SECAUCUS, N.J., Aug. 20, 2009 (GLOBE NEWSWIRE) -- The Children's Place Retail Stores, Inc. (Nasdaq:PLCE) today reported financial results for the second quarter and fiscal year-to-date 2009. Results from continuing operations for the second quarters and fiscal year-to-date periods ended August 1, 2009 and August 2, 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.
Second Quarter
* Net sales from continuing operations for the second quarter of 2009
were $315.7 million, a 7% decline compared to the previous year's
second quarter net sales of $338.0 million.
* Comparable retail sales, which include online sales, declined 9% in
the second quarter of 2009 following a 10% increase during the same
period last year.
* The loss from continuing operations after tax was $7.2 million, or
$0.24 loss per share, in the second quarter of 2009, compared to
income of $2.7 million, or $0.09 earnings per share, in the second
quarter of 2008. 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:
* In the second quarter of 2009, gains due to excess foreign tax
credits of $4.8 million after-tax generated by the repatriation
of cash from Canada and $4.6 million pre-tax from the favorable
settlement of an IRS employment tax audit related to stock
options. These gains were partially offset by $2.2 million pre-
tax for expenses incurred in connection with the recent proxy
contest, $1.5 million pre-tax for expenses associated with the
pre-payment of the Company's term loan on August 3, 2009, and
$0.3 million pre-tax for expenses associated with previously
announced restructuring programs.
* In the second quarter of 2008, gains from transition services
income net of variable expenses of $5.4 million pre-tax for
services provided to the acquirer of the DSNA business and $2.3
million pre-tax for the sale of a significant store lease. These
gains were partially offset by $1.2 million pre-tax in
professional fees associated with the Company's restructuring
activities and $0.5 million pre-tax in legal fees related to the
Company's 2006 stock-option investigation.
* Excluding the unusual or one-time items mentioned above from the
second quarters of both years, adjusted loss from continuing
operations after tax was $12.4 million, or $0.42 loss per share, in
the second quarter of 2009, compared to an adjusted loss of $0.9
million, or $0.03 loss per share, in the second quarter of 2008.
The second quarter loss 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. A
reconciliation of income/loss from continuing operations as
reported is included in this press release in Table 3.
* Net loss, including the impact of discontinued operations, was $7.1
million in the second quarter of 2009, or $0.24 loss per share,
compared to breakeven in the second quarter of 2008.
* During the second quarter of 2009, the Company opened 15 stores.
Fiscal Year-to-Date
* Net sales from continuing operations were $717.6 million for fiscal
year-to-date 2009, a 3% decline compared to $738.2 million for the
same period of the prior year.
* Comparable store sales declined 3% year-to-date 2009 following an
8% increase last year.
* Income from continuing operations after tax was $16.5 million, or
$0.56 earnings per share, year-to-date 2009, compared to $22.2
million, or $0.75 earnings per share, last year.
* Excluding the unusual or one-time items from both years, income
from continuing operations after tax was $9.3 million, or $0.31
earnings per share, year-to-date 2009, compared to $19.8 million,
or $0.67 earnings per share, last year. As previously noted, this
is a non-GAAP measure which the Company is providing as a
supplemental disclosure.
* Net income, including the impact of discontinued operations, was
$16.5 million, or $0.55 earnings per share, year-to-date 2009,
compared to $19.5 million, or $0.66 earnings per share, last year.
* Year-to-date, the Company has opened 21 stores and closed one.
As previously announced, during the second quarter of 2009 the Company entered into an agreement with former Chairman and CEO Ezra Dabah to acquire approximately 2.45 million shares, 50% of the approximate 4.9 million shares owned by Mr. Dabah and his family, for $28.88 per share. The Children's Place funded the purchase with approximately $75 million in cash repatriated from Company subsidiaries in Hong Kong and Canada. The Company closed on the share repurchase on August 3, 2009, and concurrently pre-paid the principal amount of $38 million outstanding, plus accrued and unpaid interest, on its term loan.
