The Children’s Place Reports Third Quarter 2024 Results
The Children's Place (PLCE) reported Q3 2024 financial results with net sales decreasing 18.8% to $390.2 million. Despite lower sales, the company achieved its second consecutive quarter of adjusted profitability with Adjusted EBITDA of $44.5 million and Adjusted EPS of $2.04. Gross profit margin improved to 35.5%, up 180 basis points year-over-year. The company maintained total liquidity of $94 million and reported the lowest SG&A spending in over 15 years. PLCE announced a new partnership with SHEIN and opened its first new Gymboree store in over two years.
The Children's Place (PLCE) ha riportato i risultati finanziari del terzo trimestre 2024, registrando una diminuzione delle vendite nette del 18,8%, scendendo a 390,2 milioni di dollari. Nonostante le vendite più basse, l'azienda ha raggiunto il secondo trimestre consecutivo di redditività aggiustata, con un EBITDA aggiustato di 44,5 milioni di dollari e un EPS aggiustato di 2,04 dollari. Il margine di profitto lordo è migliorato al 35,5%, con un incremento di 180 punti base rispetto all'anno precedente. L'azienda ha mantenuto una liquidità totale di 94 milioni di dollari e ha riportato la spesa SG&A più bassa degli ultimi 15 anni. PLCE ha annunciato una nuova partnership con SHEIN e ha aperto il suo primo nuovo negozio Gymboree in oltre due anni.
The Children's Place (PLCE) informó los resultados financieros del tercer trimestre de 2024, con ventas netas que disminuyeron un 18.8%, alcanzando 390.2 millones de dólares. A pesar de la baja en las ventas, la empresa logró su segundo trimestre consecutivo de rentabilidad ajustada, con un EBITDA ajustado de 44.5 millones de dólares y un EPS ajustado de 2.04 dólares. El margen de beneficio bruto mejoró al 35.5%, un aumento de 180 puntos base en comparación con el año anterior. La empresa mantuvo una liquidez total de 94 millones de dólares y reportó el gasto SG&A más bajo en más de 15 años. PLCE anunció una nueva asociación con SHEIN y abrió su primera nueva tienda Gymboree en más de dos años.
어린이의 장소 (PLCE)는 2024년 3분기 재무 결과를 보고하며, 순매출이 18.8% 감소하여 3억9020만 달러에 이르렀습니다. 판매가 감소했음에도 불구하고, 회사는 조정된 수익성의 두 번째 연속 분기를 달성하며 조정된 EBITDA가 4450만 달러, 조정된 EPS가 2.04달러에 달했습니다. 매출 총이익률은 35.5%로 개선되어 전년 대비 180bp 증가했습니다. 회사는 총 유동성을 9400만 달러로 유지하였고, 15년 이상 만에 가장 낮은 SG&A 지출을 기록했습니다. PLCE는 SHEIN과의 새로운 파트너십을 발표하고 2년 이상 만에 첫 신규 Gymboree 매장을 열었습니다.
The Children's Place (PLCE) a publié les résultats financiers du troisième trimestre 2024, avec des ventes nettes en baisse de 18,8 %, atteignant 390,2 millions de dollars. Malgré des ventes plus faibles, l'entreprise a atteint son deuxième trimestre consécutif de rentabilité ajustée, avec un EBITDA ajusté de 44,5 millions de dollars et un BPA ajusté de 2,04 dollars. La marge brute de profit a progressé à 35,5 %, soit une augmentation de 180 points de base par rapport à l'année précédente. L'entreprise a maintenu une liquidité totale de 94 millions de dollars et a enregistré les dépenses SG&A les plus faibles depuis plus de 15 ans. PLCE a annoncé un nouveau partenariat avec SHEIN et a ouvert son premier nouveau magasin Gymboree en plus de deux ans.
The Children's Place (PLCE) hat die finanziellen Ergebnisse des dritten Quartals 2024 bekannt gegeben, wobei die Nettoumsätze um 18,8% auf 390,2 Millionen Dollar gesunken sind. Trotz sinkender Verkaufszahlen erzielte das Unternehmen das zweite aufeinanderfolgende Quartal mit angepasster Rentabilität, mit einem angepassten EBITDA von 44,5 Millionen Dollar und einem angepassten EPS von 2,04 Dollar. Die Bruttomarge verbesserte sich auf 35,5%, was einem Anstieg von 180 Basispunkten im Vergleich zum Vorjahr entspricht. Das Unternehmen hielt eine GesamtlLiquidität von 94 Millionen Dollar aufrecht und berichtete die niedrigsten SG&A-Ausgaben seit über 15 Jahren. PLCE gab eine neue Partnerschaft mit SHEIN bekannt und eröffnete seinen ersten neuen Gymboree-Shop seit über zwei Jahren.
