The Children’s Place (PLCE) Beats 1Q Forecasts, Stock Soars

Shares of The Children’s Place Inc. (PLCE) were trading up +4.27 or +6.26 percent to $72.50 per share in Tuesday’s premarket after the company reported first quarter earnings that topped analyst forecasts early this morning. Children’s Place stock closed at $68.23 per share, up +0.85 or +1.26 percent in Monday’s regular trading session.


Stock Analysis

Secaucus, New Jersey based The Children’s Place was founded in 1969 and is a large retailer of children’s specialty apparel.
The company’s focus is on the manufacture, retail and wholesale of high quality children’s apparel and accessories under “The Children’s Place”, “Baby Place” and “Place” brand names. As of the end of April of this year, the company operated 1,064 stores in the United States, Canada and Puerto Rico, a retail website and 110 distribution points internationally in 16 countries operated by the company’s six franchise partners.

For its first fiscal quarter of 2016, The Children’s Place reported net income of $26 million, or $1.33 per diluted share versus $15.6 million, or $0.73 per diluted share in the same period one year ago. Adjusted net income came to $25.8 million or $1.32 per diluted share, an increase of +59 percent, which included a negative impact of -$0.01 due to foreign exchange. On a constant currency basis, adjusted net income was $1.33 per diluted share, an increase of +60.2 percent compared to last year’s first quarter, while comparable retail sales increased +5.1 percent in the quarter.

Net sales for the company came to $419.4 million, which included a negative impact from currency fluctuations of about -$2.2 million. On a constant currency basis, net sale were $421.6 million compared to the previous year’s $404.9 million, an increase of +4.1 percent. The analyst consensus was for the company to report earnings of $1.03 per share on $412.9 million in revenue.

Jane Elfers, President and Chief Executive Officer of the company said in this morning’s press release that, “We are raising our guidance for the full year, despite the challenging environment and continued weakness in store traffic. This guidance assumes a low single digit comp sales increase, expansion of gross margin and disciplined expense control.” Elfers concluded saying, “These strong results further 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. These growth initiatives are led by a best in class management team and supported by a foundation of operational excellence.”

The Children’s Place updated its outlook for its full 2016 year and is now forecasting adjusted net income per diluted share of $4.17 to $4.27, which includes a negative -$0.12 impact from foreign exchange. The company’s previous guidance was for full year earnings to be $4.00 to $4.10 per diluted share. The full year guidance assumes a positive low single digit increase in yearly comparable retail sales.

For the second quarter of 2016, the company is expecting a loss of -$0.30 to -$0.22 with a -$0.02 negative impact from foreign exchange compared to a net loss of -$0.33 per diluted share in the second quarter of 2015. In addition to the earnings release, the company also declared a quarterly dividend of $0.20 per share payable on July 7th, 2016 to holders of record on June 16th, 2016.

Other News About PLCE

The Children’s Place Appoints John E. Bachman to Its Board of Directors

Mr. Bachman was appointed to the board at the end of March.

(PLCE)

Zacks identified the stock as a good value pick early last month.

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Published on May 17, 2016
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2016. Content published with author's permission.

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