Delivers Q3 Comparable Retail Sales
Increase of 9.5%
The Children’s Place, Inc. (Nasdaq: PLCE), the
largest pure-play children’s specialty apparel retailer in North
America, today announced financial results for the thirteen weeks
ended November 3, 2018.
Jane Elfers, President and Chief Executive Officer announced,
“For Q3, we delivered adjusted EPS of $3.07, the high-end of our
guidance range. Led by surging demand in our digital
channels, we delivered an industry-leading 9.5% comp on top of a
positive 5.1% comp last year. Our digital channels delivered
a 38% increase, representing 29% of our net sales for the
quarter. Our strategy to take market share continues to
produce meaningful results; we delivered positive traffic in our
brick-and-mortar stores and generated positive comps every month in
the quarter. Importantly, our customer file increased five
percent in Q3, which provides us with increased visibility into
future sales.”
Ms. Elfers continued, “Moving on to Q4, due to stronger than
anticipated digital demand in the back-half of 2018, we were forced
to accelerate online access to our brick-and-mortar inventory and
our ship from store fulfillment capabilities, resulting in an
anticipated incremental fulfillment cost of $5 million, or $0.24 in
EPS in Q4. These capabilities allow our digital customers to
access our brick-and-mortar inventory, which helped fuel high teens
growth in our digital channels over the extended Thanksgiving
holiday weekend. We ended the month of November with
comparable retail sales up low-single digits. Additionally,
given recent competitor news, our updated outlook also assumes the
sales and margin impact of potentially significant liquidation
events.”
Ms. Elfers concluded, “We are uniquely positioned from a
competitive standpoint to gain additional market share by
leveraging our accelerated digital transformation investment.
We are focused on driving customer acquisition, improving customer
retention and increasing customer engagement through our digital
transformation investments and the results are tangible. We
have significant runway ahead of us through the continued
successful execution of our multi-year strategic growth
initiatives.”
Financial ResultsThe Company’s results are
reported in this press release on a GAAP and as adjusted, non-GAAP
basis. A reconciliation of non-GAAP to GAAP financial information
is provided at the end of this press release.
Third Quarter 2018 Results
Net sales increased by $32.5 million, or 6.6%, to $522.5 million
during the third quarter 2018 from $490.0 million during the third
quarter 2017. This increase was primarily driven by a
positive comparable retail sales increase of 9.5% and approximately
$5.0 million due to the new revenue recognition rules, partially
offset by an approximately a $14.0 million adverse impact from the
calendar shift related to the 53rd week in fiscal 2017.
Net income was $49.9 million, or $3.03 per diluted share, in the
third quarter of 2018, compared to net income of $44.1 million, or
$2.44 per diluted share, the previous year. Adjusted net
income was $50.7 million, or $3.07 per diluted share, compared to
adjusted net income of $46.7 million, or $2.58 per diluted share,
in the third quarter last year. Return on invested capital
improved approximately 320 basis points to 22.8% in the
quarter.
Gross profit was $204.4 million in the third quarter, compared
to $202.4 million in the third quarter of 2017. Adjusted
gross profit was $204.4 million in the third quarter, compared to
$202.4 million last year. Adjusted gross margin deleveraged
220 basis points to 39.1% of sales, as a result of stronger sales
in e-commerce and our decision to compete aggressively for market
share, partially offset by fixed cost leverage on stronger
comparable retail sales and the reclassification of certain items
due to the new revenue recognition rules.
Selling, general, and administrative expenses were $123.2
million compared to $118.3 million in the third quarter of
2017. Adjusted selling, general, and administrative expense
was $122.0 million compared to $117.3 million in the third quarter
last year and leveraged 60 basis points as a percentage of net
sales. The SG&A leverage was primarily driven by fixed
cost leverage on stronger comparable retail sales and lower
incentive compensation expenses, partially offset by an increase in
expenditures in our transformation initiatives and the
reclassification of certain items due to the new revenue
recognition rules.
Operating income was $64.6 million, compared to $64.1 million in
the third quarter of 2017. Adjusted operating income in the
third quarter of 2018 was $65.5 million, or 12.5% of net sales,
compared to adjusted operating income of $68.4 million in the third
quarter last year, deleveraging 150 basis points.
