The Children’s Place, Inc. (Nasdaq: PLCE), an
omni-channel children’s specialty portfolio of brands with an
industry-leading digital-first model, today announced financial
results for the third quarter ended October 28, 2023.
Jane Elfers, President and Chief Executive Officer said, “Our Q3
results exceeded our expectations on the top line. The top line
beat was driven by another quarter of industry-leading digital
performance, fueled by a double digit increase in ecommerce
traffic, with strong Back-to-School results in August and the
success of our seasonal categories in September and October. And,
our wholesale channel, led by Amazon, delivered another outstanding
quarter. Importantly, our Q3 ending inventories were down 16%,
exceeding our expectations. Our bottom-line results were negatively
impacted in the third quarter by higher than planned distribution
costs driven by a combination of largely unplanned but addressable
factors. First, higher fulfillment costs, including the increased
utilization of third party fulfillment services, stemming from
shipping significantly more ecommerce units than planned due to
higher volumes coupled with an outsized increase in packages
resulting from lower transaction size as our consumer remains under
pressure in the current environment. Second, significantly higher
labor costs than planned due to the increased ecommerce demand and
a very tight labor market. Third, a delay of certain planned
freight and fulfillment savings. Looking ahead, we are planning for
these increased distribution costs to continue in the fourth
quarter.”
Ms. Elfers continued, “Our ecommerce sales were up low single
digits for the quarter, driven by a double digit increase in
ecommerce traffic. Our ecommerce channel represented an
industry-leading 57% of our retail sales in the third quarter
versus 50% last year and 37% in 2019. Our core millennial customer
clearly prefers the ease and convenience of shopping online for her
kids and we are pleased with the significant progress we have made
with respect to driving digital sales and traffic, despite the
difficult consumer environment.”
Ms. Elfers concluded, “While our core customer remains under
significant pressure, we were pleased with our ability to drive
top-line above our expectations throughout the third quarter. Our
top-line momentum from Q3 has accelerated into Q4 as our customer
is responding to our trend-right assortments and our enhanced
marketing tactics. November is off to a strong start with
consolidated retail sales running up low single digits quarter to
date versus last year, driven by the continued strength of our
digital business. Our accelerated digital transformation and fleet
optimization strategies have positioned us to operate the company
with less resources, including less stores, less inventory, less
people, and less expense, allowing us to better service our
customer on-line, where she prefers to shop, resulting in what we
believe will translate into more consistent and sustainable results
over time.”
Third Quarter 2023 ResultsNet sales decreased
$28.9 million, or 5.7%, to $480.2 million in the three months
ended October 28, 2023, compared to $509.1 million in the three
months ended October 29, 2022. The decrease in net sales compared
to the third quarter of 2022 was primarily due to the impact of the
continued slowdown in consumer demand resulting from the
unprecedented inflation impacting our customer and from other
domestic and geo-political concerns weighing on consumer
confidence, an increase in promotional activity across the sector,
and the impact of permanent store closures. Comparable retail sales
decreased 7.3% for the quarter.
Gross profit and adjusted gross profit decreased by $14.8
million to $162.1 million in the three months ended October 28,
2023, compared to $176.9 million in the three months ended October
29, 2022. Adjusted gross margin deleveraged 110 basis points to
33.7% of net sales versus 34.8% in the third quarter of 2022. This
decrease reflects the largely unplanned but addressable impact of
higher distribution and fulfillment expenses stemming from
incremental shipping and processing costs, partially offset by
decreases in supply chain and cotton costs. The increases in
distribution costs were driven by higher ecommerce volumes than
anticipated, which resulted in higher compensation expense to
fulfill orders as the Company incurred significant overtime
premiums to process orders, increased wage rates to retain talent
and added incentives to attract new associates. In addition, the
Company also increased the utilization of our third-party
fulfillment partner which operates at higher rates. The Company
also experienced an outsized increase in the number of packages
shipped due to decreases in average order size, given the
significant macro pressures our customers continue to face, and a
highly promotional retail environment, which resulted in increased
freight costs and deleveraging of freight expense. Finally, the
Company experienced a delay of certain planned freight and
fulfillment savings as negotiations continue in order to secure the
best long-term pricing. In addition to the distribution costs, the
Company’s margin rate was negatively impacted by the growth of our
wholesale business, which operates at a lower gross margin but also
operates at a lower SG&A and is accretive to our operating
margin. As a reminder, we record our wholesale revenue on a net
basis, recognizing revenue net of commissions, discounts,
chargebacks and cooperative advertising.
