The Children's Place Announces Preliminary Unaudited Results for the Fourth Quarter 2023
February 09 2024 - 6:30AM
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 preliminary
unaudited results for the fourth quarter of fiscal 2023.
Preliminary Unaudited Results for the
Fourth Quarter 2023While the results are preliminary and
subject to the Company’s detailed year-end closing process and an
independent audit, the Company is announcing that it now expects to
report the following results for the fourth quarter of fiscal
2023:
- Net sales are expected to be
approximately $454 million to $456 million, versus
the Company’s prior guidance of $460 million to $465
million.
- Adjusted operating loss, which will
exclude certain non-recurring costs, the gain from the settlement
of a lawsuit, and non-cash asset impairments, if any, for the
quarter is expected to be in the range of (9.0%) to (8.0%) of net
sales, versus the Company’s prior guidance of adjusted operating
income of approximately 2% to 3% of net sales. The adjusted
operating loss reflects the impact of lower than expected
merchandise margin resulting from more aggressive promotions in an
effort to maximize sales, higher than anticipated split shipments
to meet customer e-commerce demand, and increased inventory
valuation adjustments. The Company projects to end the year in a
clean inventory position with inventory expected to be down 16% to
20% versus the prior year. Information reconciling the
above non-GAAP measure to the most comparable financial measure
calculated and presented in accordance with GAAP is not available
without unreasonable effort due to high variability,
complexity and uncertainty with respect to finalizing and
quantifying the components that are necessary for such
reconciliation at this time.
- Total liquidity
as of February 3, 2024 is expected to be approximately $45 million
(including approximately $13 million of cash and cash equivalents
and approximately $32 million of excess availability under the
Company’s Credit Facility after excluding all necessary reserves
and excess availability requirements). As previously anticipated,
total indebtedness is expected to decrease by more than $100
million versus the third quarter of fiscal 2023 and, as of February
3, 2024, is expected to be approximately $277 million as compared
to $408 million as of the end of the third quarter of fiscal
2023.
The Company plans to provide further commentary
on the fourth quarter and full fiscal year 2023 actual results, and
the Company’s outlook for fiscal 2024, during the first quarter of
fiscal 2024 as part of its earnings release and conference
call.
Certain of the Company’s preliminary unaudited
results are reported in this press release on an adjusted, non-GAAP
basis. 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 income and 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.
This press release does not contain all the
necessary information for an understanding of the Company’s results
of operations or its financial condition for the fourth quarter of
fiscal 2023. As the Company completes its quarter-end and fiscal
year-end financial close processes and finalizes its financial
statements for the fourth quarter and full fiscal year 2023,
including the accounting for taxes in accordance with GAAP, it is
possible that the Company may identify items that require it to
make adjustments to the preliminary unaudited financial information
set forth above, and those adjustments could be material. The
Company undertakes no obligation to, and does not intend to, update
financial information prior to the release of final fourth quarter
and full fiscal year 2023 financial information in the first fiscal
quarter of fiscal 2024.
Other ActionsThe Company has
been working to improve its liquidity position and strengthen its
balance sheet to best position the Company for the future. The
Company is working with its advisors (including Centerview
Partners), lenders and potential lenders to obtain new financing
necessary to support ongoing operations, and is considering
strategic alternatives in the event that the Company is unable to
consummate new financing.
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 preliminary unaudited
results for the fourth quarter of fiscal 2023. 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, the
uncertainty of weather patterns, the risk that we may be unable to
obtain new financing, and the risk that our preliminary unaudited
results for the fourth quarter of fiscal 2023 may differ (perhaps
materially) from our actual results for such period. 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
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