Adjusted tax rate was 21.7% for the quarter versus 31.6% last
year. The effective tax rate was lower during the third
quarter primarily as a result of a lower U.S. federal tax rate in
2018 due to the Tax Cuts and Jobs Act and a favorable mix of income
generated in foreign jurisdictions subject to lower tax rates.
For the third quarter, the Company’s adjusted results exclude
net expenses of approximately $0.7 million, compared to excluded
net expenses of approximately $2.6 million in the third quarter of
2017, comprising certain items, which the Company believes, are not
reflective of the performance of its core business. For the third
quarter of 2018, these excluded items primarily related to
consulting costs for organizational design efforts, accelerated
depreciation, asset impairment charges, costs incurred in
connection with the review of the Company’s warehouse and
distribution network, an insurance claim deductible, and
restructuring costs, partially offset by other income and a state
tax audit. For the third quarter of 2017, these excluded
items were primarily related to expenses associated with asset
impairment charges and restructuring costs.
Fiscal Year to Date ResultsNet sales increased
8.2% to $1.408 billion and comparable retail sales increased 6.7%
for the first nine months of 2018, inclusive of a positive impact
of approximately $17.0 million resulting from the calendar shift
related to the 53rd week in fiscal 2017 and approximately $14.0
million due to the new revenue recognition rules.
Net income was $88.9 million, or $5.24 per diluted share, in the
first nine months of 2018, compared to net income of $94.6 million,
or $5.19 per diluted share, the previous year. Adjusted net
income was $95.5 million, or $5.62 per diluted share, compared to
adjusted net income of $98.3 million, or $5.39 per diluted share,
in the first nine months of last year.
Gross profit was $519.4 million compared to $501.4 million in
the first nine months of last year. Adjusted gross profit was
$520.6 million compared to $502.1 million in the first nine months
last year, and deleveraged 160 basis points to 37.0% of
sales. The gross margin performance was as a result of
stronger sales in e-commerce and our decision to compete
aggressively for market share, partially offset by fixed cost
leverage on stronger comparable retail sales and the
reclassification of certain items due to the new revenue
recognition rules.
Selling, general and administrative expenses were $365.9 million
compared to $338.6 million in the first nine months of last
year. Adjusted selling, general, and administrative expense
was $363.2 million compared to $331.7 million in the first nine
months of last year and deleveraged 30 basis points as a percentage
of net sales. The increase in selling, general, and
administrative expenses were driven by an increase in expenditures
in our transformation initiatives and the reclassification of
certain items due to the new revenue recognition rules, partially
offset by fixed cost leverage on stronger comparable retail sales
and lower incentive compensation expenses.
Operating income was $97.7 million, compared to operating income
of $109.7 million in the first nine months of 2017. Adjusted
operating income in the first nine months of 2018 was $106.6
million, or 7.6% of net sales, compared to adjusted operating
income of $121.9 million in the first nine months last year,
deleveraging 180 basis points compared to last year.
Adjusted tax rate was 8.6% for the first nine months of 2018
versus 19.1% last year, as a result of a lower U.S. federal tax
rate in 2018 due to the Tax Cuts and Jobs Act.
During the first nine months of fiscal 2018, the Company’s
adjusted results exclude net expenses of approximately $6.6
million, compared to excluded net expenses of approximately $3.7
million in the first nine months of 2017, comprising certain items,
which the Company believes, are not reflective of the performance
of its core business. For the first nine months of 2018,
these excluded items primarily related to asset impairment charges,
restructuring costs, consulting costs for organizational design
efforts, accelerated depreciation, costs incurred in connection
with the review of the Company’s warehouse and distribution
network, system transition costs and a provision for an insurance
claim deductible, partially offset by other income, a state sales
and use tax audit settlement, and an insurance claim
settlement. For the first nine months of fiscal 2017, these
excluded items are primarily related to charges due to a provision
for a legal settlement resulting from a pricing litigation, asset
impairment charges, restructuring costs, a state sales and use tax
audit settlement, a provision for foreign exchange control
penalties and an insurance claim deductible, partially offset by
income associated with the release of reserves for prior year
uncertain tax positions.