Selling, general, and administrative expenses were $104.8
million in the three months ended October 28, 2023, compared to
$106.6 million in the three months ended October 29, 2022. Adjusted
SG&A was $102.9 million in the three months ended October 28,
2023, compared to $105.4 million in the comparable period last
year. Adjusted SG&A deleveraged by 70 basis points to 21.4% of
net sales versus the third quarter of 2022, primarily as a result
of reductions in store expenses, home office payroll, incentive
compensation and equity compensation expense, partially offset by
the deleverage of fixed expenses resulting from the decline in net
sales and higher planned marketing spend.
Operating income was $45.0 million in the three months ended
October 28, 2023, compared to $57.8 million in the three months
ended October 29, 2022. Adjusted operating income was $47.9 million
in the three months ended October 28, 2023, compared to $59.1
million in the comparable period last year. The third quarter 2023
adjusted operating income deleveraged 160 basis points to 10.0% of
net sales versus the prior year’s third quarter.
Net interest expense was $7.9 million in the three months ended
October 28, 2023, compared to $3.8 million in the three months
ended October 29, 2022. The increase in interest expense versus the
third quarter of 2022 was driven by higher borrowings and higher
average interest rates associated with the Company’s revolving
credit facility and term loan due to continued market-based rate
increases.
The Company's provision for income taxes reflects a benefit of
$1.5 million on a GAAP basis and $0.7 million on an adjusted basis
based upon the calculation of the year-to-date effective tax rate
by applying the discrete method. The Company believes that this
method more accurately reflects the estimate of interim tax than
the annual effective tax rate method due to the mix of earnings in
different tax jurisdictions, and the sensitivity of small changes
in ordinary income on the annual effective tax rate.
Net income was $38.5 million, or $3.05 per diluted share, in the
three months ended October 28, 2023, compared to $42.9 million, or
$3.26 per diluted share, in the three months ended October 29,
2022. Adjusted net income was $40.6 million, or $3.22 per diluted
share, compared to $43.8 million, or $3.33 per diluted share, in
the comparable period last year.
Fiscal Year-To-Date 2023 ResultsNet sales
decreased $104.9 million, or 8.4%, to $1.147 billion in the nine
months ended October 28, 2023, compared to $1.252 billion in the
nine months ended October 29, 2022. The decrease in net sales
compared to year-to-date 2022 was primarily due to the impact of a
slowdown in consumer demand resulting from the unprecedented
inflation impacting our customer and from other domestic and
geo-political concerns weighing on consumer confidence, an
increase in promotional activity across the sector, and the impact
of permanent store closures. Comparable retail sales decreased 8.1%
for the nine months ended October 28, 2023.
Gross profit decreased $88.0 million to $346.4 million in the
nine months ended October 28, 2023, compared to $434.4 million in
the nine months ended October 29, 2022. Adjusted gross profit
decreased $87.4 million to $346.4 million in the nine months ended
October 28, 2023, compared to $433.8 million in the comparable
period last year. Adjusted gross margin deleveraged 440 basis
points to 30.2% of net sales versus 34.6% in year-to-date 2022,
primarily the result of lower merchandise margins due to the
accelerated liquidation of seasonal inventory, the impact of a
significantly larger wholesale business which operates at a lower
gross margin rate but is accretive to operating margin, higher
input and supply chain costs, higher than planned distribution and
fulfillment costs, and the deleverage of fixed expenses resulting
from the decline in net sales.
Selling, general, and administrative expenses were $329.8
million in the nine months ended October 28, 2023, compared to
$330.5 million in the nine months ended October 29, 2022. Adjusted
SG&A was $313.8 million in the nine months ended October 28,
2023, compared to $327.2 million in the comparable period last
year. Adjusted SG&A deleveraged 120 basis points to 27.3% of
net sales versus year-to-date 2022, primarily as a result of the
deleverage of fixed expenses resulting from the decline in net
sales and higher planned marketing spending, partially offset by
reductions in store expenses, home office payroll, and incentive
and equity compensation expense.