- Gross profit margin improved 180 basis points to 35.5%
- Achieved Adjusted EBITDA of $44.5 million
- Lowest SG&A expenses in 15 years at $93.8 million
- Maintained total liquidity of $94 million
- Adjusted operating income of $35.3 million
- Net sales decreased 18.8% to $390.2 million
- Comparable retail sales declined 17.1%
- Net income decreased to $20.1 million from $38.5 million YoY
- Interest expense increased to $10.1 million from $7.9 million YoY
- Operating cash flow usage of $238.9 million in first nine months
Insights
The Q3 results show a complex financial picture. While net sales declined
- Adjusted EBITDA of
$44.5 million - Adjusted EPS of
$2.04 - SG&A expenses at 15-year low
- Maintained liquidity of
$94 million
However, concerning factors include high inventory levels at
The strategic repositioning shows both promise and challenges. The company's deliberate sacrifice of unprofitable e-commerce sales and reduction in promotional activity demonstrates a shift toward sustainable operations, but at the cost of significant top-line pressure with comparable sales down
Reports Second Consecutive Quarter of Adjusted Profitability
Significant Improvement in Gross Profit Margin to
Lowest Level of SG&A spending in more than 15 Years during Q3
Reports Adjusted EBITDA of
Maintains Total Liquidity of
SECAUCUS, N.J., Dec. 03, 2024 (GLOBE NEWSWIRE) -- The Children’s Place, Inc. (Nasdaq: PLCE), an omni-channel children’s specialty portfolio of brands, today announced financial results for the third quarter ended November 2, 2024.
Muhammad Umair, President and Interim Chief Executive Officer said, “During the third quarter, we continued our efforts to improve the profitability of the business and provide a foundation for future growth and we were able to achieve a second consecutive quarter of adjusted profits. As we previously discussed, we anticipated our strategic changes would provide pressure to topline sales, however we are laser focused on profitability and willing to proactively sacrifice unprofitable sales to improve operating results for our shareholders. We were also extremely pleased to drive further improvements in gross profit margin versus the prior year’s third quarter and sequential improvement in margin for all three quarters this year. In addition, we also continued our efforts to decrease Adjusted SG&A expenses, as we significantly reduced marketing spend and further reduced payroll costs, resulting in a
Mr. Umair continued, “We were also delighted to expand our reach as we introduced a new partnership with SHEIN, opening up opportunities for the Company to reach customers that would not typically be found in our customer file, by making shopping even more effortless, accessible and exciting for these potential new customers. Finally, we are eager to refocus our efforts on our store portfolio, which is a critical piece of our omni-channel strategy. We recently opened our first new Gymboree store in Garden State Plaza Mall located in Paramus, New Jersey and plan to further invest in real estate while continuing to strengthen our landlord relationships. While these first steps to improve operating results have been promising, we still believe that we have significant work ahead of us in a highly promotional fourth quarter, as well as future quarters as we continue to rationalize profitability.”
Third Quarter 2024 Results
Net sales decreased
Comparable retail sales decreased
Gross profit decreased
Selling, general, and administrative expenses were well-controlled at
Operating income was
Net interest expense was
As previously announced, in the three months ended February 3, 2024, the Company established a valuation allowance against its net deferred tax assets and, as such, continues to adjust the allowance based upon the ongoing operating results. The provision (benefit) for income taxes, which is reflected net of these adjustments, was a benefit of
Net income was
Fiscal Year-To-Date 2024 Results
Net sales decreased
Gross profit decreased
Selling, general, and administrative expenses were
Operating loss was
Net interest expense was
The provision (benefit) for income taxes was a provision of
Net loss, which included certain non-cash impairment charges, restructuring charges, and charges due to the Company’s change in control, was
Store Update
The Company closed 5 stores in the three months ended November 2, 2024 and ended the quarter with 510 stores and square footage of 2.5 million. While it occurred early in the fourth quarter, the Company opened its first new store in more than 2 years, which was a Gymboree store located in Garden State Plaza Mall.
