The Children’s Place Q3 net sales witness 6.4 percent decline

The Children's Place, for the thirteen weeks ended October 31, 2015 posted net sales decline of 6.4 percent to 455.9 million dollars. The quarter included the negative impact of approximately 9.9 million dollars from currency exchange rate fluctuations. On a constant currency basis, net sales were 465.8 million dollars, a 4.4 percent decrease, compared to third quarter of 2014. Comparable retail sales decreased 3 percent.

”We delivered adjusted earnings per diluted share of 1.93 dollars in the third quarter compared to 1.82 dollars in the third quarter of 2014. Comparable retail sales were negative primarily driven by unseasonably warm weather across most of the United States. Despite this challenge, we leveraged adjusted gross margin by 60 basis points, adjusted SG&A by 60 basis points and adjusted operating margin by 80 basis points compared to last year,” said Jane Elfers, President and Chief Executive Officer.

Other third quarter result highlights

Net income was 38.5 million dollars, or 1.88 dollars per diluted share compared to net income of 36.9 million dollars, or 1.70 dollars per diluted share, the previous year. Adjusted net income was 39.6 million dollars, or 1.93 dollars per diluted share, an increase of 6 percent, inclusive of a negative 0.08 dollar impact due to foreign exchange, compared to 39.5 million dollars, or 1.82 dollars per diluted share, in the third quarter last year. On a constant currency basis, adjusted earnings per diluted share were 2.01 dollars, a 10.4 percent increase, compared to the third quarter of 2014.

Gross profit was 180.5 million dollars in the third quarter, compared to 190.1 million dollars in the third quarter of 2014. Adjusted gross profit was 180.6 million dollars in the third quarter, compared to 190.3 million dollars last year, and leveraged 60 basis points to 39.6 percent of sales. The company opened one store and closed two during the quarter. Year to date, company opened four stores and closed 16. The company ended the third quarter with 1,085 stores, a decrease of 2.9 percent compared to the prior year. The Company's international franchise partners opened five stores in the third quarter, and the company ended the quarter with 90 international franchise stores open and operated by its franchise partners in 12 countries.

Fiscal year-to-date results

Net sales declined 4.3 percent to 1.23 billion dollars, including the negative impact of approximately 21.1 million dollars from currency exchange rate fluctuations. On a constant currency basis, net sales were 1.25 billion dollars, a 2.6 percent decrease compared to net sales of 1.28 billion dollars in the prior year. Comparable retail sales declined 2 percent in the first nine months of 2015.

Net income was 40.4 million dollars, or 1.94 dollars per diluted share compared to net income of 39.9 million dollars, or 1.81 dollars per diluted share, the previous year. Adjusted net income was 50.5 million dollars, or 2.42 dollars per diluted share, inclusive of a negative 0.11 dollar impact due to foreign exchange. On a constant currency basis, adjusted earnings per diluted share were 2.53 dollars, a 19.3 percent increase compared to last year. Gross profit was 447.6 million dollars compared to 457.5 million dollars last year. Adjusted gross profit was 448 million dollars, or 36.5 percent of net sales, leveraging 80 basis points compared to last year.

Announces capital return program

During the third quarter, the company returned approximately 22 million dollars to shareholders through the repurchase of 330,248 shares and its quarterly dividend payment. Year to date, the company returned approximately 90 million dollars to shareholders through the repurchase of 1,302,048 shares and its quarterly dividend payments. Since 2009, the company has returned over 582 million dollars to its investors through share repurchases and dividends. At the end of the third quarter of 2015, approximately 59 million dollars remained available for future share repurchases under the company's existing repurchase program.

Additionally, the company's Board of Directors authorised a new 250 million dollars share repurchase and declared a quarterly dividend of 0.15 dollar per share, payable on January 7, 2016 to shareholders of record at the close of business on December 17, 2015.

“The systems investments we have made in state of the art assortment planning, inventory allocation and replenishment tools are delivering results. Our fleet rationalization initiative is on track and we expect to close 200 stores through 2017. Our wholesale and international businesses continue to expand; we recently announced a new partnership with El Palacio de Hierro to open free-standing stores and shop in shops in Mexico, with the first successful opening occurring last month. And today, our Board authorized a new 250 million dollars share repurchase and declared a quarterly dividend. This new authorization and dividend reflect our company's commitment to return excess capital to our shareholders," added Elfers.

Reaffirms FY15 outlook

The company is reaffirming its adjusted net income per diluted share guidance for fiscal 2015 in the range of 3.35 dollars to 3.45 dollars, inclusive of a 0.14 dollar negative impact from foreign exchange. This guidance assumes that comparable retail sales for the year will be slightly negative compared to fiscal 2014.

For the fourth quarter of 2015, the company expects adjusted net income per diluted share between 0.93 dollar and 1.03 dollars, inclusive of an estimated 0.03 dollar negative impact from foreign exchange, assuming comparable retail sales to increase low single digits.