Operating loss was $22.0 million in the nine months ended
October 28, 2023, compared to operating income of $63.3 million in
the nine months ended October 29, 2022. Adjusted operating loss was
$1.6 million in the nine months ended October 28, 2023, compared to
adjusted operating income of $68.0 million in the comparable period
last year. Year-to-date 2023 adjusted operating margin deleveraged
550 basis points to (0.1)% of net sales versus year-to-date 2022,
which was 5.4% of net sales.
Net interest expense was $21.5 million in the nine months ended
October 28, 2023, compared to $8.1 million in the nine months ended
October 29, 2022. The increase in interest expense versus
year-to-date 2022 was driven by higher borrowings and higher
average interest rates associated with the Company’s revolving
credit facility and term loan due to continued market-based rate
increases.
The Company's provision for income taxes reflects a benefit of
$17.8 million on a GAAP basis and $12.5 million on an adjusted
basis based upon the calculation of the year-to-date effective tax
rate by applying the discrete method. The Company believes that
this method more accurately reflects the estimate of interim tax
than the annual effective tax rate method due to the mix of
earnings in different tax jurisdictions, and the sensitivity of
small changes in ordinary income on the annual effective tax
rate.
Net loss was $25.7 million, or ($2.06) per diluted share, in the
nine months ended October 28, 2023, compared to net income of $49.4
million, or $3.68 per diluted share, in the nine months ended
October 29, 2022. Adjusted net loss was $10.6 million, or ($0.85)
per diluted share, compared to adjusted net income of $46.6
million, or $3.48 per diluted share, in the comparable period last
year.
Store Update The Company ended the third
quarter of 2023 with 591 stores and square footage of 2.8 million,
a decrease of 9% compared to the prior year. Consistent with the
Company’s store fleet optimization initiative, the Company
permanently closed 5 stores during the third quarter of 2023 and
has permanently closed 608 stores since 2013 and decreased total
square footage by 2.4 million square feet or approximately 46%. The
Company is planning to close approximately 64 more stores by the
end of the fourth quarter, leaving the Company with a fleet of
approximately 530 stores as we enter 2024.
Balance Sheet and Cash FlowAs of October 28,
2023, the Company had $14 million of cash and cash equivalents and
$359 million outstanding on its revolving credit facility.
Additionally, the Company used $10 million in operating cash flows
in the three months ended October 28, 2023.
Inventories were $462 million as of October 28, 2023, a decrease
of 16% versus last year due to the combination of the accelerated
liquidation of seasonal inventory, reductions in units purchased
and decreases in average unit costs, compared to $549 million in
the same period last year.
OutlookThe Company is providing
updated guidance for the fourth quarter of 2023 and for the full
year 2023. For the fourth quarter of 2023, the Company now
expects:
- Net sales in the range of $460 million to $465 million,
representing a low single digit increase as compared to the prior
year’s fourth quarter.
- Adjusted operating profit for the
fourth quarter is expected to be approximately 2.0% to 3.0% of net
sales.
- Interest expense is expected to be
approximately $6.5 million for the fourth quarter.
- The effective tax rate for the fourth quarter is expected to be
approximately 27%, calculated by applying the discrete method.
- Adjusted net income per diluted share is estimated to be in the
range of $0.25 to $0.45 based upon an anticipated weighted average
number of shares of 12.6 million.
The Company now expects net sales for the full year 2023, to be
in the range of $1.605 billion to $1.610 billion,
adjusted operating profit is estimated to be in the low single
digit percentage range of net sales and adjusted net loss per
diluted share is estimated to be in the range of ($0.59) to ($0.39)
based upon an anticipated weighted average number of shares of 12.5
million.
The Company’s projections include the impact of the 53rd week in
2023, based upon its retail calendar. This week occurs during a low
volume non-peak clearance period and as a result is expected to
have a very modest impact on revenues and a negative impact on
operating results.
Additional details underlying the Company’s outlook for the
fourth quarter and full year 2023 will be provided on the
conference call and will also be available in the conference call
transcript which will be posted on the Company’s website. An audio
archive will also be available on the Company’s website.
Non-GAAP ReconciliationThe
Company’s results are reported in this press release on a GAAP and
as adjusted, non-GAAP basis. Adjusted net income (loss), adjusted
net income (loss) per diluted share, adjusted gross profit,
adjusted selling, general, and administrative expenses, and
adjusted operating income (loss) are non-GAAP measures, and are not
intended to replace GAAP financial information, and may be
different from non-GAAP measures reported by other companies. The
Company believes the expense items excluded as non-GAAP adjustments
are not reflective of the performance of its core business, and
that providing this supplemental disclosure to investors will
facilitate comparisons of the past and present performance of its
core business.