Balance Sheet and Cash Flow
As of November 2, 2024, the Company had
Inventories were
Non-GAAP Reconciliation
The 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, adjusted operating income (loss) and adjusted EBITDA 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.
Please refer to the “Reconciliation of Non-GAAP Financial Information to GAAP” later in this press release, which sets forth the non-GAAP operating adjustments for the 13-week periods and 39-week periods ended November 2, 2024, and October 28, 2023.
About The Children’s Place
The Children’s Place is an omni-channel children’s specialty portfolio of brands. Its global retail and wholesale network includes two digital storefronts, more than 500 stores in North America, wholesale marketplaces and distribution in 15 countries through six international franchise partners. 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 and www.gymboree.com, as well as the Company’s social media channels on Instagram, Facebook, X, formerly known as Twitter, YouTube and Pinterest.
Forward-Looking Statements
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 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 February 3, 2024. Included among the risks and uncertainties that could cause actual results and performance to differ materially are the risk that the Company will be unable to achieve operating results at levels sufficient to fund and/or finance the Company’s current level of operations and repayment of indebtedness, 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 risk that changes in the Company’s plans and strategies with respect to pricing, capital allocation, capital structure, investor communications and/or operations may have a negative effect on the Company’s business, the risk that the Company’s strategic initiatives to increase sales and margin, improve operational efficiencies, enhance operating controls, decentralize operational authority and reshape the Company’s culture 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 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 securities, 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, risks related to the existence of a controlling shareholder, 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 | ||||||||||||||
| November 2, 2024 | October 28, 2023 | November 2, 2024 | October 28, 2023 | ||||||||||||
| Net sales | $ | 390,173 | $ | 480,234 | $ | 977,706 | $ | 1,147,474 | |||||||
| Cost of sales | 251,832 | 318,182 | 634,830 | 801,111 | |||||||||||
| Gross profit | 138,341 | 162,052 | 342,876 | 346,363 | |||||||||||
| Selling, general and administrative expenses | 99,817 | 104,770 | 304,976 | 329,756 | |||||||||||
| Depreciation and amortization | 9,266 | 11,732 | 30,406 | 35,534 | |||||||||||
| Asset impairment charges | — | 583 | 28,000 | 3,115 | |||||||||||
| Operating income (loss) | 29,258 | 44,967 | (20,506 | ) | (22,042 | ) | |||||||||
| Related party interest expense | (2,078 | ) | — | (4,554 | ) | — | |||||||||
| Other interest expense, net | (8,000 | ) | (7,939 | ) | (22,476 | ) | (21,481 | ) | |||||||
| Income (loss) before provision (benefit) for income taxes | 19,180 | 37,028 | (47,536 | ) | (43,523 | ) | |||||||||
| Provision (benefit) for income taxes | (900 | ) | (1,454 | ) | 2,293 | (17,818 | ) | ||||||||
| Net income (loss) | $ | 20,080 | $ | 38,482 | $ | (49,829 | ) | $ | (25,705 | ) | |||||
| Income (loss) per common share | |||||||||||||||
| Basic | $ | 1.57 | $ | 3.07 | $ | (3.91 | ) | $ | (2.06 | ) | |||||
| Diluted | $ | 1.57 | $ | 3.05 | $ | (3.91 | ) | $ | (2.06 | ) | |||||
| Weighted average common shares outstanding | |||||||||||||||
| Basic | 12,779 | 12,548 | 12,731 | 12,481 | |||||||||||
| Diluted | 12,800 | 12,619 | 12,731 | 12,481 | |||||||||||
