x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fifty-two weeks ended February 2, 2019 | |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 31‑1241495 | |
(State or other jurisdiction of | (I.R.S. employer | |
incorporation or organization) | identification number) | |
500 Plaza Drive | ||
Secaucus, New Jersey | 07094 | |
(Address of Principal Executive Offices) | (Zip Code) |
Large accelerated filer | x | Accelerated filer | o | Non-accelerated filer | o | Smaller reporting company | o | Emerging growth company | o |
PAGE | ||
• | Fiscal 2018 - The fifty-two weeks ended February 2, 2019 |
• | Fiscal 2017 - The fifty-three weeks ended February 3, 2018 |
• | Fiscal 2016 - The fifty-two weeks ended January 28, 2017 |
• | Fiscal 2019 - Our next fiscal year representing the fifty-two weeks ending February 1, 2020 |
• | GAAP - Generally Accepted Accounting Principles |
• | Comparable Retail Sales — Net sales, in constant currency, from stores that have been open for at least 14 consecutive months and from our e-commerce store, excluding postage and handling fees. Store closures in the current fiscal year will be excluded from Comparable Retail Sales beginning in the fiscal quarter in which the store closes. A store that is closed for a substantial remodel, relocation, or material change in size will be excluded from Comparable Retail Sales for at least 14 months beginning in the fiscal quarter in which the closure occurred. However, stores that temporarily close will be excluded from Comparable Retail Sales until the store is re-opened for a full fiscal month. |
• | SEC - U.S. Securities and Exchange Commission |
• | FASB- Financial Accounting Standards Board |
• | FASB ASC - FASB Accounting Standards Codification, which serves as the source for authoritative U.S. GAAP, except that rules and interpretive releases by the SEC are also sources of authoritative U.S. GAAP for SEC registrants |
• | CCPSA - Canada Consumer Product Safety Act |
• | CPSA - U.S. Consumer Product Safety Act |
• | CPSC - U.S. Consumer Products Safety Commission |
• | CPSIA - U.S. Consumer Product Safety Improvement Act of 2008 |
1. | Superior Product - Product is our number one priority. We strive to ensure that we have the right product, in the right channels of distribution, at the right time. In addition to apparel, we offer a full line of footwear and accessories so busy moms can quickly and easily put together head-to-toe outfits. Our design, merchandising, sourcing, and planning teams strive to ensure that our product is trend right, while at the same time balancing fashion and fashion basics with more frequent, wear-now deliveries. |
2. | Business Transformation through Technology - Our business transformation through technology initiative has two key components: digital transformation and inventory management. With respect to digital transformation, our goal is to deliver one to one personalization focusing on driving customer acquisition, improving customer retention, and increasing customer engagement with our brand and to continue to gain market share. The transformation of our digital capabilities has continued during Fiscal 2018 with a new loyalty system that will deliver real-time personalized communication and promotions, the implementation of a new on-site search tool, the enhancement of our email trigger capabilities, and the introduction of dynamic display re-targeting. We plan to continue to develop several new capabilities, including: a new pricing and promotional system that will enable us to deliver personalized offers to our customers, improvements to our e-commerce platform, and buy-online-ship-to-store. With respect to inventory management, we have implemented assortment planning, allocation, replenishment, order planning, and forecasting tools. |
3. | Growth through Alternate Channels of Distribution - We have channels of distribution, in addition to retail stores and e-commerce, including international and wholesale distribution. We continued our international expansion program during Fiscal 2018 with our franchise partners and added 27 net additional international points of distribution (stores, shop in shops, e-commerce site) bringing our total count to 217 points of distribution operating in 20 countries. During the first quarter of Fiscal 2018, we announced an exclusive license agreement for the Greater China market with Zhejiang Semir Garment Co. Ltd ("Semir"), China's largest specialty children's apparel retailer and during Fiscal 2018, Semir opened its first five stores in China. In our wholesale business, our relationship with Amazon continues to develop with the expansion of our replenishment program. |
4. | Fleet Optimization - We continually evaluate our store fleet as part of our fleet optimization initiative. To improve store productivity, we plan to close approximately 300 stores through fiscal 2020, which includes the 211 stores closed since the announcement of this initiative. |
Fiscal Year Ended | ||||||||||||
February 2, 2019 | February 3, 2018 | January 28, 2017 | ||||||||||
(In thousands) | ||||||||||||
Net sales: | ||||||||||||
The Children's Place U.S. | $ | 1,727,907 | $ | 1,650,620 | $ | 1,567,556 | ||||||
The Children's Place International | 210,177 | 219,655 | 217,760 | |||||||||
Total net sales | $ | 1,938,084 | $ | 1,870,275 | $ | 1,785,316 |
Fiscal Year Ended | ||||||||||||
February 2, 2019 | February 3, 2018 | January 28, 2017 | ||||||||||
(In thousands) | ||||||||||||
Operating income: | ||||||||||||
The Children's Place U.S. | $ | 86,983 | $ | 132,152 | $ | 113,376 | ||||||
The Children's Place International | 24,345 | 29,358 | 34,032 | |||||||||
Total operating income | $ | 111,328 | $ | 161,510 | $ | 147,408 | ||||||
Operating income as a percent of net sales: | ||||||||||||
The Children's Place U.S. | 5.0 | % | 8.0 | % | 7.2 | % | ||||||
The Children's Place International | 11.6 | % | 13.4 | % | 15.6 | % | ||||||
Total operating income as a percent of net sales | 5.7 | % | 8.6 | % | 8.3 | % |
February 2, 2019 | February 3, 2018 | |||||||
(In thousands) | ||||||||
Total assets: | ||||||||
The Children's Place U.S. | $ | 651,728 | $ | 750,670 | ||||
The Children's Place International | 75,318 | 189,558 | ||||||
Total assets | $ | 727,046 | $ | 940,228 |
• | Consistently offering high quality and age appropriate products and trend right fashion at value prices in a friendly and convenient shopping environment; |
• | Providing coordinated outfits and accessories for our customers' lifestyle needs; |
• | Leveraging our customer database to communicate with our customers and personalize promotions to maximize customer satisfaction; |
• | Using our MyPLACE Loyalty Rewards Program and private label credit card to drive customer engagement; |
• | Providing exclusive assortments in our e-commerce business to further expand the breadth of our offerings and brand recognition; |
• | Creating strong merchandising and visual presentations to create a compelling in-store experience; and |
• | Emphasizing our great value and fashion in marketing visuals to convey a consistent brand message. |
• | Vendor Code of Conduct - By formally acknowledging and agreeing to our code of conduct, our vendors affirm their commitment to integrate compliance with local law and industry standards into their manufacturing and sourcing practices. Topics covered by these standards include child labor, involuntary or forced labor, slavery and human trafficking, coercion or harassment, discrimination, health and safety, transparency and integrity, compensation, working hours, freedom of association, environment, unauthorized subcontracting, security practices, and undue influence of independent auditors. |
• | Ongoing Auditing Program - We administer a factory auditing program staffed by our internal quality assurance and responsible sourcing teams and/or professional third party auditors, who visit factory locations to provide insight into general factory working conditions and other production characteristics in all factories that manufacture The Children's Place products. With this information, we can understand factories’ challenges, help the factories identify non-compliance with legal and industry standards, and offer guidance on corrective action plans for the factories to achieve better compliance. All factories that are approved for The Children’s Place production must undergo technical capabilities and responsible sourcing audits prior to any orders being placed and periodically thereafter. |
• | Corrective Action Plans - Following each audit, a corrective action plan outlines any areas of non-compliance identified through the factory audit. Each factory is expected to develop a remediation plan and remediation timeline for any non-compliance found. Through follow-up audits, we assess a factory’s progress in achieving its remediation plan. It is our preference to work with factories to remediate and achieve compliance rather than terminate our relationship; however, where there is serious non-compliance of critical standards, repeated non-compliance, or failure of the factories to invest in continued improvement, we reserve the right to terminate our relationship. |
• | Vendor Factory Engagement - Our responsible sourcing team provides guidance and training to vendors and factories in order to help vendors and factories improve compliance with industry standards and local laws. Our goal is to serve as a resource for vendors and factories as they develop and strengthen their capabilities to better manage the working conditions of their employees. |
• | Worker Well Being Programs - The Company’s global responsible sourcing activities involve the Company’s third party factories who manufacture the Company’s merchandise. These vendors’ workforce is predominantly women who work in factories in underdeveloped countries in greater Asia and Africa. In addition to its auditing activities concerning local laws and ethical business practices, worker health and welfare, working conditions, safety, rights of association, and other practices at factories, in recent times, the Company’s commitment to responsible sourcing activities has evolved beyond a compliance-based approach to a more holistic view, focusing not only on compliance but also on worker training and education. In support of our business and societal objectives and those of our vendors to create and sustain a healthy and engaged workforce, below are examples of programs sponsored by the Company: |
• | BSR’s HERproject - This program is designed to positively impact the well-being of women through workplace-based education and training provided by local non-governmental organizations to promote health, gender equality, financial inclusion, and other life-needs. The most recent Company sponsorship involved factories located in the Hawansa Industrial Park in Ethiopia and, at full implementation, will reach over 7,000 women factory workers in 10 factories. |
• | ILO’s BetterWork program - Partnering with over 30 companies and the International Finance Corporation, a member of the World Bank, this program works with global brands, factory owners, governments, unions, and workers to improve working conditions in the garment industry through assessments, training, advocacy, and research. BetterWork’s gender strategy aims to empower women workers, reduce sexual harassment, and close the gender pay gap in the global garment industry. The BetterWork program is sponsored by the Company in over 40 factories in five countries. |
• | CARE’s Healthy Food Healthy Workplace program - This program aims to improve awareness of the health benefits of nutritious foods and good hygiene. The Company has invested in this program in |
• | CCR CSR - In partnership with global brands like the Company, CCR CSR provides education and training designed to improve the lives of children and parent factory workers. The Company has invested in the Distance Without Separation program in China to provide migrant parents separated from their homes and children to find work with tools to better connect with their children, and ultimately, strengthen parent-child bonds when families are separated due to work commitments. This leads to parent workers feeling more secure about the well-being of their children, enabling them to be more engaged and productive in the workplace. |
• | Environmental Stewardship - In Fiscal 2018, the Company expanded its responsible sourcing activities to include environmental stewardship. We join with companies in the specialty apparel and footwear industry, and other non-profit organizations, to work with suppliers to reduce unnecessary environmental harm from manufacturing activities. This is accomplished by leveraging market power to encourage suppliers to improve production and procurement practices that may be harmful to the environment and to drive improved operational efficiencies and resource consumption. The Company’s environmental impact program in the supply chain focuses on: |
• | Chemical Management - To support more responsible chemical management practices in apparel and footwear production. In Fiscal 2018, the Company became a member of the Apparel & Footwear International RSL Management Group ("AFIRM") whose stated goal is to promote the harmonized management of restricted substances (chemicals) in the apparel and footwear industry. Member brands share best practices to reduce the impact of harmful chemicals in the global supply chain. |
• | Wastewater and Effluence - To support more sustainable wastewater processes at our third-party factories, in Fiscal 2018, the Company became a member of the Sustainable Apparel Coalition (SAC). Under the auspices of SAC, the Company and other brands employ their collective market power to conduct environmental facility assessments at mills, factories, and other facilities and develop corrective action plans against benchmarks aimed at promoting effective water and chemical management practices to mitigate pollution risks. |
• | Responsibly Sourced Cotton - To support cotton procurement practices that foster the payment of living wages and the reduction of pesticide and water use in our global supply chain. In Fiscal 2018, the Company became a member of the Better Cotton Initiative (BCI) whose stated goal is to make global cotton production better for the people who produce it, better for the environment it grows in, and better for the sector’s future. |
Number of Stores | ||||||
Location | February 2, 2019 | February 3, 2018 | ||||
United States | 842 | 878 | ||||
Canada | 122 | 128 | ||||
Puerto Rico | 8 | 8 | ||||
Total Stores | 972 | 1,014 |
First Quarter | Second Quarter | Third Quarter | Fourth Quarter | |||||||||
Quarterly net sales as a percentage of full year | ||||||||||||
Fiscal 2018 | 22.5 | % | 23.2 | % | 27.0 | % | 27.3 | % | ||||
Fiscal 2017 | 23.3 | % | 20.0 | % | 26.2 | % | 30.5 | % | ||||
Quarterly operating income as a percentage of full year | ||||||||||||
Fiscal 2018 | 20.7 | % | 9.0 | % | 58.0 | % | 12.3 | % | ||||
Fiscal 2017 | 26.2 | % | 2.0 | % | 39.7 | % | 32.1 | % |
Item 1A. | RISK FACTORS |
Location | Use | Approximate Sq. Footage | Current Lease Term Expiration | ||||
Fort Payne, AL (1) | Warehouse Distribution Center | 700,000 | Owned | ||||
Ontario, Canada (2) | Warehouse Distribution Center | 95,000 | 4/30/2024 | ||||
500 Plaza Drive, Secaucus, NJ (3) | Corporate Offices | 200,000 | 5/31/2029 | ||||
Hong Kong, China (3) | Product Support | 28,000 | 4/30/2021 |
(1) | Supports The Children's Place U.S. stores, wholesale, and e-commerce business. |
(2) | Supports The Children's Place Canadian stores. |
(3) | Supports The Children's Place U.S. stores, our e-commerce business, The Children's Place Canadian stores, our international franchisees, and wholesale business. |
Fiscal Year Ended February 2, 2019 | ||||||||||||||||||||
First Quarter | Second Quarter | Third Quarter | Fourth Quarter | Fiscal 2018 | ||||||||||||||||
Cash dividends declared and paid per common share | $ | 0.50 | $ | 0.50 | $ | 0.50 | $ | 0.50 | $ | 2.00 | ||||||||||
Cash dividends paid (in thousands) | $ | 8,409 | $ | 8,309 | $ | 8,221 | $ | 8,103 | $ | 33,042 |
Fiscal Year Ended | ||||||||||
February 2, 2019 | February 3, 2018 | |||||||||
Shares | Value | Shares | Value | |||||||
Share repurchases related to: | (In thousands) | |||||||||
2015 $250 Million Share Repurchase Program program (1) | — | — | 974 | 112,917 | ||||||
2017 Share Repurchase Programs (2) | 1,995 | 244,338 | 37 | 5,662 | ||||||
2018 Share Repurchase Programs (3) | 101 | 9,205 | — | — | ||||||
Shares acquired and held in treasury | 2 | 248 | 4 | 248 |
(1) | Inclusive of 0.3 million shares for approximately $33.1 million withheld to cover taxes in conjunction with the vesting of stock awards during Fiscal 2017. |
(2) | Inclusive of 0.3 million shares for approximately $43.3 million withheld to cover taxes in conjunction with the vesting of stock awards during Fiscal 2018. |
(3) | Subsequent to February 2, 2019 and through March 19, 2019, the Company repurchased approximately 0.1 million shares for approximately $9.9 million. |
Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value (in thousands) of Shares that May Yet Be Purchased Under the Plans or Programs | ||||||||
11/4/18-12/1/18 (1) | 57,067 | $133.00 | 56,638 | $273,750 | ||||||||
12/2/18-1/5/19 (2) | 189,968 | 94.59 | 189,968 | 255,781 | ||||||||
1/6/19-2/2/19 | 183,000 | 91.55 | 183,000 | 239,027 | ||||||||
Total | 430,035 | $98.39 | 429,606 | $239,027 |
(1) | Includes 429 shares acquired as treasury stock as directed by participants in the Company's deferred compensation plan and 338 shares withheld to cover taxes in conjunction with the vesting of a stock award. |
COLUMN (A) | COLUMN (B) | COLUMN (C) | ||||
Plan Category | Securities to be issued upon exercise of outstanding options | Weighted average exercise price of outstanding options | Securities remaining available for future issuances under equity compensation plans (excluding securities reflected in Column (A)) | |||
Equity Compensation Plans Approved by Security Holders | N/A | N/A | 756,502 | |||
Equity Compensation Plans Not Approved by Security Holders | N/A | N/A | N/A | |||
Total | N/A | N/A | 756,502 |
2013 | 2014 | 2015 | 2016 | 2017 | 2018 | |||||||||||||
The Children's Place---"PLCE" | 52.67 | 59.95 | 65.10 | 94.80 | 145.60 | 92.13 | ||||||||||||
CRSP Total Return Index for the NASDAQ Stock Market (US Companies) | 1,518.35 | 1,736.19 | 1,763.45 | 2,194.73 | 2,347.92 | 2,409.18 | ||||||||||||
CRSP Total Return Index for the NASDAQ Retail Trade | 912.91 | 1,111.52 | 1,126.74 | 1,188.88 | 1,282.97 | 1,345.42 |
2013 | 2014 | 2015 | 2016 | 2017 | 2018 | |||||||||||
The Children's Place---"PLCE" | 100.00 | 114.97 | 126.10 | 185.41 | 288.71 | 195.06 | ||||||||||