Please refer to the “Reconciliation of Non-GAAP
Financial Information to GAAP” later in this press release, which
sets forth the non-GAAP adjustments for the 13 week periods and 39
week periods ended October 28, 2023 and October 29, 2022.
Conference Call
Information The Children’s Place will host a
conference call on Thursday, November 16, 2023 at
8:00 a.m. Eastern Time to discuss its third quarter 2023
results.
The call will be broadcast live
at http://investor.childrensplace.com. An audio transcript
will be available on the Company’s website approximately one hour
after the conclusion of the call.
About The Children’s PlaceThe Children’s Place
is an omni-channel children’s specialty portfolio of brands with
an industry-leading digital-first model. Its global retail and
wholesale network includes four digital storefronts, more than 500
stores in North America, wholesale marketplaces and distribution in
16 countries through six international franchise partners. The
Children’s Place is proud to be a women-led Company,
including industry-leading gender diversity in senior management
and throughout all levels of its workforce, and of its
commitment to sustainable business practices that benefit its
customers, associates, investors, suppliers and the communities it
serves. The Children’s Place designs, contracts to manufacture, and
sells fashionable, high-quality apparel, accessories and footwear
predominantly at value prices, primarily under its proprietary
brands: “The Children’s Place”, “Gymboree”, “Sugar & Jade”, and
“PJ Place”. For more information, visit: www.childrensplace.com,
www.gymboree.com, www.sugarandjade.com and www.pjplace.com, as well
as the Company’s social media channels on Instagram, Facebook, X,
formerly known as Twitter, YouTube and Pinterest.
Forward Looking StatementsThis
press release contains or may contain forward-looking statements
made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995, including but not limited
to statements relating to the Company’s strategic initiatives and
results of operations, including adjusted net income (loss) per
diluted share. Forward-looking statements typically are identified
by use of terms such as “may,” “will,” “should,” “plan,” “project,”
“expect,” “anticipate,” “estimate” and similar words, although some
forward-looking statements are expressed differently. 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 and performance 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 28, 2023.
Included among the risks and uncertainties that could cause actual
results and performance to differ materially are the risk that the
Company will be unsuccessful in gauging fashion trends and changing
consumer preferences, 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 changes in
economic conditions (including inflation), the risks related to the
COVID-19 pandemic, including the impact of the COVID-19 pandemic on
our business or the economy in general, the risk that the Company’s
strategic initiatives to increase sales and margin are delayed or
do not result in anticipated improvements, the risk of delays,
interruptions, disruptions and higher costs in the Company’s global
supply chain, including resulting from COVID-19 or other disease
outbreaks, foreign sources of supply in less developed countries,
more politically unstable countries, or countries where vendors
fail to comply with industry standards or ethical business
practices, including the use of forced, indentured or child labor,
the risk that the cost of raw materials or energy prices will
increase beyond current expectations or that the Company is unable
to offset cost increases through value engineering or price
increases, various types of litigation, including class action
litigations brought under consumer protection, employment, and
privacy and information security laws and regulations, the
imposition of regulations affecting the importation of
foreign-produced merchandise, including duties and tariffs, and the
uncertainty of weather patterns. 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.