| 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 2, 2024 | October 28, 2023 | November 2, 2024 | October 28, 2023 | |||||||||||
| Net income (loss) | $ | 20,080 | $ | 38,482 | $ | (49,829 | ) | $ | (25,705 | ) | ||||
| Non-GAAP adjustments: | ||||||||||||||
| Restructuring costs | 4,813 | 756 | 11,180 | 10,683 | ||||||||||
| Credit agreement / lender-required consulting fees | 538 | 750 | 2,390 | 750 | ||||||||||
| Broken financing and restructuring fees | 347 | — | 7,008 | — | ||||||||||
| Professional and consulting fees | 158 | — | 580 | — | ||||||||||
| Fleet optimization | 148 | 372 | 857 | 1,540 | ||||||||||
| Asset impairment charges | — | 583 | 28,000 | 3,115 | ||||||||||
| Change of control | — | — | 14,589 | — | ||||||||||
| Accelerated depreciation | — | 454 | 1,813 | 1,361 | ||||||||||
| Reversal of legal settlement accrual | — | — | (2,279 | ) | — | |||||||||
| Canada distribution center closure | — | — | 781 | — | ||||||||||
| Contract termination costs | — | — | — | 2,961 | ||||||||||
| Aggregate impact of non-GAAP adjustments | 6,004 | 2,915 | 64,919 | 20,410 | ||||||||||
| Income tax effect (1) | — | (760 | ) | — | (5,310 | ) | ||||||||
| Net impact of non-GAAP adjustments | 6,004 | 2,155 | 64,919 | 15,100 | ||||||||||
| Adjusted net income (loss) | $ | 26,084 | $ | 40,637 | $ | 15,090 | $ | (10,605 | ) | |||||
| GAAP net income (loss) per common share | $ | 1.57 | $ | 3.05 | $ | (3.91 | ) | $ | (2.06 | ) | ||||
| Adjusted net income (loss) per common share | $ | 2.04 | $ | 3.22 | $ | 1.18 | $ | (0.85 | ) | |||||
(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, adjusted for the impact of any valuation allowance.
| THE CHILDREN’S PLACE, INC. RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION TO GAAP (In thousands) (Unaudited) | ||||||||||||||
| Third Quarter Ended | Year-to-Date Ended | |||||||||||||
| November 2, 2024 | October 28, 2023 | November 2, 2024 | October 28, 2023 | |||||||||||
| Operating income (loss) | $ | 29,258 | $ | 44,967 | $ | (20,506 | ) | $ | (22,042 | ) | ||||
| Non-GAAP adjustments: | ||||||||||||||
| Restructuring costs | 4,813 | 756 | 11,180 | 10,683 | ||||||||||
| Credit agreement / lender-required consulting fees | 538 | 750 | 2,390 | 750 | ||||||||||
| Broken financing and restructuring fees | 347 | — | 7,008 | — | ||||||||||
| Professional and consulting fees | 158 | — | 580 | — | ||||||||||
| Fleet optimization | 148 | 372 | 857 | 1,540 | ||||||||||
| Asset impairment charges | — | 583 | 28,000 | 3,115 | ||||||||||
| Change of control | — | — | 14,589 | — | ||||||||||
| Accelerated depreciation | — | 454 | 1,813 | 1,361 | ||||||||||
| Reversal of legal settlement accrual | — | — | (2,279 | ) | — | |||||||||
| Canada distribution center closure | — | — | 781 | — | ||||||||||
| Contract termination costs | — | — | — | 2,961 | ||||||||||
| Aggregate impact of non-GAAP adjustments | 6,004 | 2,915 | 64,919 | 20,410 | ||||||||||
| Adjusted operating income (loss) | $ | 35,262 | $ | 47,882 | $ | 44,413 | $ | (1,632 | ) | |||||
| THE CHILDREN’S PLACE, INC. RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION TO GAAP (In thousands) (Unaudited) | |||||||||||||||
| Third Quarter Ended | Year-to-Date Ended | ||||||||||||||
| November 2, 2024 | October 28, 2023 | November 2, 2024 | October 28, 2023 | ||||||||||||
| Gross profit | $ | 138,341 | $ | 162,052 | $ | 342,876 | $ | 346,363 | |||||||
| Non-GAAP adjustments: | |||||||||||||||
| Change of control | — | — | 905 | — | |||||||||||
| Aggregate impact of non-GAAP adjustments | — | — | 905 | — | |||||||||||
| Adjusted gross profit | $ | 138,341 | $ | 162,052 | $ | 343,781 | $ | 346,363 | |||||||
| Third Quarter Ended | Year-to-Date Ended | ||||||||||||||
| November 2, 2024 | October 28, 2023 | November 2, 2024 | October 28, 2023 | ||||||||||||
