Children's Place Q3 Profit Rises, But Cuts Full-year View

Children's Place Retail Stores Inc. (PLCE: Quote) Thursday reported a higher third-quarter profit, benefited by an increase in net sales and comparable retail sales. Adjusted earnings and revenues met analysts' expectations.

The company also forecast adjusted earnings per share outlook for the fourth quarter below estimates and cut its full-year 2012 earnings view, citing a 'heightened' promotional environment following Hurricane Sandy.

Children's Place noted that Hurricane Sandy had a devastating impact on its region and over 280 of its stores and its Northeast e-commerce business were impacted by the storm. These businesses together account for about 31 percent of the total company revenues, it added.

In the third quarter, the company's net income increased to $35.02 million or $1.44 per share from $33.69 million or $1.33 per share in the previous year.

The pure-play children's specialty apparel retailer said its adjusted earnings for the latest-quarter was $1.60 per share. On average, 17 analysts polled by Thomson Reuters expected the company to earn $1.60 per share for the quarter. Analysts' estimates typically exclude special items.

Jane Elfers, president and chief executive officer of the company stated, "Our third quarter earnings per share exceeded our expectations. We had strong sales results in our e-commerce and outlet channels, and continued positive momentum in our big kids business throughout the quarter."

Net sales for the quarter grew 3 percent to $500.93 million and was in line with analysts' estimate of $500.87 million. Comparable retail sales were up 1.1 percent in the quarter.

For the fiscal year-to-date, net sales increased 3 percent to $1.30 billion and comparable retail sales improved 1.1 percent from a year ago.

Looking ahead to the fourth quarter, the company expects adjusted earnings per share to be in the range of $1.01 to $1.06, assuming positive low-single digit comparable retail sales. Analysts expect the company to earn $1.24 per share for the quarter.

For the fiscal year ending January 2013, the company now projects adjusted earnings per share to be between $3.10 and $3.15, down from its previous guidance range of $3.20 to $3.30 per share, assuming positive low-single digit comparable retail sales. Analysts expect the company to report earnings of $3.32 per share for fiscal 2012.

In addition, the company now expects gross margin to expand 170 to 190 basis points in the fourth quarter, and to deleverage 50 to 70 basis points for fiscal 2012.

The company repurchased 222 thousand shares for about $12.8 million in the quarter.

During the third quarter, Children's Place opened 23 stores and closed one. Year-to-date, it has opened 60 stores and closed seven. PLCE closed Wednesday's regular trading at $57 on the Nasdaq.

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by RTT Staff Writer

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