Contact: Investor Relations (201)
558-2400 ext. 14500
THE CHILDREN’S PLACE, INC.CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS(In
thousands, except per share
amounts)(Unaudited) |
|
|
Third Quarter Ended |
|
Year-to-Date Ended |
|
October 28,2023 |
|
October 29,2022 |
|
October 28,2023 |
|
October 29,2022 |
|
|
|
|
|
|
|
|
Net sales |
$ |
480,234 |
|
|
$ |
509,120 |
|
|
$ |
1,147,474 |
|
|
$ |
1,252,355 |
|
Cost of sales |
|
318,182 |
|
|
|
332,189 |
|
|
|
801,111 |
|
|
|
817,915 |
|
Gross profit |
|
162,052 |
|
|
|
176,931 |
|
|
|
346,363 |
|
|
|
434,440 |
|
Selling, general and
administrative expenses |
|
104,770 |
|
|
|
106,631 |
|
|
|
329,756 |
|
|
|
330,480 |
|
Depreciation and
amortization |
|
11,732 |
|
|
|
12,463 |
|
|
|
35,534 |
|
|
|
39,320 |
|
Asset impairment charges |
|
583 |
|
|
|
— |
|
|
|
3,115 |
|
|
|
1,379 |
|
Operating income (loss) |
|
44,967 |
|
|
|
57,837 |
|
|
|
(22,042 |
) |
|
|
63,261 |
|
Interest expense, net |
|
(7,939 |
) |
|
|
(3,786 |
) |
|
|
(21,481 |
) |
|
|
(8,080 |
) |
Income (loss) before provision
(benefit) for income taxes |
|
37,028 |
|
|
|
54,051 |
|
|
|
(43,523 |
) |
|
|
55,181 |
|
Provision (benefit) for income
taxes |
|
(1,454 |
) |
|
|
11,196 |
|
|
|
(17,818 |
) |
|
|
5,794 |
|
Net income (loss) |
$ |
38,482 |
|
|
$ |
42,855 |
|
|
$ |
(25,705 |
) |
|
$ |
49,387 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per common
share |
|
|
|
|
|
|
|
Basic |
$ |
3.07 |
|
|
$ |
3.28 |
|
|
$ |
(2.06 |
) |
|
$ |
3.72 |
|
Diluted |
$ |
3.05 |
|
|
$ |
3.26 |
|
|
$ |
(2.06 |
) |
|
$ |
3.68 |
|
|
|
|
|
|
|
|
|
Weighted average common shares
outstanding |
|
|
|
|
|
|
|
Basic |
|
12,548 |
|
|
|
13,064 |
|
|
|
12,481 |
|
|
|
13,277 |
|
Diluted |
|
12,619 |
|
|
|
13,162 |
|
|
|
12,481 |
|
|
|
13,409 |
|
THE CHILDREN’S PLACE, INC.RECONCILIATION
OF NON-GAAP FINANCIAL INFORMATION TO GAAP(In
thousands, except per share
amounts)(Unaudited) |
|
|
Third Quarter Ended |
|
Year-to-Date Ended |
|
October 28,2023 |
|
October 29,2022 |
|
October 28,2023 |
|
October 29,2022 |
|
|
|
|
|
|
|
|
Net income (loss) |
$ |
38,482 |
|
|
$ |
42,855 |
|
|
$ |
(25,705 |
) |
|
$ |
49,387 |
|
|
|
|
|
|
|
|
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
Restructuring costs |
|
756 |
|
|
|
966 |
|
|
|
10,683 |
|
|
|
1,195 |
|
Credit agreement amendment |
|
750 |
|
|
|
— |
|
|
|
750 |
|
|
|
— |
|
Asset impairment charges |
|
583 |
|
|
|
— |
|
|
|
3,115 |
|
|
|
1,379 |
|
Accelerated depreciation |
|
454 |
|
|
|
— |
|
|
|
1,361 |
|
|
|
746 |
|
Fleet optimization |
|
372 |
|
|
|
191 |
|
|
|
1,540 |
|
|
|
342 |
|
Contract termination costs |
|
— |
|
|
|
— |
|
|
|
2,961 |
|
|
|
— |
|
Professional and consulting
fees |
|
— |
|
|
|
111 |
|
|
|
— |
|
|
|
721 |
|
Provision for foreign
settlement |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
375 |
|
Aggregate impact of non-GAAP
adjustments |
|
2,915 |
|
|
|
1,268 |
|
|
|
20,410 |
|
|
|
4,758 |
|
Income tax effect (1) |
|
(760 |
) |
|
|
(331 |
) |
|
|
(5,310 |
) |
|
|
(1,167 |
) |
Settlement of tax
examination |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(6,379 |
) |
Net impact of non-GAAP
adjustments |
|
2,155 |
|
|
|
937 |
|
|
|
15,100 |
|
|
|
(2,788 |
) |
|
|
|
|
|
|
|
|
Adjusted net income (loss) |
$ |
40,637 |
|
|
$ |
43,792 |
|
|
$ |
(10,605 |
) |
|
$ |
46,599 |
|
|
|
|
|
|
|
|
|
GAAP net income (loss) per common
share |
$ |
3.05 |
|
|
$ |
3.26 |
|
|
$ |
(2.06 |
) |
|
$ |
3.68 |
|
|
|
|
|
|
|
|
|
Adjusted net income (loss) per
common share |
$ |
3.22 |
|
|
$ |
3.33 |
|
|
$ |
(0.85 |
) |
|
$ |
3.48 |
|
(1) The tax effects of the non-GAAP items are calculated based
on the statutory rate of the jurisdiction in which the discrete
item resides.
