except per share amounts)
(Unaudited)
Third Quarter Ended Year-to-Date Ended
-------------------- -----------------------
October October October
30, 31, October 30, 31,
2010 2009 2010 2009
--------- --------- ------------ ---------
Income from continuing operations,
net of income taxes $ 31,158 $ 38,172 $ 50,897 $ 54,684
--------- --------- ------------ ---------
Transactions affecting comparability:
Gains:
Settlement of IRS employment tax audit
related to stock options -- (166) -- (4,729)
Expenses:
Proxy contest fees -- (146) -- 2,054
Prepayment of term loan expenses/deferred
financing fees -- -- -- 2,390
Company restructuring fees -- -- -- 2,805
Impairment charge -- -- -- 852
--------- --------- ------------ ---------
Aggregate impact of transactions affecting
comparability -- (312) -- 3,372
Income tax effect -- 124 -- (1,349)
Excess foreign tax credits from repatriation
of cash -- -- -- (4,834)
Tax benefit from resolution of IRS income tax
audit -- -- -- (4,540)
--------- --------- ------------ ---------
Adjusted (gain) from transactions affecting
comparability -- (188) -- (7,351)
Adjusted income from continuing operations,
net of income taxes $ 31,158 $ 37,984 $ 50,897 $ 47,333
========= ========= ============ =========
GAAP income from continuing operations per
diluted share $ 1.14 $ 1.38 $ 1.83 $ 1.88
Adjusted income from continuing operations
per diluted share $ 1.14 $ 1.38 $ 1.83 $ 1.63
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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