Store Openings and ClosuresConsistent with the
Company’s store fleet optimization initiative, the Company closed
four stores and did not open any stores during the third quarter of
2018. The Company ended the third quarter with 988 stores and
square footage of 4.6 million, a decrease of 4% compared to the
prior year. Since our fleet optimization initiative announced in
2013, the Company has closed 195 stores.
The Company’s international franchise partners opened 21 net new
points of distribution in the first nine months of 2018 and ended
the quarter with 211 international points of distribution open and
operated by its eight franchise partners in 20 countries.
Capital Return ProgramDuring the third quarter
of 2018, the Company repurchased approximately 192.2 thousand
shares for approximately $26 million, inclusive of shares
surrendered to cover tax withholdings associated with the vesting
of equity awards held by management. The Company also paid a
quarterly dividend of approximately $8 million, or $0.50 per share,
in the quarter.
For the first nine months of 2018, the Company repurchased
approximately 1.7 million shares for approximately $213 million,
inclusive of shares repurchased under an accelerated share
repurchase program and shares surrendered to cover tax withholdings
associated with the vesting of equity awards held by
management. The Company also paid quarterly dividends
totaling approximately $25 million in the first nine months of
2018.
Since 2009, the Company has repurchased approximately $1.1
billion of its common stock and, since 2014, paid approximately $92
million in dividends. At the end of the third quarter of
2018, approximately $281 million remained available for future
share repurchases under the Company’s existing share repurchase
programs.
The Company’s Board of Directors authorized a dividend of $0.50
per share, payable on December 28, 2018 to shareholders of record
at the close of business on December 17,
2018.OutlookThe Company is updating its outlook
for fiscal 2018 and now expects adjusted net income per diluted
share to be in the range of $7.69 to $7.79 compared to previous
guidance in the range of $8.09 to $8.29. This compares to adjusted
net income per diluted share of $7.91 in fiscal 2017. The
Company now expects total net sales for the year to be in the range
of $1.955 to $1.960 billion. This guidance assumes a positive
mid-single digit comparable retail sales increase. The
Company now expects adjusted operating margin to be in the range of
7.7% to 7.8%. The updated margin outlook reflects $5 million,
or $0.24 in EPS, of added fulfillment costs in the fourth quarter
to support the exposure of our brick-and-mortar inventory on-line
and our ship from store capabilities. Additionally, the
outlook considers the potential margin impact of increased
competitiveness as the industry attempts to win market share
abandoned by distressed competitors.
The Company expects adjusted net income per diluted share in the
fourth quarter of 2018 to be in the range of $2.07 to $2.17. This
compares to adjusted net income per diluted share of $2.52 in
fiscal 2017. The Company now expects total net sales in the
fourth quarter of 2018 to be in the range of $547 million to $552
million. This guidance assumes a positive low-single digit
comparable retail sales increase.
Additional details underlying the Company’s outlook for the
third quarter and full year 2018 will be provided on the conference
call and will be available in the conference call transcript, which
will be posted on our website. An audio archive will also be
available on the Company’s website.
Conference Call InformationThe Children’s Place
will host a conference call today at 8:00 a.m. Eastern Time to
discuss its third quarter 2018 results and the Company’s outlook.
The call will be broadcast live at
http://investor.childrensplace.com. An audio archive will be
available on the Company’s website approximately one hour after the
conclusion of the call. A conference call transcript will also be
posted on our website.
Financial ResultsThe Company’s results are
reported in this press release on a GAAP and as adjusted, non-GAAP
basis. Adjusted net income, adjusted net income per diluted share,
adjusted gross profit, adjusted selling, general, and
administrative expense, and adjusted operating income 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. The
Company uses non-GAAP measures to evaluate and measure operating
performance, including, to measure performance for purposes of the
Company’s annual bonus and long-term incentive compensation plans.
A reconciliation of non-GAAP to GAAP financial information is
provided at the end of this press
release.