|
Third Quarter Ended |
|
Year-to-Date Ended |
|
October 28,2023 |
|
October 29,2022 |
|
October 28,2023 |
|
October 29,2022 |
|
|
|
|
|
|
|
|
Operating income (loss) |
$ |
44,967 |
|
$ |
57,837 |
|
$ |
(22,042 |
) |
|
$ |
63,261 |
|
|
|
|
|
|
|
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
Restructuring costs |
|
756 |
|
|
966 |
|
|
10,683 |
|
|
|
1,195 |
Credit agreement amendment |
|
750 |
|
|
— |
|
|
750 |
|
|
|
— |
Asset impairment charges |
|
583 |
|
|
— |
|
|
3,115 |
|
|
|
1,379 |
Accelerated depreciation |
|
454 |
|
|
— |
|
|
1,361 |
|
|
|
746 |
Fleet optimization |
|
372 |
|
|
191 |
|
|
1,540 |
|
|
|
342 |
Contract termination costs |
|
— |
|
|
— |
|
|
2,961 |
|
|
|
— |
Professional and consulting
fees |
|
— |
|
|
111 |
|
|
— |
|
|
|
721 |
Provision for foreign
settlement |
|
— |
|
|
— |
|
|
— |
|
|
|
375 |
Aggregate impact of non-GAAP
adjustments |
|
2,915 |
|
|
1,268 |
|
|
20,410 |
|
|
|
4,758 |
|
|
|
|
|
|
|
|
Adjusted operating income
(loss) |
$ |
47,882 |
|
$ |
59,105 |
|
$ |
(1,632 |
) |
|
$ |
68,019 |
THE CHILDREN’S PLACE, INC.RECONCILIATION
OF NON-GAAP FINANCIAL INFORMATION TO GAAP(In
thousands, except per share
amounts)(Unaudited) |
|
|
Third Quarter Ended |
|
Year-to-Date Ended |
|
October 28,2023 |
|
October 29,2022 |
|
October 28,2023 |
|
October 29,2022 |
|
|
|
|
|
|
|
|
Gross profit |
$ |
162,052 |
|
$ |
176,931 |
|
$ |
346,363 |
|
$ |
434,440 |
|
|
|
|
|
|
|
|
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
Fleet optimization |
|
— |
|
|
— |
|
|
— |
|
|
(621 |
) |
Aggregate impact of non-GAAP
adjustments |
|
— |
|
|
— |
|
|
— |
|
|
(621 |
) |
|
|
|
|
|
|
|
|
Adjusted gross profit |
$ |
162,052 |
|
$ |
176,931 |
|
$ |
346,363 |
|
$ |
433,819 |
|
|
Third Quarter Ended |
|
Year-to-Date Ended |
|
October 28,2023 |
|
October 29,2022 |
|
October 28,2023 |
|
October 29,2022 |
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses |
$ |
104,770 |
|
|
$ |
106,631 |
|
|
$ |
329,756 |
|
|
$ |
330,480 |
|
|
|
|
|
|
|
|
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
Restructuring costs |
|
(756 |
) |
|
|
(966 |
) |
|
|
(10,683 |
) |
|
|
(1,195 |
) |
Credit agreement amendment |
|
(750 |
) |
|
|
— |
|
|
|
(750 |
) |
|
|
— |
|
Fleet optimization |
|
(372 |
) |
|
|
(191 |
) |
|
|
(1,540 |
) |
|
|
(963 |
) |
Contract termination costs |
|
— |
|
|
|
— |
|
|
|
(2,961 |
) |
|
|
— |
|
Provision for foreign
settlement |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(375 |
) |
Professional and consulting
fees |
|
— |
|
|
|
(111 |
) |
|
|
— |
|
|
|
(721 |
) |
Aggregate impact of non-GAAP
adjustments |
|
(1,878 |
) |
|
|
(1,268 |
) |
|
|
(15,934 |
) |
|
|
(3,254 |
) |
|
|
|
|
|
|
|
|
Adjusted selling, general and
administrative expenses |
$ |
102,892 |
|
|
$ |
105,363 |
|
|
$ |
313,822 |
|
|
$ |
327,226 |
|
THE CHILDREN’S PLACE, INC.CONDENSED
