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The Children’s Place Q1 net income increases 48 percent

Net sales at The Children’s Place increased 4.1 percent to 436.7 million dollars in the first quarter of 2017. Comparable retail sales increased 6.1 percent. Net income was 36.2 million dollars or 1.97 dollars per diluted share compared 26 million dollars or 1.33 dollars per diluted share, the previous year, a 48 percent increase in net income per diluted share.

Commenting on the company’s performance, Jane Elfers, President and CEO, said in a press statement, “We continued to deliver outstanding operating results in the first quarter. Comparable retail sales, operating margin and earnings per diluted share were significantly above both last year and the high end of our guidance range. We continue to make significant progress on our key strategic growth initiatives - superior product, business transformation through technology, alternate channels of distribution and fleet optimization.”

Other important financial highlights of Q1

Adjusted net income was 35.9 million dollars, or 1.95 dollars per diluted share, compared to adjusted net income of 25.8 million dollars or 1.32 dollars per diluted share, in the first quarter last year, a 48 percent increase in adjusted net income per diluted share. This 0.63 dollars increase in adjusted net income per diluted share includes a 0.19dollar benefit resulting from the new accounting rules for the income tax impact on share-based compensation.

Gross profit was 170.6 million dollars compared to 165.4 million dollars in the first quarter of 2016. Adjusted gross profit was 171 million dollars compared to 165.3 million dollars last year, and deleveraged 20 basis points to 39.2 percent of sales.

Operating income was 42.3 million dollars compared to 39.6 million dollars in the first quarter of 2016. Adjusted operating income was 48.4 million dollars or 11.1 percent of net sales, compared to an adjusted operating income of 39.2 million dollars or 9.4 percent of net sales, in the first quarter last year, leveraging 170 basis points compared to last year.

The Children’s Place continue fleet optimisation program

In accordance with our fleet optimization initiative, the company closed seven stores and opened one store during the first quarter of 2017 and ended the quarter with 1,033 stores and square footage of 4.829 million, a decrease of 2.8 percent compared to the prior year. Since the fleet optimization initiative was announced in 2013, the company has closed 149 stores.

The company’s international franchise partners opened six points of distribution in the first quarter, and the company ended the quarter with 156 international points of distribution open and operated by its 6 franchise partners in 18 countries.

The Children's Place updates FY17 outlook

The company has updated its outlook for fiscal 2017 and now expects adjusted net income per diluted share to be in the range of 7.10 dollars to 7.20 dollars inclusive of an 0.89 dollar 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 6.50 dollars to 6.65 dollars, inclusive of a 0.45 dollar benefit resulting from new accounting rules for the income tax impact on share-based compensation, and to adjusted net income per diluted share of 5.43 dollars in fiscal 2016.

This guidance assumes an approximate 3 percent increase in comparable retail sales for the year. This guidance for adjusted net income per diluted share excludes year to date net income of approximately 0.3 million dollars primarily related to income associated with the release of reserves for uncertain tax positions, partially offset by charges related to a reserve for a legal settlement resulting from a pricing litigation as the company believes this income is not reflective of the performance of its core business.

The company expects adjusted net income per diluted share in the second quarter of 2017 will be between 0.70 dollar and 0.75 dollar, inclusive of a 0.70 dollar benefit resulting from new accounting rules for the income tax impact on share-based compensation. This compares to an adjusted net loss per share of 0.01 dollar in the second quarter of 2016. This guidance assumes a low single digit increase in comparable retail sales.

Picture:The Children's Place website