SECAUCUS, N.J., Nov. 19, 2009 (GLOBE NEWSWIRE) -- The Children's Place Retail Stores, Inc. (Nasdaq:PLCE) today reported financial results for the third quarter and fiscal year-to-date 2009. Results from continuing operations for the third quarter and fiscal year-to-date periods ended October 31, 2009 and November 1, 2008 are based on The Children's Place business only. The Disney Store North America ("DSNA") business has been classified as discontinued operations in accordance with generally accepted accounting principles ("GAAP") reflecting the Company's decision to exit the business.
Third Quarter
-- Net sales from continuing operations for the third quarter of 2009
increased 3% to $463.2 million, compared to $450.6 million in the
third quarter of 2008.
-- Comparable retail sales, which include online sales, declined 2%
in the third quarter of 2009 following a 4% increase during the
same period last year.
-- Income from continuing operations was $38.2 million, or $1.38 per
diluted share, in the third quarter of 2009, compared to $28.4
million, or $0.96 per diluted share, in the third quarter of 2008.
-- Net income, which includes the impact of discontinued operations,
was $37.8 million in the third quarter of 2009, or $1.37 per
diluted share, compared to $24.1 million, or $0.81 per diluted
share, in the third quarter of 2008.
-- Inventory per square foot increased 3% at the end of the third
quarter of 2009 compared to the third quarter of 2008.
-- At the end of the third quarter of 2009, the Company had a cash
balance of $104.4 million and no bank borrowings.
-- During the third quarter of 2009, the Company opened 13 stores,
and ended with 950 stores.
Fiscal Year-to-Date
-- Net sales from continuing operations were $1,180.8 million for
fiscal year-to-date 2009, a 1% decline compared to $1,188.9
million for the same period of the prior year.
-- Comparable retail sales declined 3% year-to-date 2009 following a
6% increase last year.
-- Income from continuing operations was $54.7 million, or $1.88 per
diluted share, fiscal year-to-date 2009, compared to $50.6
million, or $1.72 per diluted share, last year. The Company's
fiscal year-to-date income from continuing operations includes the
following items which the Company deems to be unusual or one-time
in nature:
- In fiscal 2009, gains included a $4.8 million income tax
benefit from excess foreign tax credits generated by the
repatriation of cash from Canada, a $4.7 million, pre-tax,
favorable settlement of an IRS employment tax audit related to
stock options, and a tax benefit of $4.5 million from the
settlement of an IRS income tax audit. These gains were
partially offset by $2.9 million of pre-tax expenses associated
with previously announced restructuring programs, $2.4 million
of pre-tax expenses associated with the pre-payment of the
Company's term loan, $2.0 million of pre-tax expenses incurred
in connection with the recent proxy contest and an asset
impairment charge of $0.8 million, pre-tax, for an
underperforming store that has been open for less than two
years.
- In fiscal 2008, gains included $11.1 million, pre-tax, from
transition services income net of variable expenses for
services provided to the acquirer of the DSNA business, $2.3
million, pre-tax, for the sale of a store lease and $0.2
million, pre-tax, in recovery of legal fees. These gains were
partially offset by $2.4 million, pre-tax, in professional fees
associated with the Company's restructuring activities and $1.3
million, pre-tax, in legal fees related to the Company's 2006
stock-option investigation.
-- Excluding the unusual or one-time items mentioned above from both
years, adjusted income from continuing operations was $47.3
million, or $1.63 per diluted share, fiscal year-to-date 2009,
compared to $44.7 million, or $1.52 per diluted share, for the
same period last year. The income from continuing operations
excluding these items 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, which includes the impact of discontinued operations,
was $54.2 million, or $1.87 per diluted share, fiscal year-to-date
2009, compared to $43.6 million, or $1.48 per diluted share, last
year.
-- Fiscal year-to-date, the Company has opened 34 stores and closed
one.
Chuck Crovitz, interim Chief Executive Officer of The Children's Place, commented, "We were pleased to have delivered top-line growth and increased profitability in the third quarter. While the consumer remains cautious, we were encouraged by the increased number of sales transactions as customers responded favorably to our fashionable assortment at value price points. In addition, we were able to protect margins with prudent cost controls and inventory management. Based on our expectation that the consumer will remain price sensitive during the fourth quarter, we plan to offer compelling promotions that are designed to create excitement throughout the holiday season."
Conference Call Information
The Children's Place will host a conference call to discuss its third quarter results today at 10:00 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 Retail Stores, Inc. is a leading specialty retailer of children's merchandise. The Company designs, contracts to manufacture and sells high-quality, value-priced merchandise under the proprietary "The Children's Place" brand name. As of October 31, 2009, the Company owned and operated 950 The Children's Place stores and an online store at www.childrensplace.com.
