The Children's Place Retail Stores, Inc., the largest pure-play children's specialty apparel retailer in North America, announced financial results for the thirteen weeks ended May 3, 2014.
First Quarter 2014 Results
Net sales were $410.1 million in the first quarter of 2014. The quarter included the negative impact of approximately $3.5 million from currency exchange rate fluctuations. This compares to net sales of $423.2 million for the first quarter of 2013. Comparable retail sales declined 3.6% for the first quarter 2014.
Net income was $13.6 million, or $0.61 per diluted share, in the first quarter of 2014, compared to $19.3 million, or $0.83 per diluted share, the previous year. Adjusted net income was $15.3 million, or $0.68 per diluted share, compared to $19.3 million, or $0.83 per diluted share, the previous year.
Gross profit was $148.3 million, compared to $163.3 million in the first quarter of 2013. Adjusted gross profit in the first quarter of 2014 was $148.4 million, and declined 240 basis points to 36.2% of sales due to deleverage on the lower sales base and modest merchandise margin deleverage.
As a result of the Company's strong expense management, selling, general and administrative expenses were $113.7 million, compared to $119.0 million in the first quarter of 2013. Adjusted SG&A in the first quarter of 2014 was $111.4 million, and leveraged 80 basis points to 27.2% of sales.
Operating income was $20.1 million, compared to $28.5 million in the first quarter of 2013. Adjusted operating income in the first quarter of 2014 was $22.7 million, and deleveraged 120 basis points to 5.5% of sales.
During the first quarter, the Company recorded charges of $2.6 million for unusual items, which primarily consisted of severance associated with a corporate restructuring as well as severance associated with our fleet optimization initiative.
Adjusted net income, adjusted gross profit, adjusted SG&A, and adjusted operating income are Non-GAAP measures. 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.