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Children's Place achieves solid top-line growth for the quarter

21
Aug '08
The Children's Place Retail Stores Inc reported financial results for the second quarter and fiscal year-to-date ended August 2, 2008. Results from continuing operations for the second quarters and fiscal year-to-date periods ended August 2, 2008 and August 4, 2007 are based on The Children's Place business only. The Disney Store North America ("DSNA") business has been classified as a discontinued operation in accordance with generally accepted accounting principles ("GAAP") reflecting the Company's exit of the business.

Second Quarter:
• Net sales from continuing operations for the second quarter increased 16% to $338.0 million, compared to $290.5 million last year.
• Comparable store sales increased 9% in the second quarter of 2008 compared to a 1% decrease last year.
• Income from continuing operations after tax was $2.7 million, or $0.09 earnings per share, in the second quarter of 2008, compared to a loss of $19.8 million, or $0.68 loss per share, last year. The Company's second quarter income from continuing operations included several items which the Company deems to be unusual or one-time in nature, including:
• Transition services income net of variable expenses of $5.4 million pre-tax in the second quarter of 2008 for services being provided to the acquirer of the DSNA business;
• Sale of a significant store lease for approximately $2.3 million pre-tax in the second quarter of 2008;
• Professional fees associated with the Company's restructuring activities of $1.2 million pre-tax in the second quarter of
2008;
• Legal fees related to the Company's 2006 stock-option investigation of $0.5 million pre-tax in the second quarter of 2008, and $1.8 million pre-tax in the second quarter of 2007; and
• Stock option tolling expenses of $1.3 million pre-tax in the second quarter of 2007.
• Excluding the unusual or one-time items mentioned above from the second quarters of both years, adjusted loss from continuing operations after tax was $0.9 million, or $0.03 loss per share, in the second quarter of 2008, compared to a loss of $17.8 million, or $0.61 loss per share, in the second quarter of 2007. The second quarter loss 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 may facilitate comparisons of its past and future performance.
• Net income including the impact of discontinued operations was breakeven in the second quarter of 2008, compared to a loss of $28.1 million, or $0.97 loss per share, last year.
• The effective tax rate for continuing operations in the second quarter was 39%.
• During the second quarter, the Company closed four stores.

Fiscal Year-to-Date:
• Net sales from continuing operations increased 14% to $738.2 million, for fiscal year-to-date 2008, compared to $646.5 million for the same period of the prior year.


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