This press release may contain certain forward-looking statements regarding future circumstances, including statements relating to our future operating plans and strategies. 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 31, 2009. 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 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 STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Third Quarter Fiscal Year-to-Date
Ended Ended
------------------- -------------------
October 31, November 1, October 31, November 1,
2009 2008 2009 2008
----------- ----------- ----------- -----------
Net sales $ 463,175 $ 450,623 $1,180,752 $1,188,864
Cost of sales 261,348 254,239 707,099 692,839
----------- ----------- ----------- -----------
Gross profit 201,827 196,384 473,653 496,025
Selling, general and
administrative
expenses 118,579 126,716 336,565 351,919
Asset impairment
charge 307 954 1,721 1,081
Depreciation and
amortization 18,170 17,791 53,258 53,152
----------- ----------- ----------- -----------
Income from continuing
operations before
interest and taxes 64,771 50,923 82,109 89,873
Interest (expense),
net (520) (1,912) (5,250) (2,803)
----------- ----------- ----------- -----------
Income from continuing
operations before
income taxes 64,251 49,011 76,859 87,070
Provision for income
taxes 26,079 20,563 22,175 36,466
----------- ----------- ----------- -----------
Income from continuing
operations 38,172 28,448 54,684 50,604
Loss from discontinued
operations (389) (4,391) (440) (7,018)
----------- ----------- ----------- -----------
Net income $ 37,783 $ 24,057 $ 54,244 $ 43,586
=========== =========== =========== ===========
Basic income from
continuing operations
per common share $ 1.39 $ 0.97 $ 1.90 $ 1.73
Loss from discontinued
operations per common
share (0.01) (0.15) (0.02) (0.24)
----------- ----------- ----------- -----------
Basic net income per
common share $ 1.38 $ 0.82 $ 1.88 $ 1.49
=========== =========== =========== ===========
Basic weighted average
common shares
outstanding 27,389 29,364 28,805 29,173
Diluted income from
continuing operations
per common share $ 1.38 $ 0.96 $ 1.88 $ 1.72
Loss from discontinued
operations per common
share (0.01) (0.15) (0.02) (0.24)
----------- ----------- ----------- -----------
Diluted net income per
common share $ 1.37 $ 0.81 $ 1.87 $ 1.48
=========== =========== =========== ===========
Diluted weighted
average common shares
outstanding 27,622 29,726 29,038 29,444
Note: Amounts may not add due to rounding.
Table 2
THE CHILDREN'S PLACE RETAIL STORES, INC.
CONDENSED BALANCE SHEETS
(In thousands)
(Unaudited)
October 31, January 31, November 1,
2009 2009 2008
----------- ----------- -----------
Current assets:
Cash and investments $ 104,364 $ 226,206 $ 185,980
Accounts receivable 16,739 19,639 24,213
Inventories 250,599 211,227 232,776
Other current assets 87,965 62,518 104,218
Restricted assets in bankruptcy
estate of subsidiary -- -- 78,971
----------- ----------- -----------
Total current assets 459,667 519,590 626,158
Property and equipment, net 311,113 318,116 336,921
Other assets, net 64,536 102,051 83,230
----------- ----------- -----------
Total assets $ 835,316 $ 939,757 $1,046,309
=========== =========== ===========
Current liabilities:
Revolving credit facility $ -- $ -- $ --
Short term portion of term loan -- 30,000 30,000
Accounts payable 62,612 73,333 79,913
Accrued expenses and
other current liabilities 104,886 103,662 123,179
Liabilities in bankruptcy estate
of subsidiary -- -- 107,767
----------- ----------- -----------
Total current liabilities 167,498 206,995 340,859
Long term portion of term loan -- 55,000 55,000
Other liabilities 114,584 129,883 140,984
----------- ----------- -----------
Total liabilities 282,082 391,878 536,843
Stockholders' equity 553,234 547,879 509,466
----------- ----------- -----------
Total liabilities and
stockholders' equity $ 835,316 $ 939,757 $1,046,309
=========== =========== ===========
Table 3
THE CHILDREN'S PLACE RETAIL STORES, INC.
RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION TO GAAP
(In millions, except per share amounts)
(Unaudited)
Third Quarter Fiscal Year-to-Date
Ended Ended
----------------------- -----------------------
October 31, November 1, October 31, November 1,
2009 2008 2009 2008
----------- ----------- ----------- -----------
Income from continuing
operations net of
income taxes $ 38.2 $ 28.4 $ 54.7 $ 50.6
----------- ----------- ----------- -----------
Unusual or one-time
items pre-tax:
Gains:
Favorable settlement
of IRS employment
tax audit related
to stock options (0.1) -- (4.7) --
Net transition
services income -- (5.7) -- (11.1)
Sale of store lease -- -- -- (2.3)
Legal fee recovery -- (0.2) -- (0.2)
Expenses:
Proxy contest fees (0.2) -- 2.0 --
Company
restructuring fees -- -- 2.9 2.4
Prepayment of term
loan expenses/
deferred financing
fees -- -- 2.4 --
Impairment charge -- -- 0.8 --
Stock option/special
investigation fees -- -- -- 1.3
----------- ----------- ----------- -----------
Aggregate (income)
impact of unusual or
one-time items (0.3) (5.9) 3.4 (9.9)
Income tax effect of
unusual or one-time
items 0.1 2.4 (1.5) 4.0
Excess foreign tax
credits from
repatriation of cash -- -- (4.8) --
One-time tax benefit
from resolution of
IRS income tax audit -- -- (4.5) --
----------- ----------- ----------- -----------
Adjusted (gain) impact
from unusual or one-
time items after
taxes (0.2) (3.5) (7.4) (5.9)
Adjusted income from
continuing
operations net of
income taxes $ 38.0 $ 24.9 $ 47.3 $ 44.7
=========== =========== =========== ===========
GAAP income from
continuing operations
per common share $ 1.38 $ 0.96 $ 1.88 $ 1.72
Adjusted income from
continuing operations
per common share $ 1.38 $ 0.84 $ 1.63 $ 1.52