Comparable retail sales grew 3.4% in the quarter, driven by increases in both US and Canadian Place stores and strong e-commerce sales, combined with an improved sales trend in Outlet stores.
As expected, gross margin declined in the second quarter of 2012 to 31.7% from 33.6% in the prior year, as higher costs for spring and summer merchandise impacted the Company's profitability during the first half of 2012.
The Company anticipates gross margin to strengthen in the third quarter and to expand for fiscal 2012 as a result of more favorable product costs for the back-to-school and holiday product lines.
GAAP net loss was $18.0 million, or $0.74 per share, in the second quarter of 2012. As adjusted, net loss was $15.1 million, or $0.62 per share, which beat the upper-end of the Company's guidance range for the quarter. The aggregate impact of non-GAAP adjustments of $4.8 million included $3.1 million to exit a West Coast distribution center, and $1.1 million for a legal settlement. In the second quarter of 2011, the Company had a net a loss of $9.8 million, or $0.38 per share.
"We achieved solid sales growth during the second quarter. Our focus on differentiated merchandise assortments has worked well for us all year, and we expect continued momentum during the important back-to-school selling season," commented Jane Elfers, President and Chief Executive Officer of The Children's Place. "Despite the continued difficult economic environment, we believe lower apparel costs in the back half coupled with strengthening conversion, transactions and average transaction value, will result in positive comp sales and operating margin expansion in fiscal 2012."
The Company opened 19 stores and closed one, ending the second quarter with 1,080 stores.
Net sales from continuing operations increased 3% to $799.3 million fiscal year-to-date 2012, compared to $774.3 million for the same period last year. Comparable retail sales increased 1.1% fiscal year-to-date 2012.
GAAP net income for fiscal year-to-date 2012 was $5.6 million, or $0.23 per diluted share. As adjusted, net income was $12.1 million, or $0.49 per diluted share, compared to $19.3 million, or $0.74 per diluted share, for the same period last year.
Share Repurchase Program
During the second quarter, the Company repurchased 336 thousand shares for approximately $15.6 million. During the first half of fiscal 2012, the Company repurchased 713 thousand shares for approximately $34.8 million. At the end of the quarter, there was approximately $34.4 million remaining of the $50 million share repurchase program which was authorized by the Board of Directors in March 2012.
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