New Jersey, United States – The Children’s Place, Inc., the largest pure-play children’s specialty apparel retailer in North America, announced financial results for the thirteen weeks ended August 2, 2014.
- Management Updates Fiscal 2014 Earnings Guidance
- Announces India Franchise Agreement
- Board Declares Quarterly Dividend
“Our sales improved significantly in the second quarter, reflecting a rebound in shopping activity with more normalized weather patterns. While we expect the sector to remain highly promotional and the uncertainty surrounding the economy to continue, we are well positioned to compete effectively in the back half of 2014 and we are updating our full year guidance,” commented Jane Elfers, President and Chief Executive Officer.
Ms. Elfers continued, “We are making significant strides in our International franchise business, and we remain focused on providing great fashion and value for kids around the world. Today, we announced a partnership with Arvind Lifestyle Brands Limited to open stores in India. Arvind has a proven track record of operating successful apparel brands inIndia and we are excited to partner with them. Our first openings are slated for Fall 2015.”
“We remain committed to the continued execution of our key initiatives: E-Commerce growth, the expansion of our wholesale and international businesses, investments in seamless retail and state of the art systems, and fleet rationalization to deliver long-term sustainable growth,” concluded Ms. Elfers.
Second Quarter 2014 Results
Net sales were $384.6 million in the second quarter of 2014. The quarter included the negative impact of approximately $2.8 million from currency exchange rate fluctuations. This compares to net sales of $382.4 million for the second quarter of 2013. Comparable retail sales increased 0.8% for the second quarter 2014.
Net loss was $(10.7) million, or $(0.49) per share, in the second quarter of 2014, compared to a net loss of $(23.6) million, or $(1.05) per share, the previous year. Adjusted net loss was $(8.2) million, or $(0.37) per share, compared to $(9.4) million, or $(0.42) per share, the previous year.
Gross profit was $119.1 million, compared to $126.2 million in the second quarter of 2013 and declined 200 basis points to 31.0% of sales primarily due to fixed cost and merchandise margin deleverage.
Selling, general and administrative expenses were $117.1 million compared to $124.4 million in the second quarter of 2013. Adjusted SG&A was $116.0 million; $6.7 millionlower than last year, and leveraged 190 basis points to 30.2% of sales.
Operating loss was $(16.5) million, compared to $(35.6) million in the second quarter of 2013. Adjusted operating loss in the second quarter of 2014 was $(12.5) million, and leveraged 10 basis points to (3.2%) of sales.
During the second quarter, the Company recorded charges of $4.0 million for unusual items, which primarily consisted of asset impairment charges as a result of the Company’s fleet optimization initiative and severance associated with corporate restructuring.
Adjusted net loss, adjusted gross profit, adjusted SG&A, and adjusted operating loss are Non-GAAP measures, and are not intended to replace GAAP financial information. 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 to GAAP financial information is provided at the end of this release.
Store Openings and Closures
The Company opened 10 stores and closed 3 during the second quarter of 2014. The Company ended the quarter with 1,113 stores and square footage of 5.215 million, a decrease of 1.4% compared to the prior year. The Company’s international franchise partners opened 6 stores overseas in the second quarter, and the Company ended the quarter with 54 international franchise stores open.
Net sales declined 1.3% to $794.8 million, compared to $805.6 million in the first half of the prior year. Comparable retail sales declined 1.5%. Year to date sales include the negative impact of approximately $6.3 million from currency exchange rate fluctuations.
Net income was $2.9 million, or $0.13 per diluted share, in the first half of 2014, compared to net loss of $(4.4) million, or $(0.19) per share, the previous year. Adjusted net income was $7.1 million, or $0.32 per diluted share, compared to $9.9 million, or $0.43 per diluted share the previous year.
Gross profit decreased 7.6% to $267.4 million. Adjusted gross profit was $267.5 million.
Selling, general and administrative expenses decreased 5.2% to $230.8 million. Adjusted SG&A decreased 5.7% to $227.5 million and leveraged 130 basis points compared to the first half of 2013.
Operating income was $3.6 million, compared to an operating loss of $(7.2) million in the first half of 2013. Adjusted operating income was $10.2 million, compared to $15.9 millionthe previous year.
Capital Return Program
During the second quarter of 2014, the Company repurchased 301,301 shares for approximately $14.5 million. At the end of the second quarter, $73.7 million of the $100 million share repurchase program authorized in March 2014 remained available for future share repurchases.
Additionally, the Company reported its Board of Directors approved a quarterly dividend of$0.1325 per share, payable on October 17, 2014 to shareholders of record at the close of business on September 26, 2014.
The Company now expects full-year 2014 adjusted net income per diluted share will be in the range of $2.95 to $3.05, which compares to previous guidance of adjusted net income per diluted share in the range of $2.90 to $3.05. This guidance assumes comparable retail sales for the year will be flat to negative 1%. The Company estimates a $0.09 negative impact from foreign exchange in 2014.
The Company provided initial guidance for the third quarter of fiscal 2014, and is expecting an adjusted net income per diluted share between $1.74 and $1.82, assuming flat to negative low single digit comparable retail sales. This compares to an adjusted net income per diluted share of $1.89 in the third quarter of 2013. The Company estimates a$0.05 negative impact from foreign exchange in the third quarter of 2014.
To view the full report click here
Source: The Children’s Place Retail Stores, Inc.