About The Children’s Place, Inc.The Children’s
Place is the largest pure-play children’s specialty apparel
retailer in North America. The Company designs, contracts to
manufacture, sells at retail and wholesale, and licenses to sell
fashionable, high-quality merchandise at value prices, primarily
under the proprietary “The Children’s Place,” “Place” and “Baby
Place” brand names. As of November 3, 2018, the Company
operated 988 stores in the United States, Canada and Puerto Rico,
an online store at www.childrensplace.com, and had 211
international points of distribution open and operated by its eight
franchise partners in 20 countries.
Forward Looking Statement
This 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 adjusted net income 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 February 3, 2018.
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, 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 and disruptions in the Company’s global supply chain,
including resulting from foreign sources of supply in less
developed countries or more politically unstable countries, 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: Anthony Attardo, CFA, Director,
Investor Relations, (201) 453-6693(Tables Follow)
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THE CHILDREN’S PLACE, INC. |
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
(In thousands, except per share
amounts) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter Ended |
|
Year-To-Date Ended |
|
|
November 3, |
|
October 28, |
|
November 3, |
|
October 28, |
|
|
|
2018 |
|
|
|
2017 |
|
|
|
2018 |
|
|
|
2017 |
|
Net sales |
|
$ |
522,495 |
|
|
$ |
490,026 |
|
|
$ |
1,407,526 |
|
|
$ |
1,300,303 |
|
Cost of sales |
|
|
318,129 |
|
|
|
287,593 |
|
|
|
888,125 |
|
|
|
798,874 |
|
Gross profit |
|
|
204,366 |
|
|
|
202,433 |
|
|
|
519,401 |
|
|
|
501,429 |
|
Selling, general and
administrative expenses |
|
|
123,207 |
|
|
|
118,288 |
|
|
|
365,933 |
|
|
|
338,642 |
|
Asset impairment
charges |
|
|
396 |
|
|
|
3,203 |
|
|
|
5,632 |
|
|
|
4,661 |
|
Other costs
(income) |
|
|
(1,246 |
) |
|
|
4 |
|
|
|
(1,255 |
) |
|
|
14 |
|
Depreciation and
amortization |
|
|
17,404 |
|
|
|
16,789 |
|
|
|
51,405 |
|
|
|
48,460 |
|
Operating income |
|
|
64,605 |
|
|
|
64,149 |
|
|
|
97,686 |
|
|
|
109,652 |
|
Interest expense |
|
|
(831 |
) |
|
|
(100 |
) |
|
|
(2,074 |
) |
|
|
(429 |
) |
Income before
taxes |
|
|
63,774 |
|
|
|
64,049 |
|
|
|
95,612 |
|
|
|
109,223 |
|
Provision for income
taxes |
|
|
13,861 |
|
|
|
19,972 |
|
|
|
6,675 |
|
|
|
14,627 |
|
Net income |
|
$ |
49,913 |
|
|
$ |
44,077 |
|
|
$ |
88,937 |
|
|
$ |
94,596 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common
share |
|
|
|
|
|
|
|
|
Basic |
|
$ |
3.04 |
|
|
$ |
2.50 |
|
|
$ |
5.33 |
|
|
$ |
5.36 |
|
Diluted |
|
$ |
3.03 |
|
|
$ |
2.44 |
|
|
$ |
5.24 |
|
|
$ |
5.19 |
|
|
|
|
|
|
|
|
|
|
Weighted average common
shares outstanding |
|
|
|
|
|
|
|
|
Basic |
|
|
16,394 |
|
|
|
17,617 |
|
|
|
16,677 |
|
|
|
17,645 |
|
Diluted |
|
|
16,496 |