CRSP Total Return Index for the NASDAQ Stock Market (US Companies) | 100.00 | 114.54 | 116.59 | 145.13 | 155.29 | 159.31 | ||||||||||
CRSP Total Return Index for the NASDAQ Retail Trade | 100.00 | 121.12 | 121.90 | 128.30 | 139.09 | 147.55 |
Fiscal Year Ended (1) | ||||||||||||||||||||
Statement of Operations Data (in thousands, except earnings per share and dividends): | February 2, 2019 | February 3, 2018 | January 28, 2017 | January 30, 2016 | January 31, 2015 | |||||||||||||||
Net sales | $1,938,084 | $1,870,275 | $1,785,316 | $1,725,777 | $1,761,324 | |||||||||||||||
Cost of sales | 1,254,488 | 1,158,920 | 1,113,723 | 1,100,645 | 1,139,024 | |||||||||||||||
Gross profit | 683,596 | 711,355 | 671,593 | 625,132 | 622,300 | |||||||||||||||
Selling, general, and administrative expenses | 498,343 | 476,486 | 454,143 | 469,898 | 470,686 | |||||||||||||||
Depreciation and amortization | 68,884 | 68,159 | 65,734 | 62,685 | 60,494 | |||||||||||||||
Asset impairment charges (2) | 6,096 | 5,190 | 4,026 | 2,371 | 11,145 | |||||||||||||||
Other costs (income) | (1,055 | ) | 10 | 282 | 98 | (68 | ) | |||||||||||||
Operating income | 111,328 | 161,510 | 147,408 | 90,080 | 80,043 | |||||||||||||||
Interest income (expense), net | (2,804 | ) | (307 | ) | (395 | ) | (698 | ) | (168 | ) | ||||||||||
Income before provision for income taxes | 108,524 | 161,203 | 147,013 | 89,382 | 79,875 | |||||||||||||||
Provision for income taxes | 7,564 | 76,505 | 44,677 | 31,498 | 22,987 | |||||||||||||||
Net income | 100,960 | 84,698 | 102,336 | 57,884 | 56,888 | |||||||||||||||
Diluted income per common share | $ | 6.01 | $ | 4.67 | $ | 5.40 | $ | 2.80 | $ | 2.59 | ||||||||||
Cash dividends declared and paid per common share (3) | $ | 2.00 | $ | 1.60 | $ | 0.80 | $ | 0.60 | $ | 0.53 | ||||||||||
Selected Data: | ||||||||||||||||||||
Number of Company operated stores open at end of period | 972 | 1,014 | 1,039 | 1,069 | 1,097 | |||||||||||||||
Comparable retail sales increase | 4.6 | % | 5.8 | % | 4.9 | % | 0.4 | % | 0.4 | % | ||||||||||
Balance Sheet Data (in thousands): | ||||||||||||||||||||
Working capital (4) | $ | 103,996 | $ | 295,980 | $ | 281,966 | $ | 306,286 | $ | 334,812 | ||||||||||
Total assets | 727,046 | 940,228 | 910,499 | 897,948 | 958,618 | |||||||||||||||
Revolving loan | 48,861 | 21,460 | 15,380 | — | — | |||||||||||||||
Long-term debt | — | — | — | — | — | |||||||||||||||
Stockholders’ equity | 314,437 | 473,699 | 496,287 | 527,793 | 589,118 |
(1) | The period ended February 3, 2018 was a 53-week year. The remaining periods presented, including the period ended February 2, 2019, were 52-week years. |
(2) | Asset impairment charges generally relate to the write-down of fixed assets to their fair value related to underperforming stores. In Fiscal 2018, Fiscal 2017, and fiscal 2016, asset impairment charges also included the write-off of obsolete systems of $4.4 million, $2.4 million, and $1.3 million, respectively. |
(3) | The Company instituted its quarterly dividend program and paid its first dividend during the first quarter of fiscal 2014. |
(4) | Working capital is calculated by subtracting our current liabilities from our current assets. |
• | Fiscal 2018 - The fifty-two weeks ended February 2, 2019 |
• | Fiscal 2017 - The fifty-three weeks ended February 3, 2018 |
• | Fiscal 2016 - The fifty-two weeks ended January 28, 2017 |
• | Fiscal 2019 - Our next fiscal year representing the fifty-two weeks ending February 1, 2020 |
• | FASB- Financial Accounting Standards Board |
• | FASB ASC - FASB Accounting Standards Codification, which serves as the source for authoritative U.S. GAAP, except that rules and interpretive releases by the SEC are also sources of authoritative U.S. GAAP for SEC registrants |
• | GAAP - U.S. Generally Accepted Accounting Principles |
• | SEC- The U.S. Securities and Exchange Commission |
• | AUR- Average unit retail price |
• | Comparable Retail Sales — Net sales, in constant currency, from stores that have been open for at least 14 consecutive months and from our e-commerce store, excluding postage and handling fees. Store closures in the current fiscal year will be excluded from Comparable Retail Sales beginning in the fiscal quarter in which the store closes. A store that is closed for a substantial remodel, relocation, or material change in size will be excluded from Comparable Retail Sales for at least 14 months beginning in the fiscal quarter in which the closure occurred. However, stores that temporarily close will be excluded from Comparable Retail Sales until the store is re-opened for a full fiscal month. |
• | Gross Margin - Gross profit expressed as a percentage of net sales |
• | SG&A - Selling, general, and administrative expenses |
Fiscal 2018 | Fiscal 2017 | Fiscal 2016 | ||||
Average Translation Rates (1) | ||||||
Canadian Dollar | 0.7675 | 0.7752 | 0.7595 | |||
Hong Kong Dollar | 0.1276 | 0.1283 | 0.1289 | |||
China Yuan Renminbi | 0.1503 | 0.1489 | 0.1499 |
(1) | The average translation rates are the average of the monthly translation rates used during each fiscal year to translate the respective income statements. The rates represent the U.S. dollar equivalent of each foreign currency. |
• | Level 1 - inputs to the valuation techniques that are quoted prices in active markets for identical assets or liabilities |
• | Level 2 - inputs to the valuation techniques that are other than quoted prices but are observable for the assets or liabilities, either directly or indirectly |
• | Level 3 - inputs to the valuation techniques that are unobservable for the assets or liabilities |
Fiscal Year Ended | ||||||||
February 2, 2019 | February 3, 2018 | January 28, 2017 | ||||||
Net sales | 100.0 | % | 100.0 | % | 100.0 | % | ||
Cost of sales (exclusive of depreciation and amortization) | 64.7 | 62.0 | 62.4 | |||||
Gross profit | 35.3 | 38.0 | 37.6 | |||||
Selling, general, and administrative expenses | 25.7 | 25.5 | 25.4 | |||||
Depreciation and amortization | 3.6 | 3.6 | 3.7 | |||||
Asset impairment charge | 0.3 | 0.3 | 0.2 | |||||
Operating income | 5.7 | 8.6 | 8.3 | |||||
Income before provision for income taxes | 5.6 | 8.6 | 8.2 | |||||
Provision for income taxes | 0.4 | 4.1 | 2.5 | |||||
Net income | 5.2 | % | 4.5 | % | 5.7 | % | ||
Number of stores operated by the Company, end of period | 972 | 1,014 | 1,039 |
Fiscal Year Ended | |||||||||||
February 2, 2019 | February 3, 2018 | January 28, 2017 | |||||||||
(In thousands) | |||||||||||
Net sales: | |||||||||||
The Children’s Place U.S. | $ | 1,727,907 | $ | 1,650,620 | $ | 1,567,556 | |||||
The Children’s Place International | 210,177 | 219,655 | 217,760 | ||||||||
Total net sales | $ | 1,938,084 | $ | 1,870,275 | $ | 1,785,316 |
(i) | the prime rate plus a margin of 0.50% to 0.75% based on the amount of our average excess availability under the facility; or |
(ii) | the London InterBank Offered Rate, or “LIBOR”, for an interest period of one, two, three, or six months, as selected by us, plus a margin of 1.25% to 1.50% based on the amount of our average excess availability under the facility. |
February 2, 2019 | February 3, 2018 | ||||||
(In millions) | |||||||
Credit facility maximum | $ | 250.0 | $ | 250.0 | |||
Borrowing base (1) | 250.0 | 250.0 | |||||
Outstanding borrowings | 48.9 | 21.5 | |||||
Letters of credit outstanding—standby | 7.0 | 7.0 | |||||
Utilization of credit facility at end of period | 55.9 | 28.5 | |||||
Availability (2) | $ | 194.1 | $ | 221.5 | |||
Interest rate at end of period | 6.0 | % | 5.0 | % |
Fiscal 2018 | Fiscal 2017 | ||||||
Average end of day loan balance during the period | $ | 64.4 | $ | 45.8 | |||
Highest end of day loan balance during the period | 156.4 | 98.2 | |||||
Average interest rate | 4.3 | % | 2.9 | % |
(1) | Lower of the credit facility maximum or the total borrowing base collateral. |
(2) | The sublimit availability for letters of credit was $43.0 million and $43.0 million at February 2, 2019 and February 3, 2018, respectively. |
Payment Due By Period | ||||||||||||||||||||
Contractual Obligations (dollars in thousands) | Total | 1 year or less | 1-3 years | 3-5 years | More than 5 years | |||||||||||||||
Operating leases(1) | $ | 487,641 | $ | 143,601 | $ | 203,825 | $ | 89,952 | $ | 50,263 | ||||||||||
Total---Contractual Obligations | $ | 487,641 | $ | 143,601 | $ | 203,825 | $ | 89,952 | $ | 50,263 | ||||||||||
Amounts of Commitment Expiration Per Period | ||||||||||||||||||||
Other Commercial Commitments (dollars in thousands) | Total | 1 year or less | 1-3 years | 3-5 years | More than 5 years | |||||||||||||||
Purchase commitments--merchandise | 122,362 | 122,362 | — | — | — | |||||||||||||||
Purchase commitments--non-merchandise | 14,493 | 14,493 | — | — | — | |||||||||||||||
Standby letters of credit(2) | 7,023 | 7,023 | — | — | — | |||||||||||||||
Total---Other Commercial Commitments | $ | 143,878 | $ | 143,878 | $ | — | $ | — | $ | — | ||||||||||
Total---Contractual Obligations and Other Commercial Commitments | $ | 631,519 | $ | 287,479 | $ | 203,825 | $ | 89,952 | $ | 50,263 |
(1) | Certain of our operating leases include common area maintenance and other charges in our monthly rental expense. For other leases which do not include these charges in the minimum lease payments, we incur monthly charges, which are billed and recorded separately. Additionally, our minimum lease obligation does not include contingent rent based upon sales volume. |
(2) | Represents letters of credit issued to landlords, banks, and insurance companies. |
Fiscal Year Ended February 2, 2019 | ||||||||||||||||
First Quarter | Second Quarter | Third Quarter | Fourth Quarter | |||||||||||||
(In thousands) | ||||||||||||||||
Net sales | $ | 436,314 | $ | 448,718 | $ | 522,495 | $ | 530,557 | ||||||||
Gross profit | 160,192 | 154,806 | 204,366 | 164,232 | ||||||||||||
Selling, general, and administrative expenses | 118,471 | 124,210 | 123,207 | 132,455 | ||||||||||||
Depreciation and amortization | 17,406 | 16,595 | 17,404 | 17,479 | ||||||||||||
Asset impairment charges | 1,257 | 3,979 | 396 | 464 | ||||||||||||
Operating income | 23,058 | 10,022 | 64,605 | 13,643 | ||||||||||||
Income before provision for income taxes | 22,761 | 9,076 | 63,774 | 12,913 | ||||||||||||
Provision (benefit) for income taxes | (8,776 | ) | 1,590 | 13,861 | 889 | |||||||||||
Net income | 31,537 | 7,486 | 49,913 | 12,024 | ||||||||||||
Diluted earnings per share | $ | 1.78 | $ | 0.45 | $ | 3.03 | $ | 0.74 | ||||||||
Diluted weighted average common shares outstanding | 17,734 | 16,715 | 16,496 | 16,277 | ||||||||||||
Cash dividends declared and paid per common share | $ | 0.5000 | $ | 0.5000 | $ | 0.5000 | $ | 0.5000 |
February 2, 2019 | February 3, 2018 | ||||||
(In thousands, except par value) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 69,136 | $ | 244,519 | |||
Short-term investments | — | 15,000 | |||||
Accounts receivable | 35,123 | 26,094 | |||||
Inventories | 303,466 | 324,435 | |||||
Prepaid expenses and other current assets | 27,670 | 46,456 | |||||
Total current assets | 435,395 | 656,504 | |||||
Long-term assets: | |||||||
Property and equipment, net | 260,357 | 258,537 | |||||
Deferred income taxes | 17,750 | 12,698 | |||||
Other assets | 13,544 | 12,489 | |||||
Total assets | $ | 727,046 | $ | 940,228 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
LIABILITIES: | |||||||
Current liabilities: | |||||||
Revolving loan | $ | 48,861 | $ | 21,460 | |||
Accounts payable | 194,786 | 210,300 | |||||
Income taxes payable | 997 | 6,911 | |||||
Accrued expenses and other current liabilities | 86,755 | 121,853 | |||||
Total current liabilities | 331,399 | 360,524 | |||||
Long-term liabilities: | |||||||
Deferred rent liabilities | 44,329 | 52,425 | |||||
Other tax liabilities | 5,080 | 4,030 | |||||
Income taxes payable | 18,939 | 34,598 | |||||
Other long-term liabilities | 12,862 | 14,952 | |||||
Total liabilities | 412,609 | 466,529 | |||||
COMMITMENTS AND CONTINGENCIES (SEE NOTE 9) | |||||||
STOCKHOLDERS’ EQUITY: | |||||||
Preferred stock, $1.00 par value, 1,000 shares authorized, 0 shares issued and outstanding | — | — | |||||
Common stock, $0.10 par value, 100,000 shares authorized; 15,873 and 17,257 issued; 15,827 and 17,211 outstanding (shares in thousands) | 1,588 | 1,726 | |||||
Additional paid-in capital | 146,991 | 258,501 | |||||
Treasury stock, at cost (47 and 46 shares, in thousands) | (2,685 | ) | (2,436 | ) | |||
Deferred compensation | 2,685 | 2,436 | |||||
Accumulated other comprehensive loss | (14,934 | ) | (12,831 | ) | |||
Retained earnings | 180,792 | 226,303 | |||||
Total stockholders’ equity | 314,437 | 473,699 | |||||
Total liabilities and stockholders’ equity | $ | 727,046 | $ | 940,228 |
Fiscal Year Ended | |||||||||||
February 2, 2019 | February 3, 2018 | January 28, 2017 | |||||||||
(In thousands, except earnings per share) | |||||||||||
Net sales | $ | 1,938,084 | $ | 1,870,275 | $ | 1,785,316 | |||||
Cost of sales (exclusive of depreciation and amortization) | 1,254,488 | 1,158,920 | 1,113,723 | ||||||||
Gross profit | 683,596 | 711,355 | 671,593 | ||||||||
Selling, general, and administrative expenses | 498,343 | 476,486 | 454,143 | ||||||||
Depreciation and amortization | 68,884 | 68,159 | 65,734 | ||||||||
Asset impairment charges | 6,096 | 5,190 | 4,026 | ||||||||
Other (income) costs | (1,055 | ) | 10 | 282 | |||||||
Operating income | 111,328 | 161,510 | 147,408 | ||||||||
Interest expense | (3,534 | ) | (2,222 | ) | (1,953 | ) | |||||
Interest income | 730 | 1,915 | 1,558 | ||||||||
Income before provision for income taxes | 108,524 | 161,203 | 147,013 | ||||||||
Provision for income taxes | 7,564 | 76,505 | 44,677 | ||||||||
Net income | $ | 100,960 | $ | 84,698 | $ | 102,336 | |||||
Earnings per common share | |||||||||||
Basic | $ | 6.10 | $ | 4.82 | $ | 5.51 | |||||
Diluted | $ | 6.01 | $ | 4.67 | $ | 5.40 | |||||
Weighted average common shares outstanding | |||||||||||
Basic | 16,542 | 17,569 | 18,584 | ||||||||
Diluted | 16,805 | 18,151 | 18,959 |
Fiscal Year Ended | |||||||||||
February 2, 2019 | February 3, 2018 | January 28, 2017 | |||||||||
(In thousands) | |||||||||||
Net income | $ | 100,960 | $ | 84,698 | $ | 102,336 | |||||
Other comprehensive income: | |||||||||||
Foreign currency translation adjustment | (2,178 | ) | 7,350 | 6,161 | |||||||
Change in fair value of cash flow hedges, net of income taxes | 75 | 160 | 983 | ||||||||
Total comprehensive income | $ | 98,857 | $ | 92,208 | $ | 109,480 |
Accumulated | ||||||||||||||||||||||||||||||||||
Additional | Other | Total | ||||||||||||||||||||||||||||||||
Common Stock | Paid-In | Deferred | Retained | Comprehensive | Treasury Stock | Stockholders' | ||||||||||||||||||||||||||||
(in thousands, except dividends per share) | Shares | Amount | Capital | Compensation | Earnings | Income | Shares | Value | Equity | |||||||||||||||||||||||||
BALANCE, January 30, 2016 | 19,479 | $1,948 | $232,182 | $1,939 | $321,148 | ($27,485 | ) | (39 | ) | ($1,939 | ) | $527,793 | ||||||||||||||||||||||
Exercise of stock options | 15 | 2 | 436 | 438 | ||||||||||||||||||||||||||||||
Excess tax benefits from stock-based compensation | 1,728 | 1,728 | ||||||||||||||||||||||||||||||||
Vesting of stock awards | 217 | 22 | (22 | ) | — | |||||||||||||||||||||||||||||
Stock-based compensation | 28,040 | 28,040 | ||||||||||||||||||||||||||||||||
Capitalized stock-based compensation | 1,402 | 1,402 | ||||||||||||||||||||||||||||||||
Purchase and retirement of shares | (1,947 | ) | (196 | ) | (24,622 | ) | (132,991 | ) | (157,809 | ) | ||||||||||||||||||||||||
Dividends declared ($0.80 per share) | (14,785 | ) | (14,785 | ) | ||||||||||||||||||||||||||||||
Unvested dividends | 796 | (796 | ) | — | ||||||||||||||||||||||||||||||
Change in cumulative translation adjustment | 6,161 | 6,161 | ||||||||||||||||||||||||||||||||
Change in fair value of cash flow hedges, net of income taxes | 983 | 983 | ||||||||||||||||||||||||||||||||
Deferral of common stock into deferred compensation plan | 249 | (3 | ) | (249 | ) | — | ||||||||||||||||||||||||||||
Net income | 102,336 | 102,336 | ||||||||||||||||||||||||||||||||
BALANCE, January 28, 2017 | 17,764 | $ | 1,776 | $ | 239,940 | $ | 2,188 | $ | 274,912 | $ | (20,341 | ) | (42 | ) | ($2,188 | ) | $ | 496,287 | ||||||||||||||||
Exercise of stock options | 504 | 51 | (51 | ) | — | |||||||||||||||||||||||||||||
Excess tax benefits from stock-based compensation | — | — | ||||||||||||||||||||||||||||||||
Vesting of stock awards | — | — | ||||||||||||||||||||||||||||||||
Stock-based compensation | 30,797 | 30,797 | ||||||||||||||||||||||||||||||||
Capitalized stock-based compensation | 1,087 | 1,087 | ||||||||||||||||||||||||||||||||
Purchase and retirement of shares | (1,011 | ) | (101 | ) | (14,822 | ) | (103,656 | ) | (118,579 | ) | ||||||||||||||||||||||||
Dividends declared ($1.60 per share) | (28,101 | ) | (28,101 | ) | ||||||||||||||||||||||||||||||
Unvested dividends | 1,550 | (1,550 | ) | — | ||||||||||||||||||||||||||||||
Change in cumulative translation adjustment | 7,350 | 7,350 | ||||||||||||||||||||||||||||||||
Change in fair value of cash flow hedges, net of income taxes | 160 | 160 | ||||||||||||||||||||||||||||||||
Deferral of common stock into deferred compensation plan | 248 | (4 | ) | (248 | ) | — | ||||||||||||||||||||||||||||
Net income | 84,698 | 84,698 | ||||||||||||||||||||||||||||||||
BALANCE, February 3, 2018 | 17,257 | $ | 1,726 | $ | 258,501 | $ | 2,436 | $ | 226,303 | $ | (12,831 | ) | (46 | ) | ($2,436 | ) | $ | 473,699 | ||||||||||||||||
Vesting of stock awards | 711 | 71 | (71 | ) | — | |||||||||||||||||||||||||||||
Stock-based compensation | 27,415 | 27,415 | ||||||||||||||||||||||||||||||||
Capitalized stock-based compensation | 176 | 176 | ||||||||||||||||||||||||||||||||
Purchase and retirement of shares | (2,095 | ) | (209 | ) | (140,343 | ) | (112,991 | ) | (253,543 | ) | ||||||||||||||||||||||||
Dividends declared ($2.00 per share) | (33,042 | ) | (33,042 | ) | ||||||||||||||||||||||||||||||
Unvested dividends | 1,313 | (1,313 | ) | — | ||||||||||||||||||||||||||||||
ASC Topic 606 Adjustment | 875 | 875 | ||||||||||||||||||||||||||||||||
Change in cumulative translation adjustment | (2,178 | ) | (2,178 | ) | ||||||||||||||||||||||||||||||
Change in fair value of cash flow hedges, net of income taxes | 75 | 75 | ||||||||||||||||||||||||||||||||
Deferral of common stock into deferred compensation plan | 249 | (1 | ) | (249 | ) | — | ||||||||||||||||||||||||||||
Net income | 100,960 | 100,960 | ||||||||||||||||||||||||||||||||
BALANCE, February 2, 2019 | 15,873 | $ | 1,588 | $ | 146,991 | $ | 2,685 | $ | 180,792 | $ | (14,934 | ) | (47 | ) | ($2,685 | ) | $ | 314,437 |
Fiscal Year Ended | |||||||||||
