Children's Place posts positive Q3, raises outlook

Net sales at the Children’s Place increased 3.9 percent to 473.8 million dollars in the third quarter of 2016. Comparable retail sales increased 4.6 percent. Net income was 44.2 million dollars or 2.36 dollars per diluted share compared to 38.5 million dollars or 1.88 dollars per diluted share, the previous year. Adjusted net income was 42.8 million dollars or 2.29 dollars per diluted share compared to 39.6 million dollars or 1.93 dollars per diluted share, in the third quarter last year.

In the company release, Jane Elfers, President and Chief Executive Officer, said, “We delivered another outstanding quarter, with EPS significantly above the high end of our guidance range. Based on these results, we are raising our adjusted EPS guidance for the full year to 5 dollars to 5.05 dollars per share compared to our previous guidance of 4.60 dollars to 4.70 dollars per share.”

Review of the year to date results

Gross profit was 194.5 million dollars in the third quarter compared to 180.5 million dollars in the third quarter of 2015, while adjusted gross profit was 194.4 million dollars compared to 180.6 million dollars last year. Operating income was 62.1 million dollars compared to 57.6 million dollars and adjusted operating income was 62.4 million dollars compared to 59.5 million dollars in the third quarter last year.

Year to date net sales increased 3 percent to 1,265 million dollars, including the negative impact of approximately 3.7 million dollars from currency exchange rate fluctuations. On a constant currency basis, net sales were 1,268 million dollars, a 3.3 percent increase compared to the prior year. Comparable retail sales increased 4.1 percent in the first nine months of fiscal 2016.

Net income was 68.1 million dollars or 3.56 dollars per diluted share compared to 40.4 million dollars or 1.94 dollars per diluted share, the previous year. Adjusted net income was 68.4 million dollars or 3.57 dollars per diluted share, inclusive of a negative 0.03 dollar impact due to foreign exchange, compared to 50.5 million dollars or 2.42 dollars, an increase of 48 percent, compared to the previous year. On a constant currency basis, adjusted net income per diluted share was 3.60 dollars, a 49 percent increase compared to the previous year.

The company closed five stores and opened two during the third quarter of 2016 and ended the quarter with 1,061 stores, a decrease of 2 percent compared to the prior year. The company’s international franchise partners opened 16 points of distribution in the third quarter, and the company ended the quarter with 139 international points of distribution open and operated by its 6 franchise partners in 17 countries.

Updates full year earnings outlook

The company is updating its outlook for fiscal 2016 and now expects adjusted net income per diluted share to be in the range of 5 dollars to 5.05 dollars, inclusive of a 0.03 dollar negative impact from foreign exchange. This compares to the company’s previous guidance for adjusted net income per diluted share of 4.60 dollars to 4.70 dollars and to adjusted net income per diluted share of 3.60 dollars in fiscal 2015. This guidance assumes a positive low single digit increase in comparable retail sales for the year.

The company expects adjusted net income per diluted share in the fourth quarter of 2016 to be between 1.43 dollars and 1.48 dollars and expects no impact on adjusted net income per diluted share in the quarter from currency exchange rate fluctuations. This compares to adjusted net income per diluted share of 1.19 dollars in the fourth quarter of 2015. This guidance assumes a positive low single digit increase in comparable retail sales for the quarter.

The board declared a quarterly cash dividend of 0.20 dollar per share to be paid January 5, 2017 to shareholders of record at the close of business on December 17, 2016.

Picture:Facebook/The Children's Place