Specialty apparel retailer Children's Place Retail Stores, Inc. (PLCE) reported Tuesday a net loss for the second quarter that widened from last year, reflecting charges and a sales drop.
Adjusted earnings per share matched analysts' expectations, while quarterly sales missed their estimate. The company also provided earnings guidance for the third quarter, in line with Street view, and raised earnings guidance for the full-year 2015.
"We delivered an adjusted loss per diluted share of ($0.33) in the quarter compared to ($0.37) in the second quarter of 2014. Comparable retail sales were negative (3.5%), primarily driven by a significant deceleration of consumer traffic as the quarter progressed, resulting in a more intense promotional environment than anticipated, which was further exacerbated by the continuing west coast port issues experienced by our competitive set," President and CEO Jane Elfers said in a statement.
The Secaucus, New Jersey-based largest pure-play children's apparel retailer in North America posted a net loss of $13.70 million or $0.67 per share for the second quarter, wider than $10.69 million, or $0.49 per share in the prior-year quarter.
Results for the latest quarter includes charges of $11.2 million for unusual items, which primarily include costs related to the proxy contest, restructuring costs, impairment charges, a sales tax audit settlement, and a class action wage and hour legal settlement.
Excluding items, adjusted net loss for the quarter was $6.84 million or $0.33 per share, compared to adjusted net loss of $8.15 million or $0.37 per share in the year-ago quarter.
On average, 16 analysts polled by Thomson Reuters expected the company to report a loss of $0.33 per share for the quarter. Analysts' estimates typically exclude special items.
Net sales for the quarter declined to $366.46 million from $384.63 million in the same quarter last year, and missed eleven Wall Street analysts' consensus estimate of $380.57 million. Comparable retail store sales declined 3.5 percent, primarily driven by a significant deceleration of consumer traffic.
The company said the latest quarter included the negative impact of about $6.4 million from currency exchange rate fluctuations.
The company said it reported an increase in gross margin of 40 basis points and an increase in adjusted operating margin of 80 basis points from last year.
During the second quarter, the company opened one store and closed seven stores as part of its store fleet optimization initiative. It ended the quarter with 1,086 stores. The company's international franchise partners opened six stores, and ended the quarter with 85 stores.
Additionally, the company's Board of Directors approved a quarterly dividend of $0.15 per share, payable on October 8 to shareholders of record at the close of business on September 17, 2015.
Looking ahead to the third quarter, Children's Place expects adjusted net income in a range of $1.90 to $1.96 per share, on projected comparable retail sales growth of about 1 percent. Analysts expect the company to report earnings of $1.96 per share on sales of $483.58 million for the quarter.
For fiscal 2015, the company raised its adjusted earnings guidance to a range of $3.35 to $3.45 per share from the prior forecast range of $3.30 to $3.45 per share on flat comparable retail sales growth. The Street is currently looking for full-year 2015 earnings of $3.45 per share.
"We have been sharply focused on the execution of our transformation plan and we are pleased with our continued progress on these initiatives. We expect to continue to deliver enhanced value to shareholders throughout 2015 and beyond as we realize the full benefits of this transformation," Elfers added.
PLCE closed Monday's regular trading session at $57.18, up $1.04 on a volume of 0.86 million shares.
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