February 2, 2019 | February 3, 2018 | January 28, 2017 | |||||||||
(In thousands) | |||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||
Net income | $ | 100,960 | $ | 84,698 | $ | 102,336 | |||||
Reconciliation of net income to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | 68,884 | 68,159 | 65,734 | ||||||||
Non-cash stock-based compensation | 27,415 | 30,797 | 28,040 | ||||||||
Excess tax benefits from stock-based compensation | — | — | (1,728 | ) | |||||||
Asset impairment charges | 6,096 | 5,190 | 4,026 | ||||||||
Deferred income tax (benefit) | (5,568 | ) | 34,894 | (9,379 | ) | ||||||
Other non-cash charges, net | 699 | 169 | 819 | ||||||||
Changes in operating assets and liabilities: | |||||||||||
Inventories | 19,380 | (36,434 | ) | (16,072 | ) | ||||||
Accounts receivable | (9,127 | ) | 5,386 | (5,056 | ) | ||||||
Prepaid expenses and other assets | 3,568 | (318 | ) | (2,505 | ) | ||||||
Income taxes payable, net of prepayments | (7,689 | ) | 6,865 | 25,109 | |||||||
Accounts payable and other current liabilities | (56,893 | ) | 28,930 | 18,989 | |||||||
Deferred rent and other liabilities | (7,811 | ) | (13,953 | ) | (11,021 | ) | |||||
Net cash provided by operating activities | 139,914 | 214,383 | 199,292 | ||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||
Capital expenditures | (71,114 | ) | (58,657 | ) | (34,684 | ) | |||||
Purchase of short-term investments | — | (15,000 | ) | (49,300 | ) | ||||||
Redemption of short-term investments | 15,000 | 49,300 | 40,100 | ||||||||
Change in deferred compensation plan | (749 | ) | (788 | ) | (368 | ) | |||||
Net cash used in investing activities | (56,863 | ) | (25,145 | ) | (44,252 | ) | |||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||
Borrowings under revolving credit facility | 861,806 | 578,186 | 553,415 | ||||||||
Repayments under revolving credit facility | (834,404 | ) | (572,106 | ) | (538,035 | ) | |||||
Purchase and retirement of common stock, including shares surrendered for tax withholdings and transaction costs | (253,543 | ) | (118,579 | ) | (157,809 | ) | |||||
Payment of dividends | (33,042 | ) | (28,101 | ) | (14,785 | ) | |||||
Proceeds from exercise of stock options | — | — | 438 | ||||||||
Excess tax benefits from stock-based compensation | — | — | 1,728 | ||||||||
Net cash used in financing activities | (259,183 | ) | (140,600 | ) | (155,048 | ) | |||||
Effect of exchange rate changes on cash and cash equivalents | 749 | 2,172 | 6,183 | ||||||||
Net increase (decrease) in cash and cash equivalents | (175,383 | ) | 50,810 | 6,175 | |||||||
Cash and cash equivalents, beginning of period | 244,519 | 193,709 | 187,534 | ||||||||
Cash and cash equivalents, end of period | $ | 69,136 | $ | 244,519 | $ | 193,709 |
Fiscal Year Ended | |||||||||||
February 2, 2019 | February 3, 2018 | January 28, 2017 | |||||||||
(In thousands) | |||||||||||
OTHER CASH FLOW INFORMATION: | |||||||||||
Net cash paid during the year for income taxes | $ | 19,529 | $ | 37,767 | $ | 31,492 | |||||
Cash paid during the year for interest | 3,224 | 1,949 | 1,680 | ||||||||
Increase in accrued capital expenditures | 3,398 | 457 | 3,315 |
1. | BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
• | Fiscal 2018 - The fifty-two weeks ended February 2, 2019 |
• | Fiscal 2017 - The fifty-three weeks ended February 3, 2018 |
• | Fiscal 2016 - The fifty-two weeks ended January 28, 2017 |
• | Fiscal 2019 - The Company's next fiscal year representing the fifty-two weeks ending February 1, 2020 |
• | SEC- The U.S. Securities and Exchange Commission |
• | GAAP - Generally Accepted Accounting Principles |
• | FASB- Financial Accounting Standards Board |
• | FASB ASC - FASB Accounting Standards Codification, which serves as the source for authoritative U.S. GAAP, except that rules and interpretive releases by the SEC are also sources of authoritative U.S. GAAP for SEC registrants |
Fiscal Year Ended | ||||||||
February 2, 2019 | February 3, 2018 | January 28, 2017 | ||||||
(In thousands) | ||||||||
Basic weighted average common shares | 16,542 | 17,569 | 18,584 | |||||
Dilutive effect of stock awards | 263 | 582 | 375 | |||||
Diluted weighted average common shares | 16,805 | 18,151 | 18,959 |
• | Level 1 - inputs to the valuation techniques that are quoted prices in active markets for identical assets or liabilities |
• | Level 2 - inputs to the valuation techniques that are other than quoted prices but are observable for the assets or liabilities, either directly or indirectly |
• | Level 3 - inputs to the valuation techniques that are unobservable for the assets or liabilities |
February 3, 2018 | Adjustments | February 4, 2018 | ||||||||
(As reported) | (As amended) | |||||||||
(In thousands) | ||||||||||
Retained earnings | $ | 226,303 | 875 | $ | 227,178 |
For the period ended February 2, 2019 | ||||||||||
Balance Sheet | As reported | Balances without adoption of Topic 606 | Effect of adoption Higher/(Lower) | |||||||
(In thousands) | ||||||||||
Property and equipment, net | $ | 260,357 | 259,678 | $ | 679 | |||||
Deferred income taxes | $ | 17,750 | 18,157 | $ | (407 | ) | ||||
Other assets | $ | 13,544 | 13,080 | $ | 464 | |||||
Accrued expenses and other current liabilities | $ | 86,755 | 86,268 | $ | 487 | |||||
Other long-term liabilities | $ | 12,862 | 14,417 | $ | (1,555 | ) | ||||
Retained earnings | $ | 180,792 | 178,988 | $ | 1,804 |
For the 52 weeks ended February 2, 2019 | ||||||||||
Income Statement | As reported | Amounts without adoption of Topic 606 | Effect of adoption Higher/(Lower) | |||||||
(In thousands) | ||||||||||
Net sales | $ | 1,938,084 | 1,918,171 | $ | 19,913 | |||||
Selling, general, and administrative expenses | $ | 498,343 | 479,802 | $ | 18,541 | |||||
Depreciation and amortization | $ | 68,884 | 68,741 | $ | 143 | |||||
Operating income | $ | 111,328 | 110,099 | $ | 1,229 |
Fifty-two Weeks Ended | Fifty-three Weeks Ended | |||||||
February 2, 2019 | February 3, 2018 | |||||||
Net sales: | (In thousands) | |||||||
South | $ | 670,232 | $ | 628,844 | ||||
Northeast | 460,682 | 451,745 | ||||||
West | 300,225 | 288,285 | ||||||
Midwest | 245,954 | 241,848 | ||||||
International and other | 260,991 | 259,553 | ||||||
Total net sales | $ | 1,938,084 | $ | 1,870,275 |
Contract Liability | |||
(In thousands) | |||
Balance at February 3, 2018 | $ | 4,138 | |
Loyalty points earned | 22,305 | ||
Loyalty points redeemed and expired | (24,224 | ) | |
Balance at February 2, 2019 | $ | 2,219 |
Contract Liability | |||
(In thousands) | |||
Balance at February 3, 2018 | $ | 16,145 | |
Gift cards sold | 36,691 | ||
Gift cards redeemed | (31,872 | ) | |
Gift card breakage | (3,097 | ) | |
Balance at February 2, 2019 | $ | 17,867 |
Fiscal Year Ended | |||||||||||||||
February 2, 2019 | February 3, 2018 | January 28, 2017 | |||||||||||||
Shares | Value | Shares | Value | Shares | Value | ||||||||||
Share repurchases related to: | (in thousands) | ||||||||||||||
2015 Share Repurchase Program | — | — | — | — | 310 | 20,726 | |||||||||
2015 $250 Million Share Repurchase Program program (1) | — | — | 974 | 112,917 | 1,637 | 137,083 | |||||||||
2017 Share Repurchase Programs (2) | 1,995 | 244,338 | 37 | 5,662 | — | — | |||||||||
2018 Share Repurchase Programs (3) | 101 | 9,205 | — | — | — | — | |||||||||
Shares acquired and held in treasury | 2 | 248 | 4 | 248 | 3 | 249 |
(1) | Inclusive of 0.3 million shares for approximately $33.1 million withheld to cover taxes in conjunction with the vesting of stock awards during Fiscal 2017. |
(2) | Inclusive of 0.3 million shares for approximately $43.3 million withheld to cover taxes in conjunction with the vesting of stock awards during Fiscal 2018. |
(3) | Subsequent to February 2, 2019 and through March 19, 2019, the Company repurchased approximately 0.1 million shares for approximately $9.9 million. |
Fiscal Year Ended | |||||||||||
February 2, 2019 | February 3, 2018 | January 28, 2017 | |||||||||
(In thousands) | |||||||||||
Deferred Awards | $ | 12,849 | $ | 11,891 | $ | 8,906 | |||||
Performance Awards | 14,566 | 18,906 | 19,134 | ||||||||
Total stock-based compensation expense(1) | $ | 27,415 | $ | 30,797 | $ | 28,040 |
Fiscal Year Ended | ||||||||||||||||||||
February 2, 2019 | February 3, 2018 | January 28, 2017 | ||||||||||||||||||
Number of Shares | Weighted Average Grant Date Fair Value | Number of Shares | Weighted Average Grant Date Fair Value | Number of Shares | Weighted Average Grant Date Fair Value | |||||||||||||||
(in thousands) | (in thousands) | (in thousands) | ||||||||||||||||||
Unvested Deferred Awards at beginning of year | 420 | $ | 82.30 | 469 | $ | 61.19 | 473 | $ | 54.62 | |||||||||||
Granted | 135 | 124.21 | 212 | 110.17 | 189 | 72.19 | ||||||||||||||
Vested | (197 | ) | 75.65 | (202 | ) | 62.30 | (163 | ) | 54.35 | |||||||||||
Forfeited | (59 | ) | 110.63 | (59 | ) | 83.25 | (30 | ) | 63.88 | |||||||||||
Unvested Deferred Awards at end of year | 299 | $ | 99.98 | 420 | $ | 82.30 | 469 | $ | 61.19 |
Fiscal Year Ended | |||||||||||||||||||||
February 2, 2019 | February 3, 2018 | January 28, 2017 | |||||||||||||||||||
Number of Performance Shares(1) | Weighted Average Grant Date Fair Value | Number of Performance Shares(1) | Weighted Average Grant Date Fair Value | Number of Performance Shares(1) | Weighted Average Grant Date Fair Value | ||||||||||||||||
(in thousands) | (in thousands) | (in thousands) | |||||||||||||||||||
Unvested Performance Awards at beginning of year | 544 | $ | 84.11 | 515 | $ | 68.11 | 375 | $ | 61.37 | ||||||||||||
Granted | 87 | 123.02 | 172 | 113.76 | 204 | 75.19 | |||||||||||||||
Shares earned in excess of target | 347 | 203 | 70.09 | 203 | 50.97 | — | — | ||||||||||||||
Vested shares, including shares earned in excess of target | (513 | ) | 70.09 | (301 | ) | 50.97 | (54 | ) | 48.26 | ||||||||||||
Forfeited | (113 | ) | 114.06 | (45 | ) | 86.80 | (10 | ) | 67.11 | ||||||||||||
Unvested Performance Awards at end of year | 352 | $ | 90.66 | 544 | $ | 84.11 | 515 | $ | 68.11 |
February 2, 2019 | February 3, 2018 | |||||||
(in thousands) | ||||||||
Property and equipment: | ||||||||
Land and land improvements | $ | 3,403 | $ | 3,403 | ||||
Building and improvements | 35,568 | 35,548 | ||||||
Material handling equipment | 51,934 | 50,102 | ||||||
Leasehold improvements | 301,233 | 308,465 | ||||||
Store fixtures and equipment | 273,430 | 262,363 | ||||||
Capitalized software | 254,064 | 237,786 | ||||||
Construction in progress | 14,823 | 9,498 | ||||||
934,455 | 907,165 | |||||||
Less accumulated depreciation and amortization | (674,098 | ) | (648,628 | ) | ||||
Property and equipment, net | $ | 260,357 | $ | 258,537 |
(i) | the prime rate plus a margin of 0.50% to 0.75% based on the amount of the Company’s average excess availability under the facility; or |
(ii) | the London InterBank Offered Rate, or “LIBOR”, for an interest period of one, two, three, or six months, as selected by the Company, plus a margin of 1.25% to 1.50% based on the amount of the Company’s average excess availability under the facility. |
February 2, 2019 | February 3, 2018 | ||||||
(In millions) | |||||||
Credit facility maximum | $ | 250.0 | $ | 250.0 | |||
Borrowing base (1) | 250.0 | 250.0 | |||||
Outstanding borrowings | 48.9 | 21.5 | |||||
Letters of credit outstanding—standby | 7.0 | 7.0 | |||||
Utilization of credit facility at end of period | 55.9 | 28.5 | |||||
Availability (2) | $ | 194.1 | $ | 221.5 | |||
Interest rate at end of period | 6.0 | % | 5.0 | % |
Fiscal 2018 | Fiscal 2017 | ||||||
Average end of day loan balance during the period | $ | 64.4 | $ | 45.8 | |||
Highest end of day loan balance during the period | 156.4 | 98.2 | |||||
Average interest rate | 4.3 | % | 2.9 | % |
(1) | Lower of the credit facility maximum or the total borrowing base collateral. |
(2) | The sub-limit availability for letters of credit was $43.0 million and $43.0 million at February 2, 2019 and February 3, 2018, respectively. |
7. | OTHER CURRENT AND NON-CURRENT ASSETS |
February 2, 2019 | February 3, 2018 | |||||||
(In thousands) | ||||||||
Prepaid income taxes | $ | 7,223 | $ | 21,069 | ||||
Prepaid property expense | 6,738 | 7,093 | ||||||
Prepaid maintenance contracts | 5,109 | 6,444 | ||||||
Prepaid marketing | 1,421 | 3,892 | ||||||
Other | 7,179 | 7,958 | ||||||
Total prepaid expenses and other current assets | $ | 27,670 | $ | 46,456 |
February 2, 2019 | February 3, 2018 | |||||||
(In thousands) | ||||||||
Prepaid cloud computing | $ | 5,708 | $ | 5,534 | ||||
Prepaid maintenance contracts | 2,793 | 2,352 | ||||||
Security deposits | 1,944 | 1,960 | ||||||
Other | 3,099 | 2,643 | ||||||
Total other assets | $ | 13,544 | $ | 12,489 |
8. | OTHER CURRENT AND LONG-TERM LIABILITIES |
February 2, 2019 | February 3, 2018 | |||||||
(In thousands) | ||||||||
Customer liabilities | 17,086 | 18,791 | ||||||
Accrued salaries and benefits | 12,378 | 42,073 | ||||||
Accrued professional fees | 7,091 | 6,707 | ||||||
Accrued store expenses | 7,090 | 5,796 | ||||||
Accrued property expenses | 6,265 | 5,171 | ||||||
Accrued capital expenditures | 6,107 | 2,709 | ||||||
Sales taxes and other taxes payable | 3,330 | 5,432 | ||||||
Accrued freight | 3,217 | 4,509 | ||||||
Insurance reserves | 3,068 | 2,814 | ||||||
Accrued marketing | 2,434 | 3,342 | ||||||
Deferred revenue for MyPlace Rewards loyalty program | 2,220 | 4,138 | ||||||
Deferred revenue | 2,180 | 3,803 | ||||||
Other | 14,289 | 16,568 | ||||||
Total accrued expenses and other current liabilities | $ | 86,755 | $ | 121,853 |
February 2, 2019 | February 3, 2018 | |||||||
(In thousands) | ||||||||
Deferred revenue | $ | 7,030 | $ | 7,444 | ||||
Insurance reserves | 2,548 | 5,308 | ||||||
Other | 3,284 | 2,200 | ||||||
Other long-term liabilities | $ | 12,862 | $ | 14,952 |
9. | COMMITMENTS AND CONTINGENCIES |
Fiscal Year Ended | |||||||||
February 2, 2019 | February 3, 2018 | January 28, 2017 | |||||||
(In thousands) | |||||||||
Minimum rentals | 153,017 | 154,493 | 157,647 | ||||||
Additional rent based upon sales | 2,042 | 1,924 | 1,367 | ||||||
Sublease income | (1,395 | ) | (2,592 | ) | (2,275 | ) |
Minimum Operating Lease Payments | ||||
(In thousands) | ||||
2019 | $ | 143,601 | ||
2020 | 117,037 | |||
2021 | 86,788 | |||
2022 | 57,734 | |||
2023 | 32,218 | |||
Thereafter | 50,263 | |||
Total minimum lease payments | $ | 487,641 |
11. | INCOME TAXES |
Fiscal Year Ended | ||||||||||||
February 2, 2019 | February 3, 2018 | January 28, 2017 | ||||||||||
(In thousands) | ||||||||||||
Domestic | $ | 49,820 | $ | 100,288 | $ | 90,990 | ||||||
Foreign | 58,704 | 60,915 | 56,023 | |||||||||
Total income before provision for income taxes | $ | 108,524 | $ | 161,203 | $ | 147,013 |
Fiscal Year Ended | ||||||||||||
February 2, 2019 | February 3, 2018 | January 28, 2017 | ||||||||||
(In thousands) | ||||||||||||
Current: | ||||||||||||
Federal(1) | $ | 594 | $ | 31,334 | $ | 34,056 | ||||||
State and local(1) | 2,519 | (1,341 | ) | 8,527 | ||||||||
Foreign | 10,019 | 11,618 | 11,473 | |||||||||
13,132 | 41,611 | 54,056 | ||||||||||
Deferred: | ||||||||||||
Federal | (3,418 | ) | 30,828 | (8,068 | ) | |||||||
State and local | (2,324 | ) | 3,546 | (1,691 | ) | |||||||
Foreign | 174 | 520 | 380 | |||||||||
(5,568 | ) | 34,894 | (9,379 | ) | ||||||||
Total provision for income taxes | $ | 7,564 | $ | 76,505 | $ | 44,677 | ||||||
Effective tax rate | 7.0 | % | 47.5 | % | 30.4 | % |
Fiscal Year Ended | ||||||||||||
February 2, 2019 | February 3, 2018 | January 28, 2017 | ||||||||||
(In thousands) | ||||||||||||
Calculated income tax provision at U.S. federal statutory rate | $ | 22,790 | $ | 55,246 | $ | 51,455 | ||||||
State and local income taxes, net of federal benefit (1) | 154 | 1,449 | 4,443 | |||||||||
Foreign tax rate differential (2) | (3,801 | ) | (10,794 | ) | (10,116 | ) | ||||||
Non-deductible expenses | 861 | 514 | 2,514 | |||||||||
Excess tax benefits related to stock compensation | (11,804 | ) | (14,665 | ) | — | |||||||
U.S. transition taxes on deemed repatriation of foreign earnings | 338 | 37,607 | — | |||||||||
Revaluation of deferred tax assets and liabilities | (295 | ) | 5,646 | — | ||||||||
Foreign withholding and state tax on unremitted earnings | (244 | ) | 7,483 | — | ||||||||
Unrecognized tax benefits | 1,092 | (3,199 | ) | (1,673 | ) | |||||||
Change in valuation allowance | (62 | ) | (28 | ) | 19 | |||||||
Global intangible low-taxed income | 1,033 | — | — | |||||||||
Federal tax credits | (2,188 | ) | (1,857 | ) | (2,224 | ) | ||||||
Other | (310 | ) | (897 | ) | 259 | |||||||
Total provision for income taxes | $ | 7,564 | $ | 76,505 | $ | 44,677 |
February 2, 2019 | February 3, 2018 | |||||||
(In thousands) | ||||||||
Noncurrent Assets: | ||||||||
Deferred rent | $ | 7,491 | $ | 8,755 | ||||
Stock-based compensation | 9,321 | 11,500 | ||||||
Reserves | 9,859 | 12,864 | ||||||
Inventory | 3,401 | 2,506 | ||||||
Property and equipment, net | (9,288 | ) | (16,911 | ) | ||||
Prepaid expenses | (958 | ) | (2,613 | ) | ||||
Foreign and state tax on unremitted earnings | (1,806 | ) | (3,107 | ) | ||||
Hedging transactions | (270 | ) | (296 | ) | ||||
Net operating loss carryforwards and other tax credits | 721 | 2,284 | ||||||
Valuation allowance | (721 | ) | (2,284 | ) | ||||
Total deferred tax asset, net | $ | 17,750 | $ | 12,698 |
February 2, 2019 | February 3, 2018 | |||||||
(In thousands) | ||||||||
Beginning Balance | $ | 3,905 | $ | 6,326 | ||||
Additions for current year tax positions | 1,209 | 1,154 | ||||||
Additions for prior year tax positions | 101 | 252 | ||||||
Reductions for prior year tax positions | (118 | ) | — | |||||
Reductions related to settlements with taxing authorities | (48 | ) | (3,156 | ) | ||||
Reductions due to a lapse of the applicable statute of limitations | (44 | ) | (564 | ) | ||||
Impact of foreign currency translation | (3 | ) | (107 | ) | ||||
Ending Balance | $ | 5,002 | $ | 3,905 |
12. | SEGMENT INFORMATION |
Fiscal Year Ended | |||||||||||
February 2, 2019 | February 3, 2018 | January 28, 2017 | |||||||||
(In thousands) | |||||||||||
Net sales: | |||||||||||
The Children’s Place U.S. | $ | 1,727,907 | $ | 1,650,620 | $ | 1,567,556 | |||||
The Children’s Place International(1) | 210,177 | 219,655 | 217,760 | ||||||||
Total net sales | $ | 1,938,084 | $ | 1,870,275 | $ | 1,785,316 | |||||
Operating income: | |||||||||||
The Children’s Place U.S. | $ | 86,983 | $ | 132,152 | $ | 113,376 | |||||
The Children’s Place International | 24,345 | 29,358 | 34,032 | ||||||||
Total operating income | $ | 111,328 | $ | 161,510 | $ | 147,408 |
Operating income as a percent of net sales: | |||||||||||
The Children’s Place U.S. | 5.0 | % | 8.0 | % | 7.2 | % | |||||
The Children’s Place International | 11.6 | % | 13.4 | % | 15.6 | % | |||||
Total operating income | 5.7 | % | 8.6 | % | 8.3 | % | |||||
