Children's Place delivers solid performance in first quarter

23 May '09

3 min read

The Children's Place Retail Stores Inc reported financial results for the first quarter of 2009. Results from continuing operations for the first quarters ended May 2, 2009 and May 3, 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.

• Net sales from continuing operations for the first quarter of 2009 were $401.9 million, slightly above the previous year's first quarter net sales of $400.2 million.
• Comparable retail sales, which include online sales, increased 1% in the first quarter of 2009, on top of a 6% increase during the same period last year.
• Income from continuing operations after tax was $23.7 million, or $0.80 per diluted share, in the first quarter of 2009, compared to $19.4 million, or $0.66 per share, in the first quarter of 2008. The Company's first quarter income from continuing operations included several items which the Company deems to be unusual or one-time in nature, including:
- In the first quarter of 2009, restructuring costs of $2.6 million, pre-tax, associated with the implementation of the cost-control initiatives announced in February; the write-off of deferred financing fees of $0.9 million, pre-tax, related to the prepayment of a portion of the term loan; an asset impairment charge of $0.8 million, pre-tax, for an underperforming store that has been open for less than two years; and a one-time tax benefit of $4.5 million from the settlement of an IRS income tax audit.
- In the first quarter of 2008, restructuring costs of $1.3 million, pre-tax, and professional fees of $0.8 million, pre-tax, related to the Company's review of strategic alternatives.
• Excluding the unusual or one-time items mentioned above from the first quarters of both years, adjusted income from continuing operations after tax was $21.8 million, or $0.74 per diluted share, in the first quarter of 2009, compared to $20.7 million, or $0.71 per diluted share, in the first quarter of 2008. The first quarter 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.
• Net income, including the impact of discontinued operations, was $23.5 million in the first quarter of 2009, or $0.79 per diluted share, compared to net income of $19.5 million, or $0.67 per diluted share, for the same period last year.
• During the first quarter of 2009, the Company opened six stores and closed one.

"We are pleased that the actions taken during the past year to strengthen our business and put the Company on more stable footing enabled us to deliver a solid performance in the first quarter, particularly in light of the market volatility and negative industry trends," commented Chuck Crovitz, interim Chief Executive Officer of The Children's Place Retail Stores, Inc.

"Comparable retail sales increased as our trend-right fashion at great value prices resonated well with customers. In addition, we made significant progress in our expense management and cost containment efforts, resulting in solid earnings growth for the quarter. We believe the Company is on the right path to achieve its longer-term goals."

The Children's Place Retail Stores Inc

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