CONSOLIDATED BALANCE SHEETS(In
thousands)(Unaudited) |
|
|
|
|
|
|
|
October 28, 2023 |
|
January 28,2023* |
|
October 29, 2022 |
|
|
|
Assets: |
|
|
|
|
|
Cash and cash equivalents |
$ |
13,522 |
|
$ |
16,689 |
|
$ |
19,244 |
Accounts receivable |
|
51,712 |
|
|
49,584 |
|
|
48,820 |
Inventories |
|
462,411 |
|
|
447,795 |
|
|
548,719 |
Prepaid expenses and other
current assets |
|
69,710 |
|
|
47,875 |
|
|
48,012 |
Total current assets |
|
597,355 |
|
|
561,943 |
|
|
664,795 |
|
|
|
|
|
|
Property and equipment, net |
|
134,639 |
|
|
149,874 |
|
|
154,975 |
Right-of-use assets |
|
127,863 |
|
|
155,481 |
|
|
160,041 |
Tradenames, net |
|
70,291 |
|
|
70,891 |
|
|
71,091 |
Other assets, net |
|
43,233 |
|
|
48,092 |
|
|
33,715 |
Total assets |
$ |
973,381 |
|
$ |
986,281 |
|
$ |
1,084,617 |
|
|
|
|
|
|
Liabilities and
Stockholders' Equity: |
|
|
|
|
|
Revolving loan |
$ |
358,679 |
|
$ |
286,990 |
|
$ |
265,000 |
Accounts payable |
|
182,594 |
|
|
177,147 |
|
|
221,432 |
Current portion of operating
lease liabilities |
|
66,216 |
|
|
78,576 |
|
|
77,070 |
Accrued expenses and other
current liabilities |
|
98,253 |
|
|
105,672 |
|
|
120,166 |
Total current liabilities |
|
705,742 |
|
|
648,385 |
|
|
683,668 |
|
|
|
|
|
|
Long-term debt |
|
49,801 |
|
|
49,752 |
|
|
49,735 |
Long-term portion of operating
lease liabilities |
|
76,641 |
|
|
96,482 |
|
|
104,073 |
Other long-term liabilities |
|
23,126 |
|
|
33,184 |
|
|
34,965 |
Total liabilities |
|
855,310 |
|
|
827,803 |
|
|
872,441 |
|
|
|
|
|
|
Stockholders' equity |
|
118,071 |
|
|
158,478 |
|
|
212,176 |
Total liabilities and
stockholders' equity |
$ |
973,381 |
|
$ |
986,281 |
|
$ |
1,084,617 |
* Derived from the audited consolidated financial statements
included in the Company's Annual Report on Form 10-K for the fiscal
year ended January 28, 2023.
THE CHILDREN’S PLACE, INC.CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS(In
thousands)(Unaudited) |
|
|
Year-to-Date Ended |
|
October 28,2023 |
|
October 29,2022 |
|
|
|
|
Net income (loss) |
$ |
(25,705 |
) |
|
$ |
49,387 |
|
Non-cash adjustments |
|
92,913 |
|
|
|
127,044 |
|
Working capital |
|
(109,840 |
) |
|
|
(193,396 |
) |
Net cash used in operating
activities |
|
(42,632 |
) |
|
|
(16,965 |
) |
|
|
|
|
Net cash used in investing
activities |
|
(24,542 |
) |
|
|
(31,614 |
) |
|
|
|
|
Net cash provided by financing
activities |
|
64,042 |
|
|
|
14,010 |
|
|
|
|
|
Effect of exchange rate changes
on cash and cash equivalents |
|
(35 |
) |
|
|
(974 |
) |
|
|
|
|
Net decrease in cash and cash
equivalents |
|
(3,167 |
) |
|
|
(35,543 |
) |
|
|
|
|
Cash and cash equivalents,
beginning of period |
|
16,689 |
|
|
|
54,787 |
|
|
|
|
|
Cash and cash equivalents, end of
period |
$ |
13,522 |
|
|
$ |
19,244 |
|
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