Depreciation and amortization: | |||||||||||
The Children’s Place U.S. | $ | 61,487 | $ | 60,732 | $ | 58,626 | |||||
The Children’s Place International | 7,397 | 7,427 | 7,108 | ||||||||
Total depreciation and amortization | $ | 68,884 | $ | 68,159 | $ | 65,734 | |||||
Capital expenditures: | |||||||||||
The Children’s Place U.S. | $ | 67,476 | $ | 57,360 | $ | 33,447 | |||||
The Children’s Place International | 3,638 | 1,297 | 1,237 | ||||||||
Total capital expenditures | $ | 71,114 | $ | 58,657 | $ | 34,684 |
(1) | Net sales from The Children's Place International are primarily derived from revenues from Canadian operations. Our foreign subsidiaries, primarily in Canada, have operating results based in foreign currencies and are thus subject to the fluctuations of the corresponding translation rates into U.S. dollars. |
February 2, 2019 | February 3, 2018 | ||||||
(In thousands) | |||||||
Total assets: | |||||||
The Children’s Place U.S. | $ | 651,728 | $ | 750,670 | |||
The Children’s Place International | 75,318 | 189,558 | |||||
Total assets | $ | 727,046 | $ | 940,228 |
February 2, 2019 | February 3, 2018 | |||||||
(In thousands) | ||||||||
Long-lived assets(1): | ||||||||
United States | $ | 261,932 | $ | 258,660 | ||||
Canada | 10,718 | 11,119 | ||||||
Asia | 1,251 | 1,247 | ||||||
Total long-lived assets | $ | 273,901 | $ | 271,026 |
(1) | The Company's long-lived assets are comprised of net property and equipment and other assets. |
13. | DERIVATIVE INSTRUMENTS |
14. | QUARTERLY FINANCIAL DATA (UNAUDITED) |
Fiscal Year Ended February 2, 2019 | ||||||||||||||||
First Quarter | Second Quarter | Third Quarter | Fourth Quarter | |||||||||||||
(in thousands, except earnings per share) | ||||||||||||||||
Net sales | $ | 436,314 | $ | 448,718 | $ | 522,495 | $ | 530,557 | ||||||||
Gross profit | 160,192 | 154,806 | 204,366 | 164,232 | ||||||||||||
Selling, general, and administrative expenses | 118,471 | 124,210 | 123,207 | 132,455 | ||||||||||||
Asset impairment charges | 1,257 | 3,979 | 396 | 464 | ||||||||||||
Other (income) costs | — | — | (1,246 | ) | 191 | |||||||||||
Depreciation and amortization | 17,406 | 16,595 | 17,404 | 17,479 | ||||||||||||
Operating income | 23,058 | 10,022 | 64,605 | 13,643 | ||||||||||||
Income before income taxes | 22,761 | 9,076 | 63,774 | 12,913 | ||||||||||||
Provision (benefit) for income taxes | (8,776 | ) | 1,590 | 13,861 | 889 | |||||||||||
Net income | 31,537 | 7,486 | 49,913 | 12,024 | ||||||||||||
Diluted earnings per share | $ | 1.78 | $ | 0.45 | $ | 3.03 | $ | 0.74 | ||||||||
Diluted weighted average common shares outstanding | 17,734 | 16,715 | 16,496 | 16,277 | ||||||||||||
Cash dividends declared and paid per common share | $ | 0.5000 | $ | 0.5000 | $ | 0.5000 | $ | 0.5000 |
Fiscal Year Ended February 3, 2018 | ||||||||||||||||
First Quarter | Second Quarter | Third Quarter | Fourth Quarter(1) | |||||||||||||
(in thousands, except earnings per share) | ||||||||||||||||
Net sales | $ | 436,676 | $ | 373,601 | $ | 490,026 | $ | 569,972 | ||||||||
Gross profit | 170,591 | 128,405 | 202,433 | 209,926 | ||||||||||||
Selling, general, and administrative expenses | 112,127 | 108,227 | 118,288 | 137,844 | ||||||||||||
Asset impairment charges | 484 | 974 | 3,203 | 529 | ||||||||||||
Other costs | 4 | 6 | 4 | (4 | ) | |||||||||||
Depreciation and amortization | 15,692 | 15,979 | 16,789 | 19,699 | ||||||||||||
Operating income | 42,284 | 3,219 | 64,149 | 51,858 | ||||||||||||
Income before income taxes | 42,246 | 2,928 | 64,049 | 51,980 | ||||||||||||
Provision (benefit) for income taxes | 6,017 | (11,362 | ) | 19,972 | 61,878 | |||||||||||
Net income (loss) | 36,229 | 14,290 | 44,077 | (9,898 | ) | |||||||||||
Diluted earnings (loss) per share | $ | 1.97 | $ | 0.79 | $ | 2.44 | $ | (0.57 | ) | |||||||
Diluted weighted average common shares outstanding | 18,401 | 18,177 | 18,090 | 17,359 | ||||||||||||
Cash dividends declared and paid per common share | $ | 0.4000 | $ | 0.4000 | $ | 0.4000 | $ | 0.4000 |
15. | RETIREMENT AND SAVINGS PLANS |
16. | SUBSEQUENT EVENTS |
Exhibit | Description | |
Amended and Restated Certificate of Incorporation of the Company dated May 31, 2016 filed as Exhibit 3.1 to the registrant's Current Report on Form 8-K filed on June 7, 2016 is incorporated by reference herein. | ||
Sixth Amended and Restated By-Laws of the Company filed as Exhibit 3.2 to the registrant's Form 8-K filed on June 7, 2016, is incorporated by reference herein. | ||
4.1(1) | Form of Certificate for Common Stock of the Company filed as an exhibit to the registrant's Registration Statement No. 333‑31535 on Form S-1, is incorporated by reference herein. | |
4.2(1) | Amended Form of Certificate for Common Stock of the Company filed as Exhibit 4.2 to the registrant's Annual Report on Form 10-K for the period ended January 28, 2017, is incorporated by reference herein. | |
10.1(*) | Amended and Restated 2005 Equity Incentive Plan of the Company, filed as Exhibit 10.3 to the registrant's Annual Report on Form 10-K for the period ended January 31, 2009, is incorporated by reference herein. | |
Lease Agreement as of August 12, 2003 between Orlando Corporation and The Children's Place (Canada), LP, together with Indemnity Agreement as of August 12, 2003 between the Company and Orlando Corporation, together with Surrender of Lease as of August 12, 2003 between the Company and Orlando Corporation and Orion Properties Ltd. (Canadian Distribution Center) filed as Exhibit 10.2 to the registrant's Quarterly Report on Form 10‑Q for the period ended November 1, 2003, is incorporated by reference herein. | ||
Lease Agreement between the Company and Turnpike Crossing I, LLC (Dayton New Jersey Distribution Center), dated as of July 14, 2004 filed as Exhibit 10.2 to registrant's Quarterly Report on Form 10‑Q for the period ended July 31, 2004, is incorporated by reference herein. | ||
Form of Indemnity Agreement between the Company and certain members of management and the Board of Directors filed as Exhibit 10.7 to registrant's Quarterly Report on Form 10-Q for the period ended August 2, 2008, is incorporated by reference herein. | ||
Lease Agreement between The Children's Place Services Company, LLC and 500 Plaza Drive Corp. effective as of March 12, 2009 (500 Plaza Drive), Secaucus, New Jersey filed as Exhibit 10.67 to the registrant's Annual Report on Form 10-K for the period ended January 31, 2009, is incorporated by reference herein. | ||
Guaranty between the Company and 500 Plaza Drive Corp. effective as of March 12, 2009 filed as Exhibit 10.68 to the registrant's Annual Report on Form 10-K for the period ended January 31, 2009, is incorporated by reference herein. | ||
The First Lease Modification Agreement, dated as of August 27, 2009, between The Children's Place Services Company, LLC and 500 Plaza Drive Corp. filed as Exhibit 10.3 to the Registrant's Quarterly Report on Form 10-Q for the period ended August 1, 2009, is incorporated by reference herein. | ||
The Company Nonqualified Deferred Compensation Plan effective January 1, 2010 filed as Exhibit 10.82 to the registrant's Annual Report on Form 10-K for the period ended January 30, 2010, is incorporated by reference herein. | ||
10.9(*) | Amended and Restated Employment Agreement, dated as of March 28, 2011, by and between the Company and Jane T. Elfers filed as Exhibit 10.1 to the registrant's Quarterly Report on Form 10-Q for the quarterly period ended April 30, 2011, is incorporated by reference herein. | |
10.10(*) | Amendment No. 1 as of March 23, 2012 to Amended and Restated Employment Agreement dated as of March 28, 2011, by and between the Company and Jane T. Elfers filed as Exhibit 10.31 to the Registrant's Annual Report on Form 10-K for the period ended January 28, 2012, is incorporated by reference herein. | |
10.11(*) | Deferred Stock Award Agreement, dated as of January 4, 2010, by and between the Company and Jane T. Elfers filed as Exhibit 10.84 to the registrant's Annual Report on Form 10-K for the period ended January 30, 2010, is incorporated by reference herein. | |
10.12(*) | Form of Time-Based Restricted Stock Unit Award Agreement under the 2011 Equity Incentive Plan, filed as Exhibit 10.2 to the registrant's Current Report on Form 8-K filed on May 23, 2011, is incorporated by reference herein. | |
10.13(*) | Form of Performance-Based Restricted Stock Unit Award Agreement under the 2011 Equity Incentive Plan, filed as Exhibit 10.3 to the registrant's Current Report on Form 8-K filed on May 23, 2011, is incorporated by reference herein. | |
Form of Amended and Restated Change in Control Agreement filed as Exhibit 10.41 to the registrant's Annual Report on Form 10-K for the period ended January 29, 2011, is incorporated by reference herein. |
Exhibit | Description | |
10.15(*) | Employment Offer Letter, dated as of November 26, 2012, by and between the Company and Michael Scarpa filed as Exhibit 10.40 to the registrant's Annual Report on Form 10-K for the period ended February 2, 2013, is incorporated by reference herein. | |
10.16(*) | Letter Agreement dated October 3, 2014 between Anurup Pruthi and The Children's Place Services Company, LLC filed as Exhibit 10.22 to the registrant's Annual Report on Form 10-K for the period ended January 31, 2015, is incorporated by reference herein. | |
Agreement dated May 22, 2015, by and among The Children’s Place, Inc., Macellum SPV II, LP, Barington Companies Equity Partners, L.P., Jonathan Duskin, James A. Mitarotonda, certain of their affiliates listed on Schedule A to the Agreement, and Robert L. Mettler filed as Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed on May 29, 2015, is incorporated herein by reference. | ||
10.18(*) | Form of Performance-Based Restricted Stock Unit Award Agreement under the 2011 Equity Incentive Plan (Senior Vice President & above) filed as Exhibit 10.1 to the registrant’s Quarterly Report on Form 10-Q for the period ended May 2, 2015, is incorporated by reference herein. | |
10.19(*) | Form of Performance-Based Restricted Stock Unit Award Agreement under the 2011 Equity Incentive Plan (below Senior Vice President) filed as Exhibit 10.2 to the registrant’s Quarterly Report on Form 10-Q for the period ended May 2, 2015, is incorporated by reference herein. | |
10.20(*) | Form of Time-Based Restricted Stock Unit Award Agreement under the 2011 Equity Incentive Plan (Senior Vice President & above) filed as Exhibit 10.3 to the registrant’s Quarterly Report on Form 10-Q for the period ended May 2, 2015, is incorporated by reference herein. | |
10.21(*) | Form of Time-Based Restricted Stock Unit Award Agreement under the 2011 Equity Incentive Plan (below Senior Vice President) filed as Exhibit 10.4 to the registrant’s Quarterly Report on Form 10-Q for the period ended May 2, 2015, is incorporated by reference herein. | |
10.22(*) | The Company Profit Sharing/401(k) Plan Adoption Agreement No.#001 for use with Fidelity Basic Plan Document No. 17 entered into by the Company and Fidelity Management Trust Company on September 11, 2015 as filed as Exhibit 10.28 to the registrant's Annual Report on Form 10-K for the period ended January 30, 2016, is incorporated by reference herein. | |
Credit Agreement dated July 31, 2008 by and among the Company and The Children's Place Services Company, LLC, as borrowers, The Children's Place (Virginia), LLC, The Children's Place Canada Holdings, Inc., The Childrensplace.com, Inc. and Twin Brook Insurance Company, Inc., as guarantors, Wells Fargo Retail Finance, LLC, as Administrative Agent, Collateral Agent, and Swing Line Lender and as a lender, and Bank of America, N.A., HSBC Bank USA, National Association and JPMorgan Chase Bank, N.A., as lenders, filed as Exhibit 10.8 to registrant's Quarterly Report on Form 10-Q for the period ended August 2, 2008, is incorporated by reference herein. | ||
First Amendment to the Credit Agreement, effective as of March 12, 2009, by and among the Company and The Children's Place Services Company, LLC, as borrowers, The Children's Place (Virginia), LLC, The Children's Place Canada Holdings, Inc., The Childrensplace.com, Inc. and Twin Brook Insurance Company, Inc., as guarantors, Wells Fargo Retail Finance, LLC, as Administrative Agent, Collateral Agent, and Swing Line Lender and as a lender, and Bank of America, N.A., HSBC Bank USA, National Association and JPMorgan Chase Bank, N.A., as lenders, filed as Exhibit 10.65 to the registrant's Annual Report on Form 10-K for the period ended January 31, 2009, is incorporated by reference herein. | ||
Second Amendment to Credit Agreement, dated as of May 4, 2009, by and among the Company and The Children's Place Services Company, LLC, as borrowers, The Children's Place (Virginia), LLC, The Children's Place Canada Holdings, Inc., The Childrensplace.com, Inc. and Twin Brook Insurance Company, Inc., as guarantors, Wells Fargo Retail Finance, LLC, as Administrative Agent, Collateral Agent, and Swing Line Lender and as a lender, and Bank of America, N.A., HSBC Bank USA, National Association and JPMorgan Chase Bank, N.A., as lenders, filed as Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the period ended May 2, 2009, is incorporated by reference herein. | ||
Third Amendment to Credit Agreement, dated as of July 29, 2009, by and among the Company and The Children's Place Services Company, LLC, as borrowers, The Children's Place (Virginia), LLC, The Children's Place Canada Holdings, Inc., The Childrensplace.com, Inc. and Twin Brook Insurance Company, Inc., as guarantors, Wells Fargo Retail Finance, LLC, as Administrative Agent, Collateral Agent, and Swing Line Lender and as a lender, and Bank of America, N.A., HSBC Bank USA, National Association and JPMorgan Chase Bank, N.A., as lenders, filed as Exhibit 10.2 to the Registrant's Quarterly Report on Form 10-Q for the period ended August 1, 2009, is incorporated by reference herein. | ||
Fourth Amendment to Credit Agreement, dated October 5, 2009, by and among the Company and The Children's Place Services Company, LLC, as borrowers, The Children's Place (Virginia), LLC, The Children's Place Canada Holdings, Inc., The Childrensplace.com Inc. and Twin Brook Insurance Company, Inc., as guarantors, Wells Fargo Retail Finance, LLC, as Administrative Agent, Collateral Agent, and SwingLine Lender and as a lender, and Bank of America, N.A., HSBC Bank USA, National Association and JPMorgan Chase Bank, NA, as lenders, filed as Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the period ended October 31, 2009, is incorporated by reference herein. |
Exhibit | Description | |
Fifth Amendment to Credit Agreement, dated August 18, 2010, by and among the Company and The Children's Place Services Company, LLC, as borrowers, The Children's Place (Virginia), LLC, The Children's Place Canada Holdings, Inc., The Childrensplace.com Inc. and Twin Brook Insurance Company, Inc., as guarantors, Wells Fargo Retail Finance, LLC, as Administrative Agent, Collateral Agent, and SwingLine Lender and as a lender, and Bank of America, N.A., HSBC Bank USA, National Association and JPMorgan Chase Bank, NA, as lenders, filed as Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the period ended October 30, 2010, is incorporated by reference herein. | ||
Sixth Amendment to Credit Agreement, dated March 7, 2011, by and among the Company and The Children's Place Services Company, LLC, as borrowers, The Children's Place (Virginia), LLC, The Children's Place Canada Holdings, Inc., The Childrensplace.com Inc. and Twin Brook Insurance Company, Inc., as guarantors, Wells Fargo Retail Finance, LLC, as Administrative Agent, Collateral Agent, and SwingLine Lender and as a lender, and Bank of America, N.A., HSBC Bank USA, National Association and JPMorgan Chase Bank, NA, as lenders, filed as Exhibit 10.43 to the registrant's Annual Report on Form 10-K for the period ended January 29, 2011, is incorporated by reference herein. | ||
Seventh Amendment to Credit Agreement, dated August 16, 2011, by and among the Company and The Children's Place Services Company, LLC, as borrowers, The Children's Place (Virginia), LLC, The Children's Place Canada Holdings, Inc. and The Childrensplace.com Inc., as guarantors, Wells Fargo Retail Finance, LLC, as Administrative Agent, Collateral Agent, and SwingLine Lender and as a lender, and Bank of America, N.A., HSBC Bank USA, National Association and JPMorgan Chase Bank, NA, as lenders, filed as Exhibit 10.1 to the registrant's Quarterly Report on Form 10-Q for the quarterly period ended July 30, 2011, is incorporated by reference herein. | ||
Eighth Amendment to Credit Agreement, dated January 25, 2012, by and among the Company and The Children's Place Services Company, LLC, as borrowers, The Children's Place (Virginia), LLC, The Children's Place Canada Holdings, Inc. and The Childrensplace.com Inc., as guarantors, Wells Fargo Retail Finance, LLC, as Administrative Agent, Collateral Agent, SwingLine Lender and Lender and as a lender, and Bank of America, N.A., HSBC Bank USA, National Association and JPMorgan Chase Bank, NA, as lenders, filed as Exhibit 10.44 to the registrant’s Annual Report on Form 10-K for the period ended January 28, 2012, is incorporated by reference herein. | ||
Ninth Amendment and Consent Letter to the Credit Agreement, dated May 1, 2012, by and among the Company and The Children's Place Services Company, LLC, as borrowers, The Children's Place (International), LLC, The Children's Place Canada Holdings, Inc., The Childrensplace.com, Inc., TCP IH I, LLC and TCP IH II, LLC, as guarantors, Wells Fargo Bank, National Association (successor by merger to Wells Fargo Retail Finance, LLC), as Administrative Agent and Collateral Agent, SwingLine Lender and as a lender, and Bank of America, N.A., HSBC Bank USA, and JPMorgan Chase Bank, N.A., as lenders, filed as Exhibit 10.2 to the registrant’s Quarterly Report on Form 10-Q for the period ended April 28, 2012. | ||
Tenth Amendment to the Credit Agreement, dated December 20, 2012, by and among the Company and The Children's Place Services Company, LLC, as borrowers, The Children's Place (International), LLC, The Children's Place Canada Holdings, Inc., the childrensplace.com, inc., TCP IH II, LLC, TCP International IP Holdings, LLC and TCP International Product Holdings, LLC, as guarantors, Wells Fargo Bank, National Association (successor by merger to Wells Fargo Retail Finance, LLC), as Administrative Agent and Collateral Agent, SwingLine Lender and as a lender, and Bank of America, N.A., HSBC Bank USA, and JPMorgan Chase Bank, N.A., as lenders, filed as Exhibit 10.42 to the registrant’s Annual Report on Form 10-K for the period ended February 2, 2013. | ||
