Children's Place Q4 Profit Down; Sees Q1, FY Adj. EPS Below View - Quick Facts

(RTTNews) - Kids apparel retailer Children's Place Stores Inc. (PLCE) said that net income for the fourth quarter of 2013 dropped to $15.7 million, or $0.69 per share from $19.1 million, or $0.80 per share in the same quarter last year.

Adjusted net income was $21.8 million, or $0.96 per diluted share, compared to $24.3 million, or $1.02 per share, the previous year. Analysts polled by Thomson Reuters expected the company to report earnings of $0.95 per share for the quarter. Analysts' estimates typically exclude special items.

"In recognition of our significant progress over the past few years, we are changing our Company's name in 2014 from 'The Children's Place Retail Stores, Inc.' to 'The Children's Place, Inc.' to better reflect our strategic positioning as a leading global children's brand," said Jane Elfers, President and Chief Executive Officer.

During the fourth quarter, the Company recorded charges of $9.4 million for unusual items, which primarily consisted of store impairment charges related to the continued review of underperforming stores and early closure expenses. As part of this ongoing review, the Company now expects to close a total of 125 underperforming stores through 2016, including the 41 stores which were closed in 2013.

The company followed the retail 4-5-4 reporting calendar, which included a 53rd week in 2012.

Net sales were $467.5 million in the fourth quarter of 2013. The quarter included the negative impact of approximately $3.9 million from currency exchange rate fluctuations. On a constant currency basis, sales for the quarter would have been $471.4 million. This compares to net sales of $509.2 million for the 14-week quarter in 2012, and sales of $480.1 million for the comparable 13 weeks in 2012.Fifteen analysts estimated revenues of $484.48 million for the quarter.

Comparable retail sales declined 4.3% for the 13 week period ended February 1, 2014, following an increase of 4.9% for the 13 week period ending February 2, 2013.

Adjusted net income per share for the first quarter is expected to be between $0.58 and $0.66. This compares to adjusted net income per share of $0.83 in the first quarter of 2013. Analysts project first-quarter earnings of $0.95 per share. This guidance assumes comparable retail sales will be in the range of negative 2% to 4%.

The Company said it is taking a cautious stance on its outlook for fiscal 2014 given the severe weather conditions experienced in February and early March and the heightened promotional environment. This guidance also anticipates a significant negative impact from foreign exchange in 2014.

For fiscal 2014, the Company forecasts adjusted net income per share will be between $2.85 and $3.05. Analysts project annual earnings per share of $3.66. This compares to adjusted net income per diluted share of $3.26 in fiscal 2013. This guidance assumes comparable retail sales for the year will be in the range of flat to negative 1%.

The Company estimates foreign exchange will negatively impact adjusted net income per diluted share by approximately $0.03 in the first quarter and $0.12 for fiscal 2014 at current exchange rates.

In a separate press release, the company announced that its Board of Directors has instituted a quarterly dividend and has approved a $100 million share repurchase authorization as part of the Company's strategy to return excess capital to shareholders.

The Board authorized a quarterly cash dividend of $0.1325 per share to be paid April 17, 2014 for shareholders of record at the close of business on March 27, 2014.

In conjunction with the expanded capital return program, the Company amended its existing credit facility to increase its line of credit to $200 million from $150 million and to permit dividend payments on the same basis as stock repurchases. It also extended the agreement an additional year to August 2018.