Achieves Record First Quarter Net Income
Management Raises Fiscal 2010 Earnings Guidance
SECAUCUS, N.J., May 20, 2010 (GLOBE NEWSWIRE) -- The Children's Place Retail Stores, Inc. (Nasdaq:PLCE), the largest pure-play children's specialty apparel retailer in North America, today announced record first quarter net income from continuing operations of $28.0 million, or $1.00 per diluted share for the thirteen-week period ended May 1, 2010, compared to $23.7 million, or $0.80 per share in the first quarter of 2009.
Net sales increased 5.0% to $422.1 million in the first quarter of 2010, compared to $401.9 in the first quarter of 2009. Comparable retail sales, which include online sales, declined 0.5% in the first quarter of fiscal 2010 compared to a 1.0% increase the previous year. During the first quarter of 2010, comparable store sales declined 1.7% in the U.S. and 4.6% in Canada, while online sales increased 22.0%.
"We delivered record financial results and made significant progress on key initiatives in the first quarter of 2010," commented Jane Elfers, President and Chief Executive Officer of The Children's Place. "We strengthened the senior leadership team with the appointment of five talented and experienced executives to head our merchandising, planning, outlet, information technology and human resources operations. In addition, we accelerated our new store openings, sharpened our marketing programs and continued to drive double-digit online growth."
"Looking ahead, we believe The Children's Place is well positioned to continue growing market share as we execute on our growth initiatives," Elfers added. "We will continue to keep a tight rein on expenses as consumer spending remains constrained by lingering weakness in the economic environment."
The comparability of income from continuing operations is affected by several transactions that occurred in the first quarter of 2009, which were highlighted in the Company's earnings release on May 21, 2009. Excluding those transactions that affect comparability between quarters, adjusted income from continuing operations after tax in the first quarter of 2010 increased 28.7% from $21.8 million, or $0.74 per diluted share, in the first quarter of 2009. Adjusted income from continuing operations excluding transactions that affect comparability is a non-GAAP measure. The Company believes the excluded items are not indicative of the performance of its core business and that by providing this supplemental disclosure to investors it will facilitate comparisons of its past and present performance. A reconciliation of income from continuing operations as reported is included in this press release in Table 3.
Net income, including the impact of discontinued operations, was $27.9 million, or $1.00 per diluted share, in the first quarter of 2010 compared to net income of $23.5 million, or $0.79 per diluted share, for the same period last year.
During the first quarter of 2010, the Company opened 16 stores and closed one.
Outlook
The Company updated its guidance for fiscal 2010 and now projects earnings per diluted share from continuing operations will be in the range of $3.05 to $3.15, reflecting its first quarter results, from its initial guidance of $2.90 to $3.10. The Company provided initial guidance for the second quarter of 2010, which is forecast to be a loss per share from continuing operations of $(0.38) to $(0.33). Earnings guidance for the second quarter and fiscal 2010 assumes positive low-single digit comparable retail sales and assumes that currency exchange rates will remain where they are today.
Conference Call Information
The Children's Place will host a conference call to discuss its first quarter 2010 results today at 8:00 a.m. Eastern Time. The call will be broadcast live at http://investor.childrensplace.com. An audio archive will be available approximately one hour after the conclusion of the call.
About The Children's Place Retail Stores, Inc.
The Children's Place is the largest pure-play children's specialty apparel retailer in North America. The Company designs, contracts to manufacture and sells fashionable, high-quality merchandise at value-prices under the proprietary "The Children's Place" brand name. As of May 1, 2010, the Company owned and operated 962 The Children's Place stores and an online store at www.childrensplace.com.
Forward-Looking Statements
This press release (and above referenced call) may contain certain forward-looking statements regarding future circumstances, including statements relating to the Company's positioning, and forecasts regarding earnings per diluted share for fiscal 2010 and loss per share for the second quarter of 2010. These forward-looking statements are based upon the Company's current expectations and assumptions and are subject to various risks and uncertainties that could cause actual results to differ materially. Some of these risks and uncertainties are described in the Company's filings with the Securities and Exchange Commission, including in the "Risk Factors" section of its annual report on Form 10-K for the fiscal year ended January 30, 2010. Included among the risks and uncertainties that could cause actual results, events and performance to differ materially are the risk that the Company will be unsuccessful in gauging fashion trends and changing consumer preferences, and the risks resulting from the highly competitive nature of the Company's business and its dependence on consumer spending patterns, which may be affected by the downturn in the economy. Readers (or listeners on the call) are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they were made. The Company undertakes no obligation to release publicly any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. The inclusion of any statement in this release does not constitute an admission by the Company or any other person that the events or circumstances described in such statement are material.