Eleventh Amendment to the Credit Agreement, dated March 4, 2014, by and among the Company and The Children's Place Services Company, LLC, as borrowers, The Children's Place (International), LLC, The Children's Place Canada Holdings, Inc., the childrensplace.com, inc., TCP IH II, LLC, TCP International IP Holdings, LLC and TCP International Product Holdings, LLC, as guarantors, Wells Fargo Bank, National Association (successor by merger to Wells Fargo Retail Finance, LLC), as Administrative Agent and Collateral Agent, L/C Issuer, SwingLine Lender and as a lender, and Bank of America, N.A., HSBC Bank USA, N.A. and JPMorgan Chase Bank, N.A., as lenders, filed as Exhibit 10.33 to the registrant's Annual Report on Form 10-K for the period ended February 1, 2014, is incorporated by reference herein. | ||
Twelfth Amendment to the Credit Agreement, dated September 15, 2015, by and among the Company and The Children's Place Services Company, LLC, as borrowers, The Children's Place (International), LLC, The Children's Place Canada Holdings, Inc., the childrensplace.com, inc., TCP IH II, LLC, TCP International IP Holdings, LLC and TCP International Product Holdings, LLC, as guarantors, Wells Fargo Bank, National Association (successor by merger to Wells Fargo Retail Finance, LLC), as Administrative Agent and Collateral Agent, L/C Issuer, Swing Line Lender and as a lender and Bank of America, N.A., HSBC Bank USA, N.A. and JPMorgan Chase Bank, N.A., as lenders, filed as Exhibit 10.1 to the registrant’s Quarterly Report on Form 10-Q for the period ended October 31, 2015, is incorporated by reference herein. |
Exhibit | Description | |
10.36(*) | Agreement and General Release dated as of November 30, 2015, between Brian Ferguson and The Children's Place Services Company, LLC filed as Exhibit 10.2 to the registrant’s Quarterly Report on Form 10-Q for the period ended October 31, 2015, is incorporated by reference herein. | |
The Children's Place Inc. Third Amended and Restated 2011 Equity Incentive Plan filed as Exhibit 10.1 to the registrant's Current Report on Form 8-K filed on June 7, 2016 is incorporated by reference herein. | ||
10.38(*) | Letter Agreement dated May 16, 2017 between The Children's Place Services Company, LLC and Pamela B. Wallack filed as Exhibit 10.1 to the registrant’s Quarterly Report on Form 10-Q for the period ended April 29, 2017, is incorporated by reference herein. | |
10.39(*) | Letter Agreement dated May 24, 2017 between The Children's Place Services Company, LLC and John Sullivan filed as Exhibit 10.1 to the registrant’s Quarterly Report on Form 10-Q for the period ended July 29, 2017, is incorporated by reference herein. | |
10.40(*) | Form of Performance-Based Restricted Stock Unit Award Agreement under the 2011 Equity Incentive Plan (Senior Vice President & above) filed as Exhibit 10.1 to the registrant’s Quarterly Report on Form 10-Q for the period ended May 5, 2018, is incorporated by reference herein. | |
10.41(*) | Form of Performance-Based Restricted Stock Unit Award Agreement under the 2011 Equity Incentive Plan (below Senior Vice President) filed as Exhibit 10.2 to the registrant’s Quarterly Report on Form 10-Q for the period ended May 5, 2018, is incorporated by reference herein. | |
Subsidiaries of the Company. | ||
Consent of Independent Registered Public Accounting Firm Ernst & Young, LLP. | ||
Consent of Independent Registered Public Accounting Firm BDO USA, LLP. | ||
Certificate of Principal Executive Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002. | ||
Certificate of Principal Financial Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002. | ||
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | ||
101.INS* | XBRL Instance Document. | |
101.SCH* | XBRL Taxonomy Extension Schema. | |
101.CAL* | XBRL Taxonomy Extension Calculation Linkbase. | |
101.DEF* | XBRL Taxonomy Extension Definition Linkbase. | |
101.LAB* | XBRL Taxonomy Extension Label Linkbase. | |
101.PRE* | XBRL Taxonomy Extension Presentation Linkbase. |
THE CHILDREN’S PLACE, INC. | |||
By: | /S/ Jane T. Elfers | ||
Jane T. Elfers | |||
Chief Executive Officer and President | |||
March 21, 2019 |
Signature | Title | Date | ||
/S/ Norman Matthews | Chairman of the Board | March 21, 2019 | ||
Norman Matthews | ||||
/S/ Jane T. Elfers | Director, Chief Executive Officer and President | March 21, 2019 | ||
Jane T. Elfers | (Principal Executive Officer) | |||
/S/ Michael Scarpa | Chief Operating Officer and Chief Financial Officer | March 21, 2019 | ||
Michael Scarpa | (Principal Financial Officer) | |||
/S/ Joseph Alutto | Director | March 21, 2019 | ||
Joseph Alutto | ||||
/S/ John E. Bachman | Director | March 21, 2019 | ||
John E. Bachman | ||||
/S/ Marla Malcolm Beck | Director | March 21, 2019 | ||
Marla Malcolm Beck | ||||
/S/ Joseph Gromek | Director | March 21, 2019 | ||
Joseph Gromek | ||||
/S/ Robert Mettler | Director | March 21, 2019 | ||
Robert Mettler | ||||
/S/ Stanley W. Reynolds | Director | March 21, 2019 | ||
Stanley Reynolds | ||||
/S/ Susan Sobbott | Director | March 21, 2019 | ||
Susan Sobbott |
1. | I have reviewed this annual report on Form 10-K of The Children’s Place, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the Audit Committee of the registrant’s Board of Directors (or persons performing equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | March 21, 2019 | By: | /S/ JANE T. ELFERS |
JANE T. ELFERS | |||
Chief Executive Officer and President | |||
(Principal Executive Officer) |
1. | I have reviewed this annual report on Form 10-K of The Children’s Place, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the Audit Committee of the registrant’s Board of Directors (or persons performing equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | March 21, 2019 | By: | /S/ MICHAEL SCARPA |
MICHAEL SCARPA Chief Operating Officer and Chief Financial Officer (Principal Financial Officer) |
1. | The Annual Report of the Company on Form 10-K for the year ended February 2, 2019 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | The information contained in such annual report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
By: | /S/ JANE T. ELFERS | |
Chief Executive Officer and President (Principal Executive Officer) |
1. | The Annual Report of the Company on Form 10-K for the year ended February 2, 2019 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | The information contained in such annual report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
By: | /S/ MICHAEL SCARPA | |
Chief Operating Officer and Chief Financial Officer (Principal Financial Officer) |
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Document and Entity Information - USD ($) |
12 Months Ended | ||
---|---|---|---|
Feb. 02, 2019 |
Mar. 19, 2019 |
Aug. 03, 2018 |
|
Document and Entity Information [Abstract] | |||
Entity Registrant Name | Childrens Place, Inc. | ||
Entity Central Index Key | 0001041859 | ||
Current Fiscal Year End Date | --02-02 | ||
Document Type | 10-K | ||
Document Period End Date | Feb. 02, 2019 | ||
Amendment Flag | false | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $ 1,977,021,554 | ||
Entity Common Stock, Shares Outstanding | 15,735,700 | ||
Document Fiscal Year Focus | 2018 | ||
Document Fiscal Period Focus | FY |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
Feb. 02, 2019 |
Feb. 03, 2018 |
---|---|---|
Preferred stock, par value (in dollars per share) | $ 1 | $ 1 |
Preferred stock, shares authorized | 1,000 | 1,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.10 | $ 0.10 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common Stock, Shares Issued | 15,873,000 | 17,257,000 |
Common Stock, Shares Outstanding | 15,826,000 | 17,211,000 |
Treasury Stock, Shares | 47,000 | 46,000 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Feb. 02, 2019 |
Feb. 03, 2018 |
Jan. 28, 2017 |
|
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | $ 100,960 | $ 84,698 | $ 102,336 |
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Gain (Loss) Arising During Period, Net of Tax | (2,178) | 7,350 | 6,161 |
Other Comprehensive Income (Loss), Derivatives Qualifying as Hedges, Net of Tax | 75 | 160 | 983 |
Comprehensive income | $ 98,857 | $ 92,208 | $ 109,480 |
BASIS OF PRESENTATION |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Feb. 02, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BASIS OF PRESENTATION | BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Description of Business The Children's Place, Inc. and subsidiaries (the “Company”) is the largest pure-play children's specialty apparel retailer in North America. The Company provides apparel, footwear, accessories, and other items for children. The Company designs, contracts to manufacture, sells at retail and wholesale, and licenses to sell trend right, high-quality merchandise at value prices, the substantial majority of which is under our proprietary “The Children's Place”, "Place", and "Baby Place" brand names. The Company classifies its business into two segments: The Children’s Place U.S. and The Children’s Place International. Included in The Children’s Place U.S. segment are the Company's U.S. and Puerto Rico based stores and revenue from its U.S.-based-wholesale business. Included in The Children's Place International segment are its Canadian-based stores, revenue from the Company's Canada wholesale business, as well as revenue from international franchisees. Each segment includes an e-commerce business located at www.childrensplace.com. Certain reclassifications have been made to prior period financial statements to conform to the current period presentation. Terms that are commonly used in the Company's notes to consolidated financial statements are defined as follows:
Fiscal Year The Company's fiscal year is a 52-week or 53-week period ending on the Saturday on or nearest to January 31. Fiscal 2018 was a 52-week year, Fiscal 2017 was a 53-week year, and Fiscal 2016 was a 52-week year. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and amounts of revenues and expenses reported during the period. Actual results could differ from the assumptions used and estimates made by management, which could have a material impact on the Company's financial position or results of operations. Significant estimates inherent in the preparation of the consolidated financial statements include reserves for the realizability of inventory; reserves for litigation and other contingencies; useful lives and impairments of long-lived assets; fair value measurements; accounting for income taxes and related uncertain tax positions; insurance reserves; valuation of stock-based compensation awards and related estimated forfeiture rates, among others. Consolidation The consolidated financial statements include the accounts of the Company and its wholly‑owned subsidiaries. Intercompany balances and transactions have been eliminated. As of February 2, 2019 and February 3, 2018, the Company did not have any investments in unconsolidated affiliates. FASB ASC 810--Consolidation is considered when determining whether an entity is subject to consolidation. Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. Short-term Investments Short-term investments consist of investments which the Company expects to convert into cash within one year, including time deposits, which have original maturities greater than 90 days. The Company classifies its investments in securities at the time of purchase as held-to-maturity and reevaluates such classifications on a quarterly basis. Held-to-maturity investments consist of securities that the Company has the intent and ability to retain until maturity. These securities are recorded at cost and adjusted for the amortization of premiums and discounts, which approximates fair value. Cash inflows and outflows related to the sale and purchase of investments are classified as investing activities in the Company's consolidated statements of cash flows. All of the Company's short-term investments are U.S. dollar denominated time deposits with banking institutions in Hong Kong that have six month maturity dates from inception. Revenue Recognition The Company adopted Accounting Standards Update No. 2014-09 "Revenue from Contracts with Customers” ("Topic 606") as of the beginning of Fiscal 2018 using the modified retrospective transition method. See Note 2 "Revenues" for further details on the Company's adoption of Topic 606. Inventories Inventories, which consist primarily of finished goods, are stated at the lower of cost or net realizable value, with cost determined on an average cost basis. The Company capitalizes certain buying, design, and supply chain costs in inventory and these costs are reflected within cost of sales as the inventories are sold. Inventory shrinkage is estimated in interim periods based upon the historical results of physical inventory counts in the context of current year facts and circumstances. Cost of Sales (exclusive of depreciation and amortization) In addition to the cost of inventory sold, the Company includes certain buying, design and distribution expenses, shipping and handling costs on merchandise sold directly to customers, and letter of credit fees in its cost of sales. The Company records all occupancy costs in its cost of sales, except administrative office buildings, which are recorded in selling, general, and administrative expenses. All depreciation is reported on a separate line on the Company's consolidated statements of operations. Stock-based Compensation The Company's stock-based compensation plans are administered by the Compensation Committee of the Board of Directors (the “Board”). The Compensation Committee is comprised of independent members of the Board. Effective May 20, 2011, the shareholders approved the 2011 Equity Incentive Plan (the "Equity Plan"). The Equity Plan allows the Compensation Committee to grant multiple forms of stock-based compensation such as stock options, stock appreciation rights, restricted stock awards, deferred stock awards, and performance stock awards. The Company accounts for its stock-based compensation in accordance with the provisions of FASB ASC 718-- Compensation—Stock Compensation. These provisions require, among other things: (a) the fair value at grant date of all stock awards be expensed over their respective vesting periods; (b) the amount of cumulative compensation cost recognized at any date must at least be equal to the portion of the grant-date value of the award that is vested at that date and (c) that compensation expense include a forfeiture estimate for those shares not expected to vest. Also, in accordance with these provisions, for those awards with multiple vest dates, the Company recognizes compensation cost on a straight-line basis over the requisite service period for the entire award. The cumulative expense for performance-based awards reflects changes in estimated adjusted earnings per share, adjusted operating margin expansion, and adjusted return on invested capital as they occur. Earnings per Common Share The Company reports its earnings per share in accordance with FASB ASC 260--Earnings Per Share, which requires the presentation of both basic and diluted earnings per share on the statements of operations. The diluted weighted average common shares include adjustments for the potential effects of outstanding stock options, Deferred Awards, and Performance Awards (as both terms are used in Note 4 to these consolidated financial statements), but only in the periods in which such effect is dilutive under the treasury stock method. Included in our basic and diluted weighted average common shares are those shares due to participants in the deferred compensation plan, which are held in treasury stock. Anti-dilutive stock awards are comprised of stock options and unvested deferred, restricted and performance shares which would have been anti-dilutive in the application of the treasury stock method in accordance with FASB ASC 260--Earnings Per Share. In accordance with this topic, the following table reconciles income and share amounts utilized to calculate basic and diluted net income per common share:
Accounts Receivable Accounts receivable consists of credit and debit card receivables, franchisee and wholesale receivables, landlord construction allowance receivables, and other miscellaneous items. Credit and debit card receivables represent credit and debit card sales, inclusive of private label card sales, for which the respective third party service company has yet to remit the cash. The unremitted balance approximates the last few days of related sales for each reporting period. Bad debt associated with these sales is not material. Franchisee and wholesale receivables represent product sales and sale royalties in which cash has not yet been remitted from our partners. Bad debt associated with these sales is not material. Landlord construction allowance receivables represent landlord contributions to our construction costs of building out the related real estate, primarily new and remodeled stores. Total construction costs are capitalized as property and equipment and the landlord construction allowances are recorded as a lease incentive, a component of deferred rent, which is amortized as a reduction of rent expense over the lease term. Insurance and Self-Insurance Reserves The Company self-insures and purchases insurance policies to provide for workers' compensation, general liability and property losses, cyber-security coverage, as well as director and officer's liability, vehicle liability, and employee medical benefits. The Company estimates risks and records a liability based on historical claim experience, insurance deductibles, severity factors, and other actuarial assumptions. The Company records the current portions of employee medical benefits, workers compensation, and general liability reserves within accrued expenses and other current liabilities. Property and Equipment, Net Property and equipment are stated at cost. Leasehold improvements are depreciated on a straight-line basis over the shorter of the life of the lease or the estimated useful life of the asset. All other property and equipment is depreciated on a straight-line basis based upon their estimated useful lives, with furniture and fixtures and equipment generally ranging from 3-10 years and buildings and improvements generally ranging from 20-25 years. Repairs and maintenance are expensed as incurred. The Company accounts for internally developed software intended for internal use in accordance with provisions of FASB ASC 350--Intangibles-Goodwill and Other. The Company capitalizes development-stage costs such as direct external costs and direct payroll related costs. When development is substantially complete, the Company amortizes the cost of the software on a straight-line basis over the expected life of the software, which is generally 3-10 years. Preliminary project costs and post-implementation costs such as training, maintenance, and support are expensed as incurred. Impairment of Long-Lived Assets The Company periodically reviews its long-lived assets when events indicate that their carrying value may not be recoverable. Such events include a historical trend or projected trend of cash flow losses or a future expectation that the Company will sell or dispose of an asset significantly before the end of its previously estimated useful life. In reviewing for impairment the Company groups its long-lived assets at the lowest possible level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. The Company reviews all stores that have reached comparable sales status, or sooner if circumstances should dictate, on at least an annual basis. The Company believes waiting this period of time allows a store to reach a maturity level where a more comprehensive analysis of financial performance can be performed. For each store that shows indications of impairment, the Company projects future cash flows over the remaining life of the lease and compares the total undiscounted cash flows to the net book value of the related long-lived assets. If the undiscounted cash flows are less than the related net book value of the long-lived assets, they are written down to their fair market value. The Company primarily determines fair market value to be the discounted future cash flows associated with those assets. In evaluating future cash flows, the Company considers external and internal factors. External factors comprise the local environment in which the store resides, including mall traffic, competition, and their effect on sales trends. Internal factors include the Company's ability to gauge the fashion taste of its customers, control variable costs such as cost of sales and payroll, and in certain cases, its ability to renegotiate lease costs. Deferred Financing Costs The Company capitalizes costs directly associated with acquiring third party financing. Deferred financing costs are included in other assets and are amortized as interest expense over the term of the related indebtedness. At February 2, 2019, deferred financing costs, net of accumulated amortization of $3.9 million, were approximately $0.4 million. At February 3, 2018, deferred financing costs, net of accumulated amortization of $3.6 million, were approximately $0.7 million. Treasury Stock Treasury stock is recorded at acquisition cost. Gains and losses on disposition are recorded as increases or decreases to additional paid-in capital with losses in excess of previously recorded gains charged directly to retained earnings. When treasury shares are retired and returned to authorized but unissued status, the carrying value in excess of par is allocated to additional paid-in capital and retained earnings on a pro rata basis. Advertising and Marketing Costs The Company expenses the cost of advertising over the period the advertising is run or displayed. Included in selling, general, and administrative expenses for Fiscal 2018, Fiscal 2017, and Fiscal 2016 are advertising and other marketing costs of approximately $34.1 million, $29.9 million, and $26.4 million, respectively. Deferred advertising, marketing, and promotional costs, which principally relate to advertisements that have not yet been exhibited or services that have not yet been received, were approximately $1.4 million and $3.9 million at February 2, 2019 and February 3, 2018, respectively, and were recorded within prepaid expenses and other current assets in the Company's consolidated balance sheets. Rent Expense and Deferred Rent The Company leases certain facilities and equipment, including its retail stores. Certain of the Company's lease agreements contain renewal options, rent escalation clauses, and/or landlord incentives. Renewal terms generally reflect market rates at the time of renewal. Rent expense for non-cancellable operating leases with scheduled rent increases and/or landlord incentives is recognized on a straight-line basis over the lease term, including any applicable rent holidays, beginning on the earlier of the lease commencement date or the date the Company takes control of the leased space. The Company records rent expense and the impact of lease incentives for its stores and distribution centers as a component of cost of sales. The unamortized portion of deferred rent is included in deferred rent liabilities within long-term liabilities in the Company's consolidated balance sheets. Income Taxes We utilize the liability method of accounting for income taxes as set forth in FASB ASC 740--Income Taxes. Under the liability method, deferred taxes are determined based on the temporary differences between the financial statement and tax basis of assets and liabilities, as well as for net operating losses and tax credit carryforwards. Deferred tax assets and liabilities are measured using currently enacted tax rates that apply to taxable income in effect for the years in which the basis differences and tax assets are expected to be realized. A valuation allowance is recorded when it is more likely than not that any of the deferred tax assets will not be realized. In determining the need for valuation allowances we consider projected future taxable income and the availability of tax planning strategies. If in the future we determine that we would not be able to realize our recorded deferred tax assets, an increase in the valuation allowance would decrease earnings in the period in which such determination is made. We assess our income tax positions and record tax benefits for all years subject to examination based upon our evaluation of the facts, circumstances, and information available at the reporting date. For those tax positions where it is more likely than not that a tax benefit will be sustained, we have recorded the largest amount of tax benefit with a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. For those income tax positions where it is not more likely than not that a tax benefit will be sustained, no tax benefit has been recognized in the financial statements. Accumulated Other Comprehensive Income Accumulated other comprehensive income primarily consists of cumulative translation adjustments as well as changes in the value of cash flow hedges, net of income taxes. Foreign Currency Translation and Transactions The Company has determined that the local currencies of its Canadian and Asian subsidiaries are their functional currencies. In accordance with FASB ASC 830--Foreign Currency Matters, the assets and liabilities denominated in foreign currency are translated into U.S. dollars at the current rate of exchange existing at period-end and revenues and expenses are translated at average monthly exchange rates. Related translation adjustments are reported as a separate component of stockholders' equity. The Company also transacts certain business in foreign denominated currencies primarily with its Canadian subsidiary purchasing inventory in U.S. Dollars, and there are inter-company charges between various subsidiaries. Derivative Instruments The Company is exposed to gains and losses resulting from fluctuations in foreign currency exchange rates attributable to inventory purchases denominated in a foreign currency. Specifically, its Canadian subsidiary’s functional currency is the Canadian dollar, but purchases inventory from suppliers in U.S. dollars. In order to mitigate the variability of cash flows associated with certain of these forecasted inventory purchases, the Company enters into foreign exchange forward contracts. These contracts typically mature within 12 months. The Company does not use forward contracts to engage in currency speculation, and we do not enter into derivative financial instruments for trading purposes. For derivative instruments that are designated and qualify as cash flow hedges, the effective portion of the gain or loss on the derivative is reported as a component of other comprehensive income (“OCI”) and reclassified into earnings within cost of sales (exclusive of depreciation and amortization) in the same period or periods during which the hedged transaction affects earnings. Gains and losses on the derivative representing hedge ineffectiveness are recognized in earnings within selling, general, and administrative expenses, consistent with where the Company records realized and unrealized foreign currency gains and losses on transactions in foreign denominated currencies. All derivative instruments are presented at gross fair value on the consolidated balance sheets within either prepaid expenses and other current assets or accrued expenses and other current liabilities based on their position as of the balance sheet date. Legal Contingencies The Company reserves for the outcome of litigation and contingencies when it determines an adverse outcome is probable and can estimate losses. Estimates are adjusted as facts and circumstances require. The Company expenses the costs to resolve litigation as incurred, net of amounts, if any, recovered through our insurance coverage. Fair Value Measurement and Financial Instruments FASB ASC 820-- Fair Value Measurements and Disclosure provides a single definition of fair value, together with a framework for measuring it, and requires additional disclosure about the use of fair value to measure assets and liabilities. This topic defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and establishes a three-level hierarchy, which encourages an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of the hierarchy are defined as follows:
The Company’s cash and cash equivalents, short-term investments, assets of the Company’s Deferred Compensation Plan, accounts receivable, accounts payable, and revolving loan are all short-term in nature. As such, their carrying amounts approximate fair value and fall within Level 1 of the fair value hierarchy. The Company stock included in the Deferred Compensation Plan is not subject to fair value measurement. Our derivative assets and liabilities include foreign exchange forward contracts that are measured at fair value using observable market inputs such as forward rates, our credit risk and our counterparties’ credit risks. Based on these inputs, our derivative assets and liabilities are classified within Level 2 of the valuation hierarchy. The Company’s assets measured at fair value on a nonrecurring basis include long-lived assets. The Company reviews the carrying amounts of such assets when events indicate that their carrying amounts may not be recoverable. Any resulting asset impairment would require that the asset be recorded at its fair value. The resulting fair value measurements of the assets are considered to be Level 3 inputs. Long-lived assets, primarily comprised of property and equipment, held and used with a carrying amount of $6.1 million were written down to their fair value, resulting in an impairment charge of $6.1 million, which was included in earnings for Fiscal 2018. For Fiscal 2017, long-lived assets held and used with a carrying amount of $6.4 million were written down to their fair value, resulting in an impairment charge of $5.2 million, which was included in earnings for Fiscal 2017. For Fiscal 2016, long-lived assets held and used with a carrying amount of $4.2 million were written down to their fair value, resulting in an impairment charge of $4.0 million, which was included in earnings for Fiscal 2016. Recently Issued Accounting Updates Adopted in Fiscal 2018 In May 2014, the FASB issued guidance relating to revenue recognition from contracts with customers. This guidance requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. We adopted this guidance in the first quarter of 2018 using the modified-retrospective method. This adoption did not have a material impact on the Company’s consolidated financial statements. Refer to Note 2, "Revenues", for additional information. To Be Adopted After Fiscal 2018 In August 2017, the FASB issued guidance relating to the accounting for hedging activities. This guidance aims to better align an entity’s risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. The amendments in the guidance expand and refine hedge accounting for both non-financial and financial risk components and align the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. The standard is effective for the Company beginning in Fiscal 2019, including interim periods within those fiscal years, and early adoption is permitted. The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements. In February 2016, the FASB issued guidance relating to the accounting for leases. This guidance applies a right of use model that requires a lessee to record, for all leases with a lease term of more than 12 months, an asset representing its right to use the underlying asset for the lease term and a liability to make lease payments. The lease term is the noncancellable period of the lease, and includes both periods covered by an option to extend the lease, if the lessee is reasonably certain to exercise that option, and periods covered by an option to terminate the lease, if the lessee is reasonably certain not to exercise that termination option. The standard is effective for the Company beginning in Fiscal 2019, including interim periods within those fiscal years, and early adoption is permitted. The Company will adopt this guidance beginning in Fiscal 2019 using a modified retrospective approach with the cumulative effect of adopting the standard recognized as an adjustment to opening retained earnings. The Company expects to apply the related package of practical expedients permitted by the transition guidance in the standard, which allows the Company to carry forward its identification of contracts that are or contain leases, its historical lease classification, and its initial direct costs for existing leases. The Company currently expects to recognize right-of-use assets and lease liabilities totaling between $400 million and $450 million upon adoption. The Company does not expect adoption of the standard to have a material impact on the Company's consolidated results of operations or cash flows. |
REVENUES (Notes) |
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Statement of Financial Position [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Text Block] | 2. REVENUES Adoption of ASC Topic 606, "Revenue from Contracts with Customers" On February 4, 2018, the Company adopted Topic 606 "Revenue from Contracts with Customers" using the modified retrospective method. Results for reporting periods beginning February 4, 2018 are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with the Company's historic accounting under Topic 605 "Revenue Recognition". Upon adoption of this guidance, there was no material impact to the Company's consolidated financial statements. We recorded a net increase to opening retained earnings, net of taxes, of approximately $0.9 million as of February 4, 2018 due to the cumulative impact of adopting Topic 606. The impact primarily related to the accounting for gift card breakage of approximately $2.3 million, partially offset by our private label credit card program of approximately $1.1 million, net of taxes of $0.3 million:
In accordance with the new revenue standard requirements, the disclosure of the impact of adoption on our consolidated balance sheet and income statement were as follows, with the impact primarily related to the accounting for our private label credit card program and gift card breakage:
Revenue Recognition Revenues are recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. The following table presents our revenues disaggregated by geography:
The Company recognizes revenue, including shipping and handling fees billed to customers, upon purchase at the Company's retail stores or when received by the customer if the product was purchased via e-commerce, net of coupon redemptions and anticipated sales returns. The Company deferred approximately $1.2 million and $3.0 million as of February 2, 2019 and February 3, 2018, respectively, based upon estimated time of delivery, at which point control passes to the customer, and is recorded in accrued expenses and other current liabilities. Sales tax collected from customers is excluded from revenue. For the sale of goods with a right of return, the Company recognizes revenue for the consideration it expects to be entitled to and calculates an allowance for estimated sales returns based upon the Company's sales return experience. Adjustments to the allowance for estimated sales returns in subsequent periods are generally not material based on historical data, thereby reducing the uncertainty inherent in such estimates. The allowance for estimated sales returns, which is recorded in accrued expenses and other current liabilities, was approximately $0.9 million and $0.8 million as of February 2, 2019 and February 3, 2018, respectively. Our private label credit card is issued to our customers for use exclusively at The Children's Place stores and online at www.childrensplace.com, and credit is extended to such customers by a third-party financial institution on a non-recourse basis to us. The private label credit card includes multiple performance obligations, including marketing and promoting the program on behalf of the bank and the operation of the loyalty rewards program. Included in the agreement with the third-party financial institution was an upfront bonus paid to the Company. The upfront bonus is recognized as revenue and allocated between brand and reward obligations. As the license of the Company’s brand is the predominant item in the performance obligation, the amount allocated to the brand obligation is recognized on a straight-line basis over the initial term. The amount allocated to the reward obligation is recognized on a point-in-time basis as redemptions under the loyalty program occur. In measuring revenue and determining the consideration the Company is entitled to as part of a contract with a customer, the Company takes into account the related elements of variable consideration, such as additional bonuses, including profit-sharing, over the life of the program. Similar to the upfront bonus, the usage-based royalties and bonuses are recognized as revenue and allocated between the brand and reward obligations. The amount allocated to the brand obligation is recognized on a straight-line basis over the initial term. The amount allocated to the reward obligation is recognized on a point-in-time basis as redemptions under the loyalty program occur. In addition, the annual profit-sharing amount is estimated and recognized quarterly within an annual period when earned. The additional bonuses are amortized over the contract term based on anticipated progress against future targets and level of risk associated with achieving the targets. The Company deferred approximately $0.3 million as of February 2, 2019 in relation to its private label credit card performance obligations. The Company has a points-based customer loyalty program, in which customers earn points based on purchases and other promotional activities. These points can be redeemed for coupons to discount future purchases. A contract liability is estimated based on the standalone selling price of benefits earned by customers through the program and the related redemption experience under the program. The value of each point earned is recorded as deferred revenue and is included within accrued expenses and other current liabilities. The total contract liability related to this program was $2.2 million and $4.1 million as of February 2, 2019 and February 3, 2018, respectively. The following table provides the reconciliation of the contract liability related to this program:
