EX-99.1 2 v176811_ex99-1.htm Unassociated Document
Exhibit 99.1

 

 
FOR IMMEDIATE RELEASE

THE CHILDREN’S PLACE RETAIL STORES, INC. REPORTS
FOURTH QUARTER AND FISCAL YEAR 2009 FINANCIAL RESULTS

Projects Earnings Per Diluted Share for First Quarter and Fiscal Year 2010

Secaucus, New Jersey – March 10, 2010 – The Children’s Place Retail Stores, Inc. (Nasdaq: PLCE) today reported financial results for the fourth quarter and fiscal year 2009. Results from continuing operations for the fourth quarter and fiscal year periods ended January 30, 2010 and January 31, 2009 are based on The Children’s Place business only. The Disney Store North America (“DSNA”) business has been classified as a discontinued operation in accordance with generally accepted accounting principles (“GAAP”) reflecting the Company’s exit of the business during fiscal year 2008.

Jane Elfers, President and Chief Executive Officer of The Children’s Place Retail Stores, Inc., commented, “The Children’s Place has a unique and enviable position as the largest pure-play children’s specialty apparel retailer in North America, and the brand brings an unparalleled combination of fashion, value and convenience to the marketplace. I believe the opportunities to expand our business and increase market share are clear.

 “We have been working to identify and begin implementation on five key growth initiatives: (1) strengthening the merchandise; (2) accelerating new store growth with a focus on value centers; (3) optimizing inventory management; (4) sharpening our marketing message and (5) driving e-commerce growth,” Elfers continued. “Over the past two years, the management team has done a great job of strengthening operational efficiencies and managing expenses in a difficult economic environment. This gives us a solid base upon which to build our business going forward.”

Fourth Quarter Financial Results
 
·
Net sales from continuing operations for the fourth quarter of 2009 were $462.8 million, an increase of 5% compared to $441.5 million for the fourth quarter of 2008.
 
·
Comparable retail sales were flat in the fourth quarter of 2009 compared to a 1% increase in the fourth quarter of 2008.
 
·
Income from continuing operations after tax was $34.2 million, or $1.23 per diluted share, in the fourth quarter of 2009, compared to $23.3 million, or $0.79 per diluted share, in the fourth quarter of 2008.
 
·
The comparability of income from continuing operations between the fourth quarter of 2009 and 2008 is affected by the following transactions:
 
·
In the fourth quarter of 2009, a tax benefit of $5.5 million in excess foreign tax credits generated by the repatriation of cash and a benefit of $0.3 million, pre-tax, resulting from an accrual reversal related to the settlement of an IRS employment tax audit related to stock options.
 
·
In the fourth quarter of 2008, an asset impairment charge of $4.9 million, pre-tax, for underperforming stores that had been open for less than two years; income of $0.5 million, pre-tax, from the recovery of legal fees; income of $0.4 million, pre-tax, from transition services provided to the acquirer of the DSNA business; and a tax benefit of $4.5 million from the resolution of a state tax issue.

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PLCE – Fourth Quarter and Fiscal Year 2009 Financial Results
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Fourth Quarter Financial Results (cont’d)
 
·
Excluding these transactions that affect comparability, adjusted income from continuing operations after tax was $28.5 million, or $1.03 per diluted share, in the fourth quarter of 2009, compared to $21.3 million, or $0.72 per diluted share, in the fourth quarter of 2008. Adjusted income from continuing operations is a non-GAAP measure. The Company believes the excluded transactions are not indicative of the performance of its core business and that by providing this supplemental disclosure to investors it will facilitate comparisons of its past and present performance. A reconciliation of income from continuing operations as reported is included in this press release in Table 3.
 
·
Net income, including the impact of discontinued operations, was $34.1 million, or $1.23 per diluted share, in the fourth quarter of fiscal 2009, compared to $38.8 million, or $1.31 per diluted share, for the fourth quarter of fiscal 2008.
 
·
During the fourth quarter of 2009, the Company opened four stores and closed seven.

Fiscal Year Financial Results
 
·
Net sales from continuing operations for fiscal 2009 increased 1% to $1,643.6 million, compared to $1,630.3 million for fiscal 2008.
 
·
Comparable retail sales for fiscal 2009 declined 2% following a 5% increase for fiscal 2008.
 