| Table 1 | ||
| THE CHILDREN'S PLACE RETAIL STORES, INC. | ||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||
| (In thousands, except per share amounts) | ||
| (Unaudited) | ||
| First Quarter Ended | ||
| May 1, 2010 | May 2, 2009 | |
| Net sales | $422,133 | $401,901 |
| Cost of sales | 242,429 | 235,374 |
| Gross profit | 179,704 | 166,527 |
| Selling, general and administrative expenses | 113,455 | 111,893 |
| Asset impairment charge | 930 | 1,099 |
| Depreciation and amortization | 17,625 | 17,524 |
|
Income from continuing operations before interest and taxes |
47,694 |
36,011 |
| Interest (expense), net | (456) | (3,268) |
| Income from continuing operations before income taxes | 47,238 | 32,743 |
| Provision for income taxes | 19,231 | 9,002 |
| Income from continuing operations net of income taxes | 28,007 | 23,741 |
| (Loss) from discontinued operations net of income taxes | (105) | (229) |
| Net income | $27,902 | $23,512 |
| Basic income from continuing operations per common share |
$1.02 |
$0.81 |
| (Loss) from discontinued operations per common share | -- | (0.01) |
| Basic net income per common share | $1.01 | $0.80 |
| Basic weighted average common shares outstanding | 27,583 | 29,475 |
| Diluted income from continuing operations per common share |
$1.00 |
$0.80 |
| (Loss) from discontinued operations per common share | -- | (0.01) |
| Diluted net income per common share | $1.00 | $0.79 |
|
Diluted weighted average common shares and common shares equivalents outstanding |
27,930 |
29, 605 |
| Note: Amounts may not add due to rounding. | ||
| Table 2 | |||
| THE CHILDREN'S PLACE RETAIL STORES, INC. | |||
| CONDENSED CONSOLIDATED BALANCE SHEETS | |||
| (In thousands) | |||
| (Unaudited) | |||
| May 1, 2010 | January 30, 2010 | May 2, 2009 | |
| Assets: | |||
| Cash and investments | $225,731 | $170,492 | $224,275 |
| Accounts receivable | 16,260 | 16,910 | 19,299 |
| Inventories | 182,356 | 206,227 | 181,984 |
| Other current assets | 73,999 | 63,253 | 84,880 |
| Total current assets | 498,346 | 456,882 | 510,438 |
| Property and equipment, net | 315,567 | 312,801 | 314,331 |
| Other assets, net | 60,667 | 84,377 | 67,151 |
| Total assets | $874,580 | $854,060 | $891,920 |
| Liabilities and Stockholder Equity: | |||
| Short term portion of term loan | $-- | $-- | $15,000 |
| Accounts payable | 45,588 | 55,547 | 58,155 |
| Accrued expenses and other current liabilities | 81,099 | 89,969 | 98,811 |
| Total current liabilities | 126,687 | 145,516 | 171,966 |
| Long term portion of term loan | -- | -- | 23,000 |
| Other liabilities | 117,959 | 119,574 | 117,565 |
| Total liabilities | 244,646 | 265,090 | 312,531 |
| Stockholders' equity | 629,934 | 588,970 | 579,389 |
| Total liabilities and stockholders' equity | $874,580 | $854,060 | $891,920 |
| Table 3 | ||
| THE CHILDREN'S PLACE RETAIL STORES, INC. | ||
| RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION TO GAAP | ||
| (In millions, except per share amounts) | ||
| (Unaudited) | ||
| First Quarter Ended | ||
| May 1, 2010 | May 2, 2009 | |
| Income from continuing operations net of income taxes | $28.0 | $23.7 |
| Transactions affecting comparability: | ||
| Restructuring costs | -- | 2.6 |
| Deferred financing fees write-off | -- | 0.9 |
| Impairment charge | -- | 0.8 |
| Aggregate impact of transactions affecting comparability | -- | 4.3 |
| Income tax effect | -- | (1.7) |
|
Benefit resulting from resolution of an IRS income tax audit |
-- |
(4.5) |
|
Adjusted (gain) from transactions affecting comparability |
-- | (1.9) |
| Adjusted income from continuing operations net of income taxes |
$28.0 |
$21.8 |
| GAAP income from continuing operations per diluted share | $1.00 | $0.80 |
| Adjusted income from continuing operations per diluted share | $1.00 | $0.74 |