| Selling, general and administrative expenses | $ | 99,817 | $ | 104,770 | $ | 304,976 | $ | 329,756 | |||||||
| Non-GAAP adjustments: | |||||||||||||||
| Restructuring costs | (4,813 | ) | (756 | ) | (11,180 | ) | (10,683 | ) | |||||||
| Credit agreement / lender-required consulting fees | (538 | ) | (750 | ) | (2,390 | ) | (750 | ) | |||||||
| Broken financing and restructuring fees | (347 | ) | — | (7,008 | ) | — | |||||||||
| Professional and consulting fees | (158 | ) | — | (580 | ) | — | |||||||||
| Fleet optimization | (148 | ) | (372 | ) | (857 | ) | (1,540 | ) | |||||||
| Change of control | — | — | (13,684 | ) | — | ||||||||||
| Canada distribution center closure | — | — | (781 | ) | — | ||||||||||
| Reversal of legal settlement accrual | — | — | 2,279 | — | |||||||||||
| Contract termination costs | — | — | — | (2,961 | ) | ||||||||||
| Aggregate impact of non-GAAP adjustments | (6,004 | ) | (1,878 | ) | (34,201 | ) | (15,934 | ) | |||||||
| Adjusted selling, general and administrative expenses | $ | 93,813 | $ | 102,892 | $ | 270,775 | $ | 313,822 | |||||||
| THE CHILDREN’S PLACE, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) | ||||||||||
| November 2, 2024 | February 3, 2024* | October 28, 2023 | ||||||||
| Assets: | ||||||||||
| Cash and cash equivalents | $ | 5,749 | $ | 13,639 | $ | 13,522 | ||||
| Accounts receivable | 62,214 | 33,219 | 51,712 | |||||||
| Inventories | 491,619 | 362,099 | 462,411 | |||||||
| Prepaid expenses and other current assets | 43,109 | 43,169 | 69,710 | |||||||
| Total current assets | 602,691 | 452,126 | 597,355 | |||||||
| Property and equipment, net | 105,486 | 124,750 | 134,639 | |||||||
| Right-of-use assets | 159,374 | 175,351 | 127,863 | |||||||
| Tradenames, net | 13,000 | 41,123 | 70,291 | |||||||
| Other assets, net | 8,242 | 6,958 | 43,233 | |||||||
| Total assets | $ | 888,793 | $ | 800,308 | $ | 973,381 | ||||
| Liabilities and Stockholders' (Deficit) Equity: | ||||||||||
| Revolving loan | $ | 362,375 | $ | 226,715 | $ | 358,679 | ||||
| Accounts payable | 125,912 | 225,549 | 182,594 | |||||||
| Current portion of operating lease liabilities | 65,151 | 69,235 | 66,216 | |||||||
| Accrued expenses and other current liabilities | 95,555 | 94,905 | 98,253 | |||||||
| Total current liabilities | 648,993 | 616,404 | 705,742 | |||||||
| Long-term debt | — | 49,818 | 49,801 | |||||||
| Related party long-term debt | 165,664 | — | — | |||||||
| Long-term portion of operating lease liabilities | 108,390 | 118,073 | 76,641 | |||||||
| Other long-term liabilities | 15,320 | 25,032 | 23,126 | |||||||
| Total liabilities | 938,367 | 809,327 | 855,310 | |||||||
| Stockholders' (deficit) equity | (49,574 | ) | (9,019 | ) | 118,071 | |||||
| Total liabilities and stockholders' (deficit) equity | $ | 888,793 | $ | 800,308 | $ | 973,381 | ||||
* 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, 2024.
| THE CHILDREN’S PLACE, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) | |||||||
| Year-to-Date Ended | |||||||
| November 2, 2024 | October 28, 2023 | ||||||
| Net loss | $ | (49,829 | ) | $ | (25,705 | ) | |
| Non-cash adjustments | 130,448 | 92,913 | |||||
| Working capital | (319,535 | ) | (109,840 | ) | |||
| Net cash used in operating activities | (238,916 | ) | (42,632 | ) | |||
| Net cash used in investing activities | (15,924 | ) | (24,542 | ) | |||
| Net cash provided by financing activities | 248,040 | 64,042 | |||||
| Effect of exchange rate changes on cash and cash equivalents | (1,090 | ) | (35 | ) | |||
| Net decrease in cash and cash equivalents | (7,890 | ) | (3,167 | ) | |||
| Cash and cash equivalents, beginning of period | 13,639 | 16,689 | |||||
| Cash and cash equivalents, end of period | $ | 5,749 | $ | 13,522 | |||
FAQ
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