|
|
|
18,090 |
|
|
|
16,982 |
|
|
|
18,223 |
|
|
|
|
|
|
|
|
|
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|
THE CHILDREN’S PLACE, INC. |
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|
RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION TO
GAAP |
|
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|
(In thousands, except per share amounts) |
|
|
|
|
|
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter Ended |
|
Year-To-Date Ended |
|
|
November 3, |
|
October 28, |
|
November 3, |
|
October 28, |
|
|
|
2018 |
|
|
|
2017 |
|
|
|
2018 |
|
|
|
2017 |
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
49,913 |
|
|
$ |
44,077 |
|
|
$ |
88,937 |
|
|
$ |
94,596 |
|
|
|
|
|
|
|
|
|
|
Non-GAAP
adjustments: |
|
|
|
|
|
|
|
|
Asset impairment
charges |
|
|
396 |
|
|
|
3,203 |
|
|
|
5,632 |
|
|
|
4,661 |
|
Organizational design
costs |
|
|
934 |
|
|
|
- |
|
|
|
1,649 |
|
|
|
- |
|
Restructuring
costs |
|
|
241 |
|
|
|
1,016 |
|
|
|
2,498 |
|
|
|
1,578 |
|
System transition
costs |
|
|
- |
|
|
|
- |
|
|
|
250 |
|
|
|
- |
|
Distribution network
review costs |
|
|
228 |
|
|
|
- |
|
|
|
378 |
|
|
|
- |
|
Provision for legal
settlement |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
5,000 |
|
Sales tax audit |
|
|
(518 |
) |
|
|
- |
|
|
|
(518 |
) |
|
|
418 |
|
Foreign exchange
penalties |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
300 |
|
Insurance claim
deductible |
|
|
200 |
|
|
|
- |
|
|
|
200 |
|
|
|
250 |
|
Accelerated
depreciation |
|
|
546 |
|
|
|
- |
|
|
|
546 |
|
|
|
- |
|
Other income |
|
|
(1,097 |
) |
|
|
- |
|
|
|
(1,097 |
) |
|
|
- |
|
Insurance claim
settlement |
|
|
- |
|
|
|
- |
|
|
|
(606 |
) |
|
|
- |
|
Aggregate impact of
Non-GAAP adjustments |
|
|
930 |
|
|
|
4,219 |
|
|
|
8,932 |
|
|
|
12,207 |
|
Income tax effect
(1) |
|
|
(192 |
) |
|
|
(1,611 |
) |
|
|
(2,241 |
) |
|
|
(4,503 |
) |
Prior year uncertain
tax positions (2) |
|
|
- |
|
|
|
- |
|
|
|
(112 |
) |
|
|
(4,048 |
) |
Net impact of Non-GAAP
adjustments |
|
|
738 |
|
|
|
2,608 |
|
|
|
6,579 |
|
|
|
3,656 |
|
|
|
|
|
|
|
|
|
|
Adjusted net
income |
|
$ |
50,651 |
|
|
$ |
46,685 |
|
|
$ |
95,516 |
|
|
$ |
98,252 |
|
|
|
|
|
|
|
|
|
|
GAAP net income per
common share |
|
$ |
3.03 |
|
|
$ |
2.44 |
|
|
$ |
5.24 |
|
|
$ |
5.19 |
|
|
|
|
|
|
|
|
|
|
Adjusted net income per
common share |
|
$ |
3.07 |
|
|
$ |
2.58 |
|
|
$ |
5.62 |
|
|
$ |
5.39 |
|
|
|
|
|
|
|
|
|
|
(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. |
|
|
|
|
|
|
|
|
|
|
|
|
(2) Prior
year tax related to uncertain tax positions. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter Ended |
|
Year-To-Date Ended |
|
|
November 3, |
|
October 28, |
|
November 3, |
|
October 28, |
|
|
|
2018 |
|
|
|
2017 |
|
|
|
2018 |
|
|
|
2017 |
|
|
|
|
|
|
|
|
|
|
Operating income |
|
$ |
64,605 |
|
|
$ |
64,149 |
|
|
$ |
97,686 |
|
|
$ |
109,652 |
|
|
|
|
|
|
|
|
|
|
Non-GAAP
adjustments: |
|
|
|
|
|
|
|
|
Asset impairment
charges |
|
|
396 |
|
|
|
3,203 |
|
|
|
5,632 |
|
|
|
4,661 |
|
Organizational design
costs |
|