"Second quarter 2009 financial results were pressured by the economic environment and the negative impact of foreign exchange. In addition, we faced a challenging comparison as last year's second quarter was the best in the Company's history," commented Chuck Crovitz, interim Chief Executive Officer of The Children's Place Retail Stores, Inc. "Despite these headwinds, we were pleased to have made significant progress on various initiatives including further growth in our e-commerce business, acceleration of our cost cutting efforts and the successful rollout of a new value-engineered store format. Looking ahead, we plan to continue to operate our business conservatively while the recession lingers, but remain confident that we have the right strategies in place to drive long-term growth."
Conference Call Information
The Children's Place will host a conference call to discuss its second quarter results today at 10:00 a.m. Eastern Time. The call will be broadcast live and can be accessed through the Investor Relations section of www.childrensplace.com. An audio archive will be available approximately one hour after the conclusion of the call, until midnight on August 27, 2009.
About The Children's Place Retail Stores, Inc.
The Children's Place Retail Stores, Inc. is a leading specialty retailer of children's merchandise. The Company designs, contracts to manufacture and sells high-quality, value-priced merchandise under the proprietary "The Children's Place" brand name. As of August 1, 2009, the Company owned and operated 937 The Children's Place stores and an online store at www.childrensplace.com.
This press release may contain certain forward-looking statements regarding future circumstances, including statements relating to our future operating plans and strategies. These forward-looking statements are based upon the Company's current expectations and assumptions and are subject to various risks and uncertainties that could cause actual results to differ materially. Some of these risks and uncertainties are described in the Company's filings with the Securities and Exchange Commission, including in the "Risk Factors" section of its annual report on Form 10-K for the fiscal year ended January 31, 2009. Included among the risks and uncertainties that could cause actual results, events and performance to differ materially are the risk that the Company will be unsuccessful in gauging fashion trends and changing consumer preferences, and the risks resulting from the highly competitive nature of the Company's business and its dependence on consumer spending patterns, which may be affected by the downturn in the economy. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they were made. The Company undertakes no obligation to release publicly any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. The inclusion of any statement in this release does not constitute an admission by the Company or any other person that the events or circumstances described in such statement are material.
Table 1
THE CHILDREN'S PLACE RETAIL STORES, INC.
CONDENSED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Second Quarter Ended Year-to-Date Ended
-------------------- --------------------
August 1, August 2, August 1, August 2,
2009 2008 2009 2008
--------- --------- --------- ---------
Net sales $ 315,676 $ 338,029 $ 717,577 $ 738,241
Cost of sales 210,377 209,480 445,751 438,600
--------- --------- --------- ---------
Gross profit 105,299 128,549 271,826 299,641
Selling, general and
administrative expenses 106,093 105,793 217,986 225,203
Asset impairment charge 315 127 1,414 127
Depreciation and
amortization 17,564 17,709 35,088 35,361
--------- --------- --------- ---------
Income (loss) from
continuing operations
before interest and
taxes (18,673) 4,920 17,338 38,950
Interest (expense), net (1,462) (398) (4,730) (891)
--------- --------- --------- ---------
Income (loss) from
continuing operations
before income taxes (20,135) 4,522 12,608 38,059
Provision (benefit) for
income taxes (12,906) 1,786 (3,904) 15,903
--------- --------- --------- ---------
Income (loss) from
continuing operations
net of income taxes (7,229) 2,736 16,512 22,156
Income (loss) from
discontinued operations
net of income taxes 178 (2,725) (51) (2,627)
--------- --------- --------- ---------
Net income (loss) $ (7,051) $ 11 $ 16,461 $ 19,529
========= ========= ========= =========
Basic income (loss) from
continuing operations
per common share $ (0.24) $ 0.09 $ 0.56 $ 0.76
Income (loss) from
discontinued operations
per common share 0.01 (0.09) (0.00) (0.09)
--------- --------- --------- ---------
Basic net income (loss)
per common share $ (0.24) $ 0.00 $ 0.56 $ 0.67
========= ========= ========= =========
Basic weighted average
common shares
outstanding 29,552 29,255 29,514 29,177
Diluted income (loss)
from continuing
operations per common
share $ (0.24) $ 0.09 $ 0.56 $ 0.75
Income (loss) from
discontinued operations
per common share 0.01 (0.09) (0.00) (0.09)
--------- --------- --------- ---------
Diluted net income
(loss) per common share $ (0.24) $ 0.00 $ 0.55 $ 0.66
========= ========= ========= =========
Diluted weighted average
common shares
outstanding 29,552 29,599 29,746 29,395
Note: Amounts may not add due to rounding.