·
Income from continuing operations after tax was $88.8 million, or $3.09 per diluted share, for fiscal 2009, compared to $73.9 million, or $2.50 per diluted share, for fiscal 2008.
 
·
Excluding transactions affecting comparability between both years, adjusted income from continuing operations after tax was $75.8 million, or $2.64 per diluted share, for fiscal 2009, compared to $66.0 million, or $2.23 per diluted share, for fiscal 2008. As previously noted, this is a non-GAAP measure which the Company is providing as a supplemental disclosure. A reconciliation of income from continuing operations as reported is included in Table 3.
 
·
Net income, including the impact of discontinued operations, was $88.4 million, or $3.08 per diluted share, for fiscal 2009, compared to $82.4 million, or $2.79 per diluted share, for fiscal 2008.
 
·
During fiscal 2009, the Company opened 38 stores and closed eight.

Outlook
While there is still uncertainty in the economic environment, the Company is projecting that earnings per diluted share from continuing operations for fiscal 2010 will be between $2.90 and $3.10, assuming positive low-single digit comparable retail sales. For the first quarter of fiscal 2010, the Company is forecasting that earnings per diluted share from continuing operations will be between $0.85 and $0.90, assuming flat comparable retail sales. Earnings guidance assumes that currency exchange rates will remain where they are today.

Conference Call Information
The Children’s Place will host a conference call to discuss its fourth quarter and fiscal year 2009 results today at 10:00 a.m. Eastern Time.  The call will be broadcast live at http://investor.childrensplace.com. An audio archive will be available approximately one hour after the conclusion of the call.
 
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PLCE – Fourth Quarter and Fiscal Year 2009 Financial Results
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About The Children’s Place Retail Stores, Inc.
The Children’s Place Retail Stores, Inc. is a leading specialty retailer of children’s apparel.  The Company designs, contracts to manufacture and sells high-quality, value-priced merchandise under the proprietary “The Children’s Place” brand name.  As of January 30, 2010, the Company owned and operated 947 stores and an online store at www.childrensplace.com.

This press release and above referenced conference call may contain certain forward-looking statements regarding future circumstances, including statements relating to our future operating plans and strategies, and forecasts regarding earnings per diluted share from continuing operations. 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 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 January 31, 2009. Included among the risks and uncertainties that could cause actual results, events and performance to differ materially are the risk that the Company will be unsuccessful in gauging fashion trends and changing consumer preferences, and 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 the downturn in the economy. Readers (or listeners on the call) 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. The inclusion of any statement in this release does not constitute an admission by the Company or any other person that the events or circumstances described in such statement are material.

Contact:
The Children’s Place Retail Stores, Inc.
Susan Riley, EVP, Finance & Administration, (201) 558-2400
Jane Singer, VP, Investor Relations, (201) 453-6955    
                                                                                                   

(Tables Follow)
 
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Table 1
THE CHILDREN’S PLACE RETAIL STORES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)

   
Fourth Quarter Ended
    
Fiscal Fiscal Year Ended
  
 
Jan 30, 2010
    
Jan 31, 2009
    
Jan 30, 2010
    
Jan 31, 2009
  
                         
Net sales
   $ 462,835     $ 441,459     $ 1,643,587     $ 1,630,323  
Cost of sales
     276,987        265,671        984,086        958,510  
Gross profit
     185,848       175,788       659,501       671,813  
Selling, general and administrative expenses
      119,217        119,561        455,782        471,302  
Asset impairment charge
     479       5,410       2,200       6,491  
Other costs
     -       35       -       213  
Depreciation and amortization
     18,189        18,258        71,447        71,410  
Income from continuing operations before interest and taxes
     47,963       32,524       130,072       122,397  
Interest (expense), net
     (481 )      (2,136 )      (5,731 )     (4,939 )
Income from continuing operations before income taxes
      47,482        30,388        124,341        117,458  
Provision for income taxes
      13,325       7,057        35,500        43,523  
Income from continuing operations net of income taxes
      34,157        23,331        88,841       73,935  
Income (loss) from discontinued operations net of income taxes
     (47 )      15,453        (487 )      8,435  
Net income
   $ 34,110     $ 38,784     $ 88,354     $ 82,370  
 