The Company's policy with respect to gift cards is to record revenue as and when the gift cards are redeemed for merchandise. The Company recognizes gift card breakage income in proportion to the pattern of rights exercised by the customer when the Company expects to be entitled to breakage, and the Company determines that it does not have a legal obligation to remit the value of the unredeemed gift card to the relevant jurisdiction as unclaimed or abandoned property. With the adoption of Topic 606, gift card breakage is recorded within net sales during Fiscal 2018 and within selling, general, and administrative expenses during Fiscal 2017 prior to adoption of Topic 606. Prior to their redemption, gift cards are recorded as a liability, included within accrued expenses and other current liabilities. The total contract liability related to gift cards issued was $17.9 million and $16.1 million as of February 2, 2019 and February 3, 2018, respectively. The liability is estimated based on expected breakage that considers historical patterns of redemption. The following table provides the reconciliation of the contract liability related to gift cards:
The Company has an international expansion program through territorial agreements with franchisees. The Company generates revenues from the franchisees from the sale of product and, in certain cases, sales royalties. The Company records net sales and cost of goods sold on the sale of product to franchisees when the franchisee takes ownership of the product. The Company records net sales for royalties when the applicable franchisee sells the product to their customers. Under certain agreements, the Company receives a fee from applicable franchisees for exclusive territorial rights and based on the opening of new stores in such franchisee's licensed territory. The Company records these territorial fees as deferred revenue and amortizes the fee into gross sales over the life of the territorial agreement. In accordance with the new revenue standard requirements, the disclosure of the impact of adoption on our consolidated balance sheet and income statement were as follows, with the impact primarily related to the accounting for our private label credit card program and gift card breakage:
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STOCKHOLDERS' EQUITY | STOCKHOLDERS’ EQUITY Share Repurchase Programs The Company's Board of Directors has authorized the following share repurchase programs which were active during Fiscal 2018 and Fiscal 2017: (1) $250 million in December 2015 (the "2015 $250 Million Share Repurchase Program"); (2) $250 million in March 2017 (the "2017 Share Repurchase Program"); and (3) $250 million in March 2018 (the "2018 Share Repurchase Program"). The 2015 $250 Million and the 2017 Share Repurchase Programs have been completed. At February 2, 2019, there was approximately $239 million remaining on the 2018 Share Repurchase Program. Under these programs, the Company may repurchase shares in the open market at current market prices at the time of purchase or in privately negotiated transactions. The timing and actual number of shares repurchased under a program will depend on a variety of factors including price, corporate and regulatory requirements, and other market and business conditions. The Company may suspend or discontinue a program at any time, and may thereafter reinstitute purchases, all without prior announcement. As part of its share repurchase programs, the Company entered into an accelerated share repurchase program with Goldman Sachs & Co. LLC in March 2018 under which it repurchased and retired approximately 1.0 million shares for $125.0 million. The accelerated share repurchase program was completed during the second quarter of Fiscal 2018. Pursuant to the Company's practice, including due to restrictions imposed by the Company's insider trading policy during black-out periods, the Company withholds and surrenders shares of vesting stock awards and makes payments to taxing authorities as required by law to satisfy the withholding tax requirements of all recipients. The Company's payment of the withholding taxes in exchange for the surrendered shares constitutes a purchase of its common stock. The Company also acquires shares of its common stock in conjunction with liabilities owed under a deferred compensation plan, which are held in treasury. The following table summarizes the Company's share repurchases:
In accordance with FASB ASC 505--Equity, the par value of the shares retired is charged against common stock and the remaining purchase price is allocated between additional paid-in capital and retained earnings. The portion charged against additional paid-in capital is done using a pro-rata allocation based on total shares outstanding. Related to all shares retired for Fiscal 2018, Fiscal 2017, and Fiscal 2016, approximately $113.0 million, $103.7 million, and $133.0 million was charged to retained earnings, respectively. Dividends Related to Fiscal 2018 dividends, $34.4 million was charged to retained earnings, of which $33.0 million related to cash dividends paid and $1.4 million related to dividend share equivalents on unvested Deferred Awards and Performance Awards. Related to Fiscal 2017 dividends, $29.7 million was charged to retained earnings, of which $28.1 million related to cash dividends paid and $1.6 million related to dividend share equivalents on unvested Deferred Awards and Performance Awards. The Board of Directors authorized a quarterly cash dividend of $0.56 per share to be paid on April 26, 2019 to shareholders of record on the close of business on April 15, 2019. Future declarations of quarterly dividends, the establishment of future record dates, and the resulting payment dates are subject to approval by the Company’s Board of Directors based on a number of factors, including business and market conditions, the Company’s future financial performance, and other investment priorities. |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION The Company generally grants time vesting stock awards ("Deferred Awards") and performance-based stock awards ("Performance Awards") to employees at management levels. The Company also grants Deferred Awards to its non-employee directors. Deferred Awards are granted in the form of restricted stock units that require each recipient to complete a service period. Deferred Awards generally vest ratably over three years, except for those granted to non-employee directors, which generally vest over one year. Performance Awards are granted in the form of restricted stock units which have performance criteria that must be achieved for the awards to vest in addition to a service period requirement. With the approval of the Board's Compensation Committee, the Company may settle vested Deferred Awards and Performance Awards to the employee in shares, in a cash amount equal to the market value of such shares at the time all requirements for delivery of the award have been met, or in part shares and cash. For Performance Awards issued during Fiscal 2016 and Fiscal 2017, an employee may earn from 0% to 200% of their Target Shares based on the achievement of cumulative adjusted earnings per share achieved for the three-year performance period, adjusted operating margin expansion achieved for the three-year performance period, and adjusted return on invested capital achieved at the end of the performance period. For Performance Awards issued during Fiscal 2018 (the “2018 Performance Awards”), an employee may earn from 0% to 250% of their Target Shares based on the cumulative adjusted earnings per share achieved for the three-year performance period, adjusted operating margin expansion achieved for the three-year performance period, adjusted ROIC achieved as of the end of the performance period, and the ranking of our adjusted ROIC relative to that of companies in our peer group as of the end of the performance period. The Performance Awards cliff vest, if earned, after completion of the applicable three year performance period. The fair value of the Performance Awards granted is based on the closing price of our common stock on the grant date. Stock-based compensation expense is recognized ratably over the related service period, reduced for estimated forfeitures of those awards not expected to vest due to employee turnover. Stock-based compensation expense, as it relates to Performance Awards, is also adjusted based on the Company's estimate of the percentage of the aggregate Target Shares expected to be earned. The following table summarizes the Company’s stock-based compensation expense:
(1) A portion of stock-based compensation is included in cost of sales. Approximately $3.5 million, $4.0 million, and $3.6 million in Fiscal 2018, Fiscal 2017, and Fiscal 2016, respectively, were included in cost of sales. All other stock-based compensation is included in selling, general, and administrative expense. The Company recognized a tax benefit related to stock-based compensation expense of $7.2 million, $8.2 million, and $11.1 million for Fiscal 2018, Fiscal 2017, and Fiscal 2016, respectively. At February 2, 2019, the Company had 756,502 shares available for grant under the Equity Plan. Changes in the Company’s Unvested Stock Awards during Fiscal 2018, Fiscal 2017, and Fiscal 2016 Deferred Awards
Total unrecognized stock-based compensation expense related to unvested Deferred Awards approximated $15.8 million as of February 2, 2019, which will be recognized over a weighted average period of approximately 1.8 years. The fair value of Deferred Awards held by the Company's employees that vested during Fiscal 2018, Fiscal 2017, and Fiscal 2016 was approximately $25.3 million, $23.6 million, and $12.2 million, respectively. Performance Awards
____________________________________________ (1)For those awards for which the performance period is complete, the number of unvested shares is based on actual shares that will vest upon completion of the service period. For those awards in which the performance period is not yet complete, the number of unvested shares in the table above is based on the participants earning their Target Shares at 100%; however, the cumulative expense recognized reflects changes in estimated adjusted earnings per share, adjusted operating margin expansion, and adjusted return on invested capital as they occur. Based on the current number of Performance Awards expected to be earned, the total unrecognized stock-based compensation expense related to unvested Performance Awards approximated $9.6 million as of February 2, 2019, which will be recognized over a weighted average period of approximately 1.2 years. The fair value of Performance Awards held by the Company's employees that vested during Fiscal 2018, Fiscal 2017, and Fiscal 2016 was approximately $69.2 million, $49.1 million, and $4.4 million, respectively. Stock Options No stock options were issued during Fiscal 2018, Fiscal 2017, and Fiscal 2016 and at February 2, 2019, there were no stock options outstanding. |
PROPERTY AND EQUIPMENT |
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Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PROPERTY AND EQUIPMENT | PROPERTY AND EQUIPMENT, NET Property and equipment consist of the following:
During Fiscal 2018, the Company performed impairment testing on 972 stores with a total net book value of $81.4 million. During Fiscal 2018, the Company recorded $6.1 million of impairment charges of which $1.7 million related to the full impairment of 11 stores, and $4.4 million related to the write-down of information technology systems. During Fiscal 2017, the Company performed impairment testing on 1,014 stores with a total net book value of $79.4 million. During Fiscal 2017, the Company recorded $2.8 million of impairment charges primarily related to 21 stores, all of which were fully impaired. Additionally, the Company recorded asset impairment charges of $2.4 million related to the write-down of information technology systems. During Fiscal 2016, the Company performed impairment testing on 1,039 stores with a total net book value of $91.4 million. During Fiscal 2016, the Company recorded $2.7 million of impairment charges primarily related to 28 underperforming stores, of which 11 were fully impaired and 17 were partially impaired. Additionally, the Company recorded asset impairment charges of $1.3 million related to the write-down of some previously capitalized development costs and information technology systems. |
CREDIT FACILITY |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CREDIT FACILITY | CREDIT FACILITY The Company and certain of its domestic subsidiaries maintain a credit agreement with Wells Fargo Bank, National Association (“Wells Fargo”), Bank of America, N.A., HSBC Business Credit (USA) Inc., and JPMorgan Chase Bank, N.A. as lenders (collectively, the “Lenders”) and Wells Fargo, as Administrative Agent, Collateral Agent and Swing Line Lender (the “Credit Agreement”). The Credit Agreement was amended on September 15, 2015 and the provisions below reflect the amended and extended Credit Agreement. The Credit Agreement, which expires in September 2020, consists of a $250 million asset based revolving credit facility, with a $50 million sub-limit for standby and documentary letters of credit and an uncommitted accordion feature that could provide up to $50 million of additional availability. Revolving credit loans outstanding under the Credit Agreement bear interest, at the Company’s option, at:
The Company is charged an unused line fee of 0.25% on the unused portion of the commitments. Letter of credit fees range from 0.625% to 0.750% for commercial letters of credit and range from 0.75% to 1.00% for standby letters of credit. Letter of credit fees are determined based on the amount of the Company's average excess availability under the facility. The amount available for loans and letters of credit under the Credit Agreement is determined by a borrowing base consisting of certain credit card receivables, certain trade and franchise receivables, certain inventory, and the fair market value of certain real estate, subject to certain reserves. The outstanding obligations under the Credit Agreement may be accelerated upon the occurrence of certain events, including, among others, non-payment, breach of covenants, the institution of insolvency proceedings, defaults under other material indebtedness and a change of control, subject, in the case of certain defaults, to the expiration of applicable grace periods. The Company is not subject to any early termination fees. The Credit Agreement contains covenants, which include conditions on stock buybacks and the payment of cash dividends or similar payments. Credit extended under the Credit Agreement is secured by a first priority security interest in substantially all of the Company’s U.S. assets excluding intellectual property, software, equipment, and fixtures. As of February 2, 2019, the Company has capitalized an aggregate of approximately $4.3 million in deferred financing costs related to the Credit Agreement. The unamortized balance of deferred financing costs at February 2, 2019 and February 3, 2018 was approximately $0.4 million and $0.7 million, respectively. Unamortized deferred financing costs are amortized over the remaining term of the Credit Agreement. The table below presents the components of the Company’s credit facility:
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PREPAID EXPENSES AND OTHER CURRENT ASSETS |
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Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Prepaid Expenses And Other Current Assets [Text Block] | OTHER CURRENT AND NON-CURRENT ASSETS Prepaid expenses and other current assets are comprised of the following:
Other non-current assets are comprised of the following:
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ACCRUED EXPENSES AND OTHER CURRENT LIABILTIES |
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Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | OTHER CURRENT AND LONG-TERM LIABILITIES Accrued expenses and other current liabilities are comprised of the following:
Other long-term liabilities are comprised of the following:
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COMMITMENTS AND CONTINGENCIES |
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Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Operating Lease Commitments The Company leases all of its stores, corporate offices, and distribution facilities (except the Ft. Payne, Alabama distribution center which the Company owns), and certain office equipment, store fixtures, and automobiles, under operating leases expiring through 2029. The leases require fixed minimum annual rental payments plus, under the terms of certain leases, additional payments for taxes, other expenses, and additional rent based upon sales. Store, corporate offices, and distribution facilities minimum rent, contingent rent, and sublease income are as follows:
Future minimum annual lease payments under the Company's operating leases at February 2, 2019 were as follows:
Purchase Commitments As of February 2, 2019, the Company has entered into various purchase commitments for merchandise for re-sale of approximately $122.4 million and approximately $14.5 million for equipment, construction, and other non-merchandise commitments. Loss Contingency for Foreign Exchange Control Penalties During the fourth quarter of Fiscal 2016, the Company determined that one of its foreign subsidiaries had not complied with local foreign exchange control funding regulations related to offshore funding of those operations. The Company has taken steps during Fiscal 2017 to report the noncompliance to the foreign jurisdiction at issue under a voluntary disclosure program. The Company has concluded that, based on currently available information, a reasonable estimate of penalties payable by the Company arising from the matter will range between $2.2 million and $2.8 million. In making its estimates, however, the Company notes that this range is based on currently available information and involves elements of judgment and significant uncertainties, and that actual penalties may exceed the high end of the range. The Company has recorded a provision for potential penalties, arising from this matter, totaling $2.2 million in its consolidated financial statements. |
LEGAL AND REGULATORY MATTERS |
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LEGAL AND REGULATORY MATTERS [Abstract] | |
Legal Matters and Contingencies [Text Block] | LEGAL MATTERS The Company is a defendant in Rael v. The Children’s Place, Inc., a purported class action, pending in the U.S. District Court, Southern District of California. In the initial complaint filed in February 2016, the plaintiff alleged that the Company falsely advertised discount prices in violation of California’s Unfair Competition Law, False Advertising Law, and Consumer Legal Remedies Act. The plaintiff filed an amended complaint in April 2016, adding allegations of violations of other state consumer protection laws. In August 2016, the plaintiff filed a second amended complaint, adding an additional plaintiff and removing the other state law claims. The plaintiffs’ second amended complaint seeks to represent a class of California purchasers and seeks, among other items, injunctive relief, damages, and attorneys’ fees and costs. The Company engaged in mediation proceedings with the plaintiffs in December 2016 and April 2017. The parties reached an agreement in principle in April 2017, and signed a definitive settlement agreement in November 2017, to settle the matter on a class basis with all individuals in the U.S. who made a qualifying purchase at The Children’s Place from February 11, 2012 through the date of preliminary approval by the court of the settlement. The settlement is subject to court approval and provides for merchandise vouchers for class members who submit valid claims, as well as payment of legal fees and expenses and claims administration expenses. The court has stayed the matter, pending an appellate court ruling in another lawsuit to which the Company is not a party. The settlement, if ultimately approved by the court, will result in the dismissal of all claims through the date of the court’s preliminary approval of the settlement. However, if the settlement is rejected by the court, the parties will likely return to litigation, and in such event, no assurance can be given as to the ultimate outcome of this matter. In connection with the proposed settlement, the Company recorded a reserve for $5.0 million in its consolidated financial statements in the first quarter of Fiscal 2017. The Company is also involved in various legal proceedings arising in the normal course of business. In the opinion of management, any ultimate liability arising out of these proceedings will not have a material adverse effect on the Company's financial position, results of operations, or cash flows. |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INCOME TAXES | INCOME TAXES The components of income before taxes are as follows:
The components of the Company's provision for income taxes consisted of the following:
(1) The February 2, 2019 and February 3, 2018 federal, state, and local tax provision includes benefits resulting from stock-based compensation arrangements recognized under ASU 2016-09--Improvements to Employee Share Based Payment Accounting. The Company adopted ASU 2016-09 prospectively. Accordingly, no adjustments have been made for the benefits recognized for the year ended January 28, 2017. Such benefits were recorded in equity for the year ended January 28, 2017. A reconciliation between the calculated tax provision on income based on a U.S. federal statutory rate of 21%, 34.3%, and 35% for the years ended February 2, 2019, February 3, 2018, and January 28, 2017, respectively, the effective tax rate is as follows:
(1) The total benefit from Excess tax benefit related to stock compensation for the Fiscal 2018 was $14.9 which includes $11.8 million of federal tax and $3.1 million state tax (net of federal benefit). The total benefit from Excess tax benefit related to stock compensation for the Fiscal 2017 was $16.6 which included federal tax of $14.7 million and $1.9 million of state tax (net of federal benefit). (2) The foreign tax rate differential is due to the Company having a lower foreign effective tax rate as compared to its U.S. federal statutory tax rate of 21% for Fiscal 2018, 34.3% for Fiscal 2017, and 35% for Fiscal 2016. The Company has substantial operations in Hong Kong, which have lower statutory income tax rates as compared to the U.S. The Company's foreign effective tax rates for Fiscal 2018, Fiscal 2017, and Fiscal 2016 were 17.4% 19.9%, and 21.2%, respectively. This rate will fluctuate from year to year in response to changes in the mix of income by country as well as changes in foreign jurisdiction tax laws. The assessment of the amount of value assigned to our deferred tax assets under the applicable accounting rules is judgmental. We are required to consider all available positive and negative evidence in evaluating the likelihood that we will be able to realize the benefit of our deferred tax assets in the future. Such evidence includes scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies, and the results of recent operations. Since this evaluation requires consideration of events that may occur some years into the future, there is an element of judgment involved. Realization of our deferred tax assets is dependent on generating sufficient taxable income in future periods. We believe that it is more likely than not that future taxable income will be sufficient to allow us to recover substantially all of the value assigned to our deferred tax assets. However, if future events cause us to conclude that it is not more likely than not that we will be able to recover all of the value assigned to our deferred tax assets, we will be required to adjust our valuation allowance accordingly. The tax effects of temporary differences which give rise to deferred tax assets and liabilities are as follows:
The Company has foreign net operating loss carryforwards of approximately $0.3 million, which do not expire. During Fiscal year 2018, the company liquidated certain foreign holding companies which had net operating carryforwards. While such carryforwards were written off as a result of the liquidation, there was no impact on the consolidated statement of operations as there was a full valuation allowance for the entire carryforward. The Company also has an Alternative Minimum Tax credit ("AMT") in Puerto Rico of approximately $0.6 million. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in assessing the need for a valuation allowance. The Company has concluded that it is more likely than not that certain deferred tax assets cannot be used in the foreseeable future, principally the foreign net operating loss carryforwards and the AMT credit in Puerto Rico. Accordingly, a valuation allowance has been established for these tax benefits. However, to the extent that tax benefits related to these are realized in the future, the reduction of the valuation allowance will reduce income tax expense accordingly. On December 22, 2017, the U.S. government passed the Tax Act. The Tax Act is comprehensive tax legislation that implements complex changes to the U.S. tax code including, but not limited to, the reduction of the corporate tax rate from 35% to 21% and a move from a global tax regime to a modified territorial regime, which requires U.S. companies to pay a mandatory one-time transition tax on historical offshore earnings that have not been repatriated to the U.S. The transition tax is payable over eight years. The first payment was made during the first quarter of Fiscal 2018. In addition, pursuant to IRS guidance, the overpayment from the fiscal year 2017 tax return is required to be applied first toward the transition tax. Within our consolidated balance sheets, the remaining unpaid transition tax of $18.9 million is included in long-term liabilities. Due to the complexities of the Tax Act, the SEC staff issued SAB 118 that allowed the company to record a provisional amount for any income tax effects of the Tax Act in accordance with ASC 740--Income Taxes, to the extent that a reasonable estimate can be made. SAB 118 allows for a measurement period of up to one year after the enactment date of the Tax Act to finalize the recording of the related tax impacts. In Fiscal 2017, we recorded a provisional amount for the one-time transition tax of $37.6 million. In Fiscal 2018, we recorded an additional expense of $0.3 million as we finalized the one-time Federal transition tax which was $37.9 million. The transition tax was based on our total accumulated post-1986 prescribed foreign earnings and profits ("E&P") of $389 million, which was previously considered to be indefinitely reinvested prior to Fiscal 2017. In Fiscal 2017, we also recorded a provisional estimate of $5.7 million related to the revaluation of U.S. deferred tax assets and liabilities due to the lower enacted federal income tax rate, of 21%, that was effective January 1, 2018. A benefit of $0.3 million was recorded in Fiscal 2018, based on the finalization of the 2017 U.S. tax return which was filed in the fourth quarter of Fiscal 2018. While the Company is no longer permanently reinvested to the extent earnings were subject to the transition tax under the Tax Act, no additional income taxes have been provided on any earnings subsequent to the transition or for any additional outside basis differences inherent in these entities, as these amounts continue to be permanently reinvested in foreign operations. Determining the amount of unrecognized deferred tax liability related to any additional outside basis differences in these entities (i.e., basis differences in excess of that subject to the one-time transition tax) is not practicable. The unremitted foreign earnings earned subsequent to the transition tax which are permanently reinvested are approximately $48.5 million as of February 2, 2019. The Tax Act also includes provisions to tax global intangible low-taxed income (“GILTI”) and a base erosion and anti-abuse tax (“BEAT”) that imposes tax on certain foreign related-party payments. The Company is subject to the GILTI and BEAT provisions, which are effective January 1, 2018. The Company has included net federal and state expense of $1.4 million to reflect the impact of these new laws in the Fiscal 2018 tax provision. The ultimate impacts of the Tax Act may differ from the estimate above, possibly materially, due to additional guidance from the U.S. government, updates or changes in the Company’s assumptions, revision of accounting standards for income taxes or related interpretations, and future information that may become available. Uncertain Tax Benefits Tax positions are evaluated in a two-step process. The Company first determines whether it is more-likely-than-not that a tax position will be sustained upon examination. If a tax position meets the more-likely-than-not recognition threshold, it is measured to determine the amount of benefit to recognize in the financial statements. The tax position is measured as the largest amount of benefit that is greater than 50% likely to be realized upon ultimate settlement. A reconciliation of the gross amounts of unrecognized tax benefits, excluding accrued interest and penalties, is as follows:
Approximately $5.0 million of unrecognized tax benefits, excluding accrued interest and penalties, at February 2, 2019 would affect the Company's effective tax rate if recognized. The Company believes it is reasonably possible that there may be a reduction of approximately $0.4 million of unrecognized tax benefits in the next 12 months as a result of settlements with taxing authorities and statute of limitations expirations. The Company accrued interest and penalties related to unrecognized tax benefits as part of the provision for income taxes. At February 2, 2019 and February 3, 2018, accrued interest and penalties included in unrecognized tax benefits were approximately $0.1 million and $0.1 million, respectively. Interest, penalties, and reversals, thereof, net of taxes, was a benefit of $0.1 million in Fiscal 2018, a benefit of $0.9 million in Fiscal 2017, and a benefit of $0.3 million in Fiscal 2016. The Company is subject to tax in the United States and foreign jurisdictions, including Canada and Hong Kong. The Company, joined by its domestic subsidiaries, files a consolidated income tax return for federal income tax purposes. The Company is no longer subject to income tax examinations by U.S. federal, state and local, or foreign tax authorities for fiscal tax years 2014 and prior, with the exception of Hong Kong, which is open through fiscal tax year 2013 due to ongoing tax examination. |
SEGMENT INFORMATION |
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Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT INFORMATION | SEGMENT INFORMATION In accordance with FASB ASC 280---Segment Reporting, the Company reports segment data based on geography: The Children’s Place U.S. and The Children’s Place International. Each segment includes an e-commerce business located at www.childrensplace.com. Included in The Children’s Place U.S. segment are the Company’s U.S. and Puerto Rico-based stores and revenue from the Company's U.S.-based wholesale business. Included in The Children's Place International segment are the Company's Canadian-based stores, revenue from the Company's Canadian wholesale business, and revenue from international franchisees. The Company measures its segment profitability based on operating income, defined as income before interest and taxes. Net sales and direct costs are recorded by each segment. Certain inventory procurement functions such as production and design as well as corporate overhead, including executive management, finance, real estate, human resources, legal, and information technology services are managed by The Children’s Place U.S. segment. Expenses related to these functions, including depreciation and amortization, are allocated to The Children’s Place International segment based primarily on net sales. The assets related to these functions are not allocated. The Company periodically reviews these allocations and adjusts them based upon changes in business circumstances. Net sales from external customers are derived from merchandise sales, and the Company has no major customers that account for more than 10% of its net sales. As of February 2, 2019, The Children’s Place U.S. owned and operated 850 stores and The Children’s Place International owned and operated 122 stores. As of February 3, 2018, The Children’s Place U.S. owned and operated 886 stores and The Children’s Place International owned and operated 128 stores. The following tables provide segment level financial information for Fiscal 2018, Fiscal 2017, and Fiscal 2016:
Geographic Information The Company's long-lived assets are located in the following countries:
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DERIVATIVE INSTRUMENTS (Notes) |
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Derivative Instruments and Hedging Activities Disclosure [Text Block] | The Company is exposed to gains and losses resulting from fluctuations in foreign currency exchange rates attributable to inventory purchases denominated in a foreign currency. Specifically, our Canadian subsidiary’s functional currency is the Canadian dollar, but purchases inventory from suppliers in U.S. dollars. In order to mitigate the variability of cash flows associated with certain of these forecasted inventory purchases, we enter into foreign exchange forward contracts. These contracts typically mature within 12 months. We do not use forward contracts to engage in currency speculation, and we do not enter into derivative financial instruments for trading purposes. The Company accounts for all of its derivatives and hedging activity under FASB ASC 815--Derivatives and Hedging. Under the Company’s risk management policy and in accordance with guidance under the topic, in order to qualify for hedge accounting treatment, a derivative must be considered highly effective at offsetting changes in either the hedged item’s cash flows or fair value. Additionally, the hedge relationship must be documented to include the risk management objective and strategy, the hedging instrument, the hedged item, the risk exposure, and how hedge effectiveness will be assessed prospectively and retrospectively. The Company formally measures effectiveness of its hedging relationships both at the hedge inception and on an ongoing basis. The Company would discontinue hedge accounting under a foreign exchange forward contract prospectively (i) if management determines that the derivative is no longer highly effective in offsetting changes in the cash flows of a hedged item, (ii) when the derivative expires or is terminated, (iii) if the forecasted transaction being hedged by the derivative is no longer probable of occurring, or (iv) if management determines that designation of the derivative as a hedge instrument is no longer appropriate. All derivative instruments are presented at gross fair value on the Consolidated Balance Sheets within either prepaid expenses and other current assets or accrued expenses and other current liabilities. As of February 2, 2019 and February 3, 2018 the Company had foreign exchange forward contracts with an aggregate notional amount of $17.9 million and $30.0 million, respectively, and the fair value of the derivative instruments was an asset of $1.9 million and $1.6 million, respectively. As these foreign exchange forward contracts are measured at fair value using observable market inputs such as forward rates, the Company's credit risk, and our counterparties’ credit risks, they are classified within Level 2 of the valuation hierarchy. Cash settlements related to these forward contracts are recorded in cash flows from operating activities within the consolidated statements of cash flows. For derivative instruments that are designated and qualify as cash flow hedges, the effective portion of the gain or loss