|
934 |
|
|
|
- |
|
|
|
1,649 |
|
|
|
- |
|
Restructuring
costs |
|
|
241 |
|
|
|
1,016 |
|
|
|
2,498 |
|
|
|
1,578 |
|
System transition
costs |
|
|
- |
|
|
|
- |
|
|
|
250 |
|
|
|
- |
|
Distribution network
review costs |
|
|
228 |
|
|
|
- |
|
|
|
378 |
|
|
|
- |
|
Provision for legal
settlement |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
5,000 |
|
Sales tax audit |
|
|
(518 |
) |
|
|
- |
|
|
|
(518 |
) |
|
|
418 |
|
Foreign exchange
penalties |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
300 |
|
Insurance claim
deductible |
|
|
200 |
|
|
|
- |
|
|
|
200 |
|
|
|
250 |
|
Accelerated
depreciation |
|
|
546 |
|
|
|
- |
|
|
|
546 |
|
|
|
- |
|
Other income |
|
|
(1,097 |
) |
|
|
- |
|
|
|
(1,097 |
) |
|
|
- |
|
Insurance claim
settlement |
|
|
- |
|
|
|
- |
|
|
|
(606 |
) |
|
|
- |
|
Aggregate impact of
Non-GAAP adjustments |
|
|
930 |
|
|
|
4,219 |
|
|
|
8,932 |
|
|
|
12,207 |
|
|
|
|
|
|
|
|
|
|
Adjusted operating
income |
|
$ |
65,535 |
|
|
$ |
68,368 |
|
|
$ |
106,618 |
|
|
$ |
121,859 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
November 3, |
|
October 28, |
|
November 3, |
|
October 28, |
|
|
|
2018 |
|
|
|
2017 |
|
|
|
2018 |
|
|
|
2017 |
|
|
|
|
|
|
|
|
|
|
Gross Profit |
|
$ |
204,366 |
|
|
$ |
202,433 |
|
|
$ |
519,401 |
|
|
$ |
501,429 |
|
|
|
|
|
|
|
|
|
|
Non-GAAP
adjustments: |
|
|
|
|
|
|
|
|
Restructuring
costs |
|
|
- |
|
|
|
- |
|
|
|
1,239 |
|
|
|
377 |
|
Insurance claim
deductible |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
250 |
|
Aggregate impact of
Non-GAAP adjustments |
|
|
- |
|
|
|
- |
|
|
|
1,239 |
|
|
|
627 |
|
|
|
|
|
|
|
|
|
|
Adjusted Gross
Profit |
|
$ |
204,366 |
|
|
$ |
202,433 |
|
|
$ |
520,640 |
|
|
$ |
502,056 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter Ended |
|
Year-To-Date Ended |
|
|
November 3, |
|
October 28, |
|
November 3, |
|
October 28, |
|
|
|
2018 |
|
|
|
2017 |
|
|
|
2018 |
|
|
|
2017 |
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses |
|
$ |
123,207 |
|
|
$ |
118,288 |
|
|
$ |
365,933 |
|
|
$ |
338,642 |
|
|
|
|
|
|
|
|
|
|
Non-GAAP
adjustments: |
|
|
|
|
|
|
|
|
Organizational design
costs |
|
|
(1,185 |
) |
|
|
- |
|
|
|
(1,900 |
) |
|
|
- |
|
Restructuring
costs |
|
|
(1,236 |
) |
|
|
(1,016 |
) |
|
|
(2,263 |
) |
|
|
(1,201 |
) |
System transition
costs |
|
|
- |
|
|
|
- |
|
|
|
(250 |
) |
|
|
- |
|
Other income |
|
|
1,097 |
|
|
|
- |
|
|
|
1,097 |
|
|
|
- |
|
Distribution network
review costs |
|
|
(228 |
) |
|
|
- |
|
|
|
(378 |
) |
|
|
- |
|
Provision for legal
settlement |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(5,000 |
) |
Sales tax audit |
|
|
518 |
|
|
|
- |
|
|
|
518 |
|
|
|
(418 |
) |
Insurance claim
deductible |
|
|
(200 |
) |
|
|
|
|
(200 |
) |
|
|
- |
|
Foreign exchange
penalties |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(300 |
) |
Insurance claim
settlement |
|
|
- |
|
|
|
- |
|
|
|
606 |
|
|
|
- |
|
Aggregate impact of
Non-GAAP adjustments |
|
|
(1,234 |
) |
|
|
(1,016 |
) |
|
|
(2,770 |
) |
|
|
(6,919 |
) |
|
|
|
|
|
|
|
|
|
