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Children's Place Retail Stores (PLCE) Guides 4Q Below Street Due To Hurricane Sandy

 November 15, 2012 07:39 AM

(By Balaseshan) Children's Place Retail Stores Inc. (NASDAQ: PLCE) reported a 3.9% increase in quarterly earnings on higher store sales, in line with consensus. Due to the impact from Hurricane Sandy, the children's specialty apparel retailer guided fourth quarter earnings below Street.

Earnings for the third quarter were $35.02 million or $1.44 per share, up from $33.69 million or $1.33 per share last year. Adjusted earnings per share (EPS) rose to $1.60 from $1.33.

Net sales rose 3% to $500.9 million. Comparable retail sales increased 1.1% in the quarter.

Analysts, on average, polled by Thomson Reuters had expected a profit of $1.60 per share on revenue of $500.87 million for the third quarter.

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During the third quarter, The Children's Place opened 23 stores and closed one. During the quarter, the company repurchased 222,000 shares for about $12.8 million. At the end of the quarter, there was about $21.6 million remaining of the $50 million share repurchase program which was authorized by the Board of Directors in March 2012.

"Entering the fourth quarter, Hurricane Sandy had a devastating impact on our region, and our deepest sympathy goes out to all who were affected. Over 280 of our stores and our Northeast e-commerce business, which together account for about 31% of total company revenues, were impacted," said Jane Elfers, President and Chief Executive Officer.

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The company still expects to deliver positive comparable retail sales, but it is adjusting the margin and earnings outlook for the quarter and fiscal 2012 due to the heightened promotional environment post-Sandy.

Looking ahead into the fourth quarter, the company expects adjusted EPS of $1.01 to $1.06, assuming positive low-single digit comparable retail sales, while Street predicts earnings of $1.24 per share. The company now expects gross margin to expand 170 to 190 basis points in the fourth quarter and selling, general & administrative expense to be flat as a percent of sales.

For the fiscal 2012, the company lowered adjusted EPS guidance to range of $3.10 to $3.15 from previous forecast of $3.20 to $3.30, assuming positive low-single digit comparable retail sales, while Street analysts predict EPS of $3.32.

The company now expects gross margin to deleverage 50 to 70 basis points for fiscal 2012 and selling, general & administrative expense to deleverage 10 to 20 basis points.

PLCE closed Wednesday's regular session down 0.99% at $57. The stock has been trading between $43.12 and $62.24 for the past 52 weeks.



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