Table 2
THE CHILDREN'S PLACE RETAIL STORES, INC.
CONDENSED BALANCE SHEETS
(In thousands)
(Unaudited)
August 1, January 31, August 2,
2009 2009 2008
----------- ----------- -----------
Current assets:
Cash and investments $ 152,198 $ 226,206 $ 146,704
Accounts receivable 21,792 19,639 26,150
Inventories 262,986 211,227 219,100
Other current assets 100,143 62,518 100,316
Restricted assets in
bankruptcy estate of
subsidiary -- -- 85,265
----------- ----------- -----------
Total current assets 537,119 519,590 577,535
Property and equipment, net 310,795 318,116 333,783
Other assets, net 74,960 102,051 97,868
----------- ----------- -----------
Total assets $ 922,874 $ 939,757 $ 1,009,186
=========== =========== ===========
Current liabilities:
Revolving credit facility $ -- $ -- $ --
Short term portion of term
loan 38,000 30,000 30,000
Accounts payable 89,249 73,333 80,287
Accrued expenses and
other current liabilities 93,088 103,662 99,145
Liabilities in bankruptcy
estate of subsidiary -- -- 108,409
----------- ----------- -----------
Total current liabilities 220,337 206,995 317,841
Long term portion of term loan -- 55,000 55,000
Other liabilities 119,304 129,883 140,119
----------- ----------- -----------
Total liabilities 339,641 391,878 512,960
Stockholders' equity 583,233 547,879 496,226
----------- ----------- -----------
Total liabilities and
stockholders' equity $ 922,874 $ 939,757 $ 1,009,186
=========== =========== ===========
Table 3
THE CHILDREN'S PLACE RETAIL STORES, INC.
RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION TO GAAP
(In millions, except per share amounts)
(Unaudited)
Second Quarter Ended Year-to-Date Ended
--------------------- ---------------------
August 1, August 2, August 1, August 2,
2009 2008 2009 2008
---------- ---------- ---------- ----------
Income (loss) from
continuing operations
net of income taxes $ (7.2) $ 2.7 $ 16.5 $ 22.2
---------- ---------- ---------- ----------
Unusual or one-time
items pre-tax:
Gains:
Favorable settlement
of IRS employment tax
audit related to stock
options (4.6) -- (4.6) --
Net transition services
income -- (5.4) -- (5.4)
Sale of store lease -- (2.3) -- (2.3)
Expenses:
Proxy contest fees 2.2 -- 2.2 --
Prepayment of term loan
expenses/ deferred
financing fees 1.5 -- 2.4 --
Company restructuring
fees 0.3 1.2 2.9 2.5
Impairment Charge -- -- 0.8 --
Stock option/special
investigation fees -- 0.5 -- 1.3
---------- ---------- ---------- ----------
Aggregate impact of
unusual or one-time
items (0.6) (6.0) 3.7 (3.9)
Income tax effect of
unusual or one-time
items 0.2 2.4 (1.6) 1.5
Excess foreign tax
credits from
repatriation of cash (4.8) -- (4.8) --
One-time tax benefit
from resolution of IRS
income tax audit -- -- (4.5) --
---------- ---------- ---------- ----------
Adjusted gain from
unusual or one-time
items after taxes (5.2) (3.6) (7.2) (2.4)
Adjusted income (loss)
from continuing
operations net of
income taxes (12.4) (0.9) 9.3 19.8
========== ========== ========== ==========
GAAP income (loss) from
continuing operations
per common share $ (0.24) $ 0.09 $ 0.56 $ 0.75
Adjusted income (loss)
from continuing
operations per common
share $ (0.42) $ (0.03) $ 0.31 $ 0.67
CONTACT: The Children's Place Retail Stores, Inc.
Susan Riley, EVP, Finance & Administration
(201) 558-2400
Jane Singer, VP, Investor Relations
(201) 453-6955
