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The Children's Place Q2 net sales rise 20.1 percent, raises outlook

By Prachi Singh

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Management

Second quarter net sales, The Children’s Place, Inc. said increased by 75.1 million dollars or 20.1 percent to 448.7 million dollars driven by a positive comparable retail sales increase of 13.2 percent, an approximately 22 million dollars benefit from the calendar shift related to the 53rd week in fiscal 2017, and an approximately 5 million dollars due to the new revenue recognition rules.

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Commenting on the trading update, Jane Elfers, the company’s President and CEO said in a statement: “We set the bar very high for the second quarter and we beat it. We delivered our highest ever quarterly comp, a positive 13.2 percent on top of a positive 3.1 percent last year. We delivered adjusted EPS of 0.70 dollar, 0.09 dollar above the high end of our guidance range.”

Highlights of The Children’s Place second quarter results

Net income for the quarter was 7.5 million dollars or 0.45 dollar per diluted share compared to 14.3 million dollars or 0.79 dollar per diluted share, the previous year. Adjusted net income was 11.7 million dollars or 0.70 dollar per diluted share compared to 15.6 million dollars or 0.86 dollar per diluted share, in the second quarter last year.

Gross profit was 154.8 million dollars in the second quarter, compared to 128.4 million dollars in the second quarter of 2017. Adjusted gross profit was 154.8 million dollars compared to 128.7 million dollars last year. Adjusted gross margin leveraged 10 basis points to 34.5 percent of sales.

The Children’s Place H1 net sales rise 9.1 percent

The company added that net sales increased 9.2 percent to 885 million dollars and comparable retail sales increased 5.1 percent in the first half of 2018, inclusive of a positive impact of approximately 22 million dollars resulting from the calendar shift related to the 53rd week in fiscal 2017 and approximately 9 million dollars due to the new revenue recognition rules.

Net income was 39 million dollars or 2.27 dollars per diluted share in the first half compared to 50.5 million dollars or 2.76 dollars per diluted share, the previous year. Adjusted net income was 44.9 million dollars or 2.60 dollars per diluted share, compared to 51.6 million dollars or 2.82 dollars per diluted share, in the first half last year.

Gross profit was 315 million dollars in the first half, compared to 299 million dollars in the first half of 2017 and adjusted gross profit was 316.2 million dollars compared to 299.6 million dollars last year, and deleveraged 130 basis points to 35.7 percent of sales.

The company closed 10 stores and did not open any stores during the second quarter of 2018 and ended the quarter with 992 stores, a decrease of 4 percent compared to the prior year. Since its fleet optimization initiative announced in 2013, the company has closed 191 stores. The Company’s international franchise partners opened 11 points of distribution and closed one in the second quarter, and the company ended the quarter with 211 international points of distribution open and operated by its eight franchise partners in 20 countries.

The Children’s Place raises FY18 outlook

For fiscal 2018, the company is raising its outlook for adjusted net income per diluted share to a range of 8.09 dollars to 8.29 dollars from a range of 7.95 dollars to 8.20 dollars. This compares to adjusted net income per diluted share of 7.91 dollars in fiscal 2017. The company now expects total net sales for the year to be in the range of 1.945 to 1.955 billion dollars. This guidance assumes a positive mid-single digit comparable retail sales increase.

The company expects net income per diluted share in the third quarter to be in the range of 2.97 dollars to 3.07 dollars based upon a mid-single digit comparable retail sales increase. This compares to adjusted net income per diluted share of 2.58 dollars in the third quarter of 2017.

Picture:The Children's Place website

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