The Children’s Place posts rise in Q2 net sales, updates outlook

The Children’s Place has said that its net sales increased 1.4 percent to 371.4 million dollars in the second quarter of 2016. The quarter included the negative impact of approximately 1.7 million dollars from currency exchange rate fluctuations. On a constant currency basis, net sales were 373.1 million dollars, a 1.8 percent increase. Comparable retail sales increased 2.4 percent in the second quarter.

“Based on these results and the consistently positive customer response to our merchandise assortments, we are raising our guidance for the full year. We continue to demonstrate our ability to deliver on our multi-pronged transformation strategy - superior product, business transformation through technology, global growth through alternate channels of distribution and store fleet optimization - despite the challenging retail environment and the continued weakness in store traffic,” said Jane Elfers, President and Chief Executive Officer of the company.

Review of the second quarter

Net loss was two million dollars or 0.11 dollar per diluted share, compared to a net loss of 13.7 million dollars or 0.67 dollar per diluted share, the previous year. Adjusted net loss was 0.2 million dollars, or 0.01 dollar per diluted share, inclusive of a negative 0.02 dollar impact due to foreign exchange, compared to an adjusted net loss of 6.8 million dollars, or 0.33 dollar per diluted share, in the second quarter last year. On a constant currency basis, adjusted net income per diluted share was 0.01 dollar.

Net sales for the period till date increased 2.5 percent to 790.8 million dollars, including the negative impact of approximately four million dollars from currency exchange rate fluctuations. On a constant currency basis, net sales were 794.8 million dollars, a 3 percent increase and comparable retail sales increased 3.8 percent in the first half of fiscal 2016.

Net income was 24 million dollars, or 1.24 dollars per diluted share, in the first half of fiscal 2016, compared to net income of 1.9 million dollars, or 0.09 dollar per diluted share, the previous year. Adjusted net income was 25.6 million dollars, or 1.32 dollars per diluted share, inclusive of a negative 0.03 dollar impact due to foreign exchange, an increase of 154 percent, compared to the previous year. On a constant currency basis, adjusted net income per diluted share was 1.35 dollars, a 160 percent increase compared to the previous year.

The company closed two stores and opened two stores during the second quarter. The Company ended the second quarter with 1,064 stores, a decrease of 2 percent compared to the prior year. The Company’s international franchise partners opened 13 points of distribution in the second quarter, and the company ended the quarter with 123 international points of distribution open and operated by its six franchise partners in 16 countries.

Updates outlook, declares dividend

The company is updating its outlook for fiscal 2016 and now expects adjusted net income per diluted share to be in the range of 4.60 dollars to 4.70 dollars, inclusive of a 0.08 dollar negative impact from foreign exchange. This compares to the Company’s previous guidance of 4.17 dollars to 4.27 dollars per adjusted diluted share 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 third quarter to be between 1.93 dollars and 2.01 dollars, inclusive of an estimated 0.03 dollar negative impact from foreign exchange. This compares to adjusted net income per diluted share of 1.93 dollars in the third quarter of 2015. This guidance assumes a positive low single digit increase in comparable retail sales for the quarter.

The Board has declared a quarterly cash dividend of 0.20 dollar per share to be paid October 6, 2016 to shareholders of record at the close of business on September 16, 2016.

Picture:The Children's Place