Children's Place Q1 Adj. Profit Tops View, But Sales Miss; Backs 2015 Outlook

(RTTNews) - Specialty apparel retailer Children's Place Retail Stores, Inc. (PLCE) reported Thursday a profit for the first quarter that grew from last year, despite a sales drop, reflecting improved margins.

Adjusted earnings per share topped analysts' expectations by a penny, while quarterly sales missed their estimates by a whisker. However, the company continues to see a loss in the second quarter, and reaffirmed earnings guidance for the full-year 2015.

"We have been sharply focused on the execution of our transformation plan, and we are pleased that our efforts are yielding substantial financial and operational results. We delivered our fourth consecutive quarter of positive comparable retail sales......" President and CEO Jane Elfers said in a statement.

The Secaucus, New Jersey-based largest pure-play children's apparel retailer in North America posted net income of $15.61 million or $0.73 per share for the first quarter, higher than $13.60 million or $0.61 per share in the prior-year quarter.

Results for the latest quarter includes charges of $3.5 million for unusual items, which primarily consisted of certain non-recurring items, including costs related to the proxy contest, restructuring costs, and store disposition and distribution center exit costs.

Excluding items, adjusted net income for the quarter was $17.74 million or $0.83 per share, compared to $15.28 million or $0.68 per share in the year-ago quarter.

On average, 15 analysts polled by Thomson Reuters expected the company to report earnings of $0.82 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter declined to $404.87 million from $410.15 million in the same quarter last year, and missed fourteen Wall Street analysts' consensus estimate of $405.35 million by a whisker. Comparable retail store sales edged up 0.7 percent.

The company said the latest quarter included the negative impact of about $4.7 million from currency exchange rate fluctuations.

The company said it reported an increase in adjusted gross margin of 150 basis points and an increase in adjusted operating margin of 110 basis points from last year.

During the first quarter, the company opened two stores and closed seven stores as part of its store fleet optimization initiative. It ended the quarter with 1,092 stores. The company's international franchise partners opened seven stores, and ended the quarter with 79 stores.

Looking ahead to the second quarter, Children's Place still expects adjusted net loss in a range of $0.32 to $0.36 per share, on projected comparable retail sales growth of about 1 percent. Analysts expect the company to report a loss of $0.34 per share on sales of $381.62 million for the quarter.

For fiscal 2015, the company continues to project adjusted earnings in a range of $3.30 to $3.45 per share and comparable retail sales growth of about 1 percent. Street is currently looking for full-year 2015 earnings of $3.44 per share.

"Our strategy is generating results across the entirety of our business, and we expect to continue to deliver enhanced value to shareholders throughout 2015 and beyond as we realize the full benefits of our transformation," Elfers added.

PLCE closed Wednesday's regular trading session at $67.84, down $0.05 on a volume of 0.50 million shares.