                               
Basic income from continuing operations per common share
   $ 1.24     $  0.79     $ 3.12     $ 2.52  
Income (loss) from discontinued operations per common share
     (0.00 )      0.53        (0.02 )       0.29  
Basic net income per common share
   $ 1.24     $ 1.32     $ 3.10     $ 2.81  
Basic weighted average common shares outstanding
      27,436        29,428        28,463        29,307  
 
                               
Diluted income from continuing operations per common share
   $ 1.23     $  0.79     $ 3.09     $ 2.50  
Income (loss) from discontinued operations per common share
     (0.00 )       0.52        (0.02 )       0.29  
Diluted net income per common share
   $ 1.23     $ 1.31     $ 3.08     $ 2.79  
Diluted weighted average common shares and common shares equivalents outstanding
        27,713          29,575          28,707          29,548  
 
Note: All periods presented above reflect the exit of the DSNA business, which has been classified as a discontinued operation in accordance with GAAP. Continuing operations, as presented above, includes the operations of The Children’s Place business only. Numbers may not add due to rounding.
 
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Table 2
THE CHILDREN’S PLACE RETAIL STORES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)

   
January 30, 2010
    
January 31, 2009
  
             
Current assets:
            
             
Cash and investments
   $ 170,492     $ 226,206  
Accounts receivable
     16,910       19,639  
Inventories
     206,227       211,227  
Other current assets
      63,253        62,518  
Total current assets
     456,882       519,590  
                 
Property and equipment, net
     312,801       318,116  
Other assets, net
      84,377        102,051  
Total assets
   $ 854,060     $ 939,757  
                 
Current liabilities:
                
                 
Revolving credit facility
   $ -     $ -  
Short term portion of term loan
     -       30,000  
Accounts payable
     55,547       73,333  
Accrued expenses and other current liabilities
     89,969       103,662  
Total current liabilities
     145,516       206,995  
                 
Long term portion of term loan
     -       55,000  
Other liabilities
      119,574        129,883  
Total liabilities
     265,090       391,878  
                 
Stockholders’ equity
      588,970        547,879  
                 
Total liabilities and stockholders’ equity
   $ 854,060     $ 939,757  
 
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Table 3
THE CHILDREN’S PLACE RETAIL STORES, INC.
RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION TO GAAP
(In millions, except per share amounts)
(Unaudited)

   
Fourth Quarter Ended
    
FFiscal Year Ended
  
   
Jan 30, 2010
    
Jan 31, 2009
    
Jan 30, 2010
    
Jan 31, 2009
  
                         
Income from continuing operations net of income taxes
   $ 34.2     $ 23.3     $ 88.8     $ 73.9  
                                 
Transactions affecting comparability pre-tax:
                                
Gains:
                                
Favorable settlement of IRS
                                
Employment tax audit related to stock options
     (0.3 )     -       (5.0 )     -  
Net transition services income
     -       (0.4 )     -       (11.6 )
Sale of store lease
     -       -       -       (2.3 )
Professional fees (income recovery)
     -       (0.5 )     -       3.1  
Expenses:
                                
Proxy contest fees
     -       -       2.0       -  
Company restructuring fees
     -       -       2.9       -  
Prepayment of term loan expenses/deferred financing fees
     -       -       2.4       -  
Impairment charge
     -       4.9       0.8       5.1  
Aggregate (income) impact of transactions affecting comparability
     (0.3 )     4.0       3.1       (5.7 )
Income tax effect of transactions affecting comparability
     0.1       (1.6 )     (1.3 )     2.3  
Excess foreign tax credits from repatriation of cash
     (5.5 )     -       (10.3 )     -  
Tax benefit from resolution of IRS income tax audit
     -       -       (4.5 )     -  
Tax benefit from resolution of state tax issue
     -       (4.5 )     -       (4.5 )
Adjusted (gain) impact from transactions affecting comparability
     (5.7 )     (2.0 )     (13.0 )     (7.9 )
Adjusted income from continuing operations net of income taxes
   $ 28.5     $ 21.3     $ 75.8     $ 66.0  
GAAP income from continuing operations per common share
   $ 1.23     $ 0.79     $ 3.09     $ 2.50  
Adjusted income from continuing operations per common share
   $ 1.03     $ 0.72     $ 2.64     $ 2.23  

Note: Numbers may not add due to rounding
 
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