Children's Place expects flat sales in Q4 FY '11

06 Jan '12

2 min read

The Children's Place Retail Stores Inc.,the largest pure-play children's specialty apparel retailer in North America, announced that the Company now expects earnings per diluted share from continuing operations for the fourth quarter of fiscal 2011 to be in the range of $0.85 to $0.90, compared to its previous guidance of $1.19 to $1.24.

The updated guidance assumes that comparable retail sales will be approximately flat for the quarter, and includes an approximately $0.16 per share benefit resulting from the Company becoming permanently reinvested in the current and future earnings of its Asian subsidiaries during fourth quarter 2011 which will result in a lower tax rate going forward.

"Quarterly sales are projected to be in line with our previous guidance. However, due to the unseasonably warm weather throughout the quarter, we took aggressive markdowns to clear winter apparel and accessories. These discounts, coupled with record high apparel costs in the fourth quarter, significantly impacted our margin," commented Jane Elfers, President and Chief Executive Officer of The Children's Place.

"Looking forward to 2012, we expect the progress being made on our key initiatives – most notably better fashion, introduction of made-for-outlet merchandise, a stronger merchandise assortment for Canada, and continued growth in e-commerce and value center stores, along with a tailwind from lower product costs in the second half – to drive sales growth and margin expansion."

"Our disciplined focus on inventory management continues to be a key component of our growth strategy. We have had positive consumer response to our Spring line and we will be entering fiscal 2012 with significantly less clearance inventory on our balance sheet. This reduction in clearance inventory will be on top of a 39% decline in clearance inventory at the end of fiscal 2010," Elfers concluded.

The Company expects to end fiscal 2011 with approximately $165 million in cash on the balance sheet and no borrowings under its bank credit facility.

As previously announced, the Company will be participating in the 14th Annual ICR XChange Conference on Wednesday, January 11, 2012 at the Fontainebleau Miami Beach in Miami, Florida. The Company will announce fourth quarter and fiscal 2011 financial results on Wednesday, March 7, 2012.

The Children's Place is the largest pure-play children's specialty apparel retailer in North America.

The Children's Place Retail Stores, Inc.

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