Comparable sales decline at The Children's Place
The Children's Place Retail Stores Inc. the largest pure-play children's specialty apparel retailer in North America, announced net sales increased 2% to $438.5 million for the thirteen weeks ended April 28, 2012, compared to $430.8 million in the first quarter of fiscal 2011. Comparable retail sales declined 0.7% for the quarter.
GAAP net income was $23.6 million, or $0.96 per diluted share, in the first quarter of 2012. As adjusted, net income was $27.1 million, or $1.10 per diluted share, compared to $29.1 million, or $1.10 per diluted share, in the first quarter of 2011.
During the quarter, the Company undertook several actions to reduce operating costs going forward, including consolidating from three to two US distribution centers, streamlining its field workforce and restructuring corporate headquarters, which it expects will result in annual savings of approximately $9 million.
The Company incurred expenses of approximately $2.8 million associated with these actions during the quarter which the Company deems to be unusual in nature. Additionally, during the quarter the Company impaired an oversized store, incurred accelerated depreciation for seven Canadian store remodels, and wrote off obsolete supplies and fixture costs.
Adjusted net income is a non-GAAP measure. The Company believes the excluded transactions 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 net income as reported is included in this press release in Table 3.
"We made good progress in the first quarter - tightly managing our inventory, reducing expenses and improving operational efficiencies across the organization - and we delivered adjusted earnings per share consistent with last year, in spite of significantly higher product costs," commented Jane Elfers, President and Chief Executive Officer.
The Company opened 18 stores and closed 5, ending the first quarter with 1,062 stores.
Share Repurchase Program
During the first quarter of fiscal 2012, the Company repurchased 377 thousand shares for $19.2 million and completed the $100 million share repurchase program announced in March 2011. A new $50 million share repurchase program was authorized by the Board of Directors in March 2012. Under the new program, the Company may repurchase shares in the open market at current market prices at the time of purchase or in privately negotiated transactions.
The timing and actual number of shares repurchased under the program will depend on a variety of factors including price, corporate and regulatory requirements, and other market and business conditions, and the Company may suspend or discontinue the program at any time, and may thereafter reinstitute purchases, all without prior announcement.
The Company updated its guidance to reflect first quarter results and now projects that non-GAAP adjusted earnings per diluted share will be between $3.15 and $3.30, compared to its initial guidance of $3.10 to $3.30, assuming positive low-single digit comparable retail sales.
The Company provided initial guidance for the second quarter of fiscal 2012, and is forecasting a non-GAAP adjusted loss per share between $0.65 and $0.70, assuming positive low-single digit comparable retail sales.
This earnings guidance assumes that currency exchange rates will remain where they are and does not include the impact of further potential share repurchases.
The Children's Place is the largest pure-play children's specialty apparel retailer in North America.
The Children's Place Retail Stores Inc