Adjusted Selling,
general and administrative expenses |
|
$ |
121,973 |
|
|
$ |
117,272 |
|
|
$ |
363,163 |
|
|
$ |
331,723 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THE CHILDREN’S PLACE, INC. |
CONDENSED CONSOLIDATED BALANCE
SHEETS |
(In thousands) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
November 3, |
|
February 3, |
|
October 28, |
|
|
2018 |
|
2018* |
|
2017 |
Assets: |
|
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
92,950 |
|
$ |
244,519 |
|
$ |
257,743 |
Short-term investments |
|
|
- |
|
|
15,000 |
|
|
15,000 |
Accounts
receivable |
|
|
40,111 |
|
|
26,094 |
|
|
32,432 |
Inventories |
|
|
376,858 |
|
|
324,435 |
|
|
363,788 |
Other
current assets |
|
|
37,467 |
|
|
46,456 |
|
|
22,690 |
Total
current assets |
|
|
547,386 |
|
|
656,504 |
|
|
691,653 |
|
|
|
|
|
|
|
Property
and equipment, net |
|
|
262,380 |
|
|
258,537 |
|
|
266,230 |
Other
assets, net |
|
|
27,487 |
|
|
25,187 |
|
|
55,541 |
Total
assets |
|
$ |
837,253 |
|
$ |
940,228 |
|
$ |
1,013,424 |
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity: |
|
|
|
|
|
|
Revolving
loan |
|
$ |
65,000 |
|
$ |
21,460 |
|
$ |
56,400 |
Accounts
payable |
|
|
223,607 |
|
|
210,300 |
|
|
249,562 |
Accrued
expenses and other current liabilities |
|
|
123,181 |
|
|
128,764 |
|
|
123,216 |
Total
current liabilities |
|
|
411,788 |
|
|
360,524 |
|
|
429,178 |
|
|
|
|
|
|
|
Other
liabilities |
|
|
82,007 |
|
|
106,005 |
|
|
73,780 |
Total
liabilities |
|
|
493,795 |
|
|
466,529 |
|
|
502,958 |
|
|
|
|
|
|
|
Stockholders' equity |
|
|
343,458 |
|
|
473,699 |
|
|
510,466 |
|
|
|
|
|
|
|
Total
liabilities and stockholders' equity |
|
$ |
837,253 |
|
$ |
940,228 |
|
$ |
1,013,424 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Derived from the audited consolidated
financial statements included in the Company's Annual Report on
Form 10-K for the fiscal year ended February 3, 2018. |
|
|
|
|
|
|
|
|
THE CHILDREN’S PLACE, INC. |
CONDENSED CONSOLIDATED CASH FLOWS |
(In thousands) |
(Unaudited) |
|
|
|
39 Weeks Ended |
|
39 Weeks Ended |
|
|
November 3, |
|
October 28, |
|
|
2018 |
|
2017 |
|
|
|
|
|
Net income |
|
$ |
88,937 |
|
|
$ |
94,596 |
|
Non-cash
adjustments |
|
|
78,118 |
|
|
|
72,299 |
|
Working Capital |
|
|
(83,577 |
) |
|
|
(36,950 |
) |
Net cash provided by
operating activities |
|
|
83,478 |
|
|
|
129,945 |
|
|
|
|
|
|
|
|
|
|
|
Net cash used in
investing activities |
|
|
(41,121 |
) |
|
|
(4,218 |
) |
|
|
|
|
|
|
|
|
|
|
Net cash used in
financing activities |
|
|
(194,471 |
) |
|
|
(65,510 |
) |
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate
changes on cash |
|
|
545 |
|
|
|
3,817 |
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease)
in cash and cash equivalents |
|
|
(151,569 |
) |
|
|
64,034 |
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents, beginning of period |
|
|
244,519 |
|
|
|
193,709 |
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents, end of period |
|
$ |
92,950 |
|
|
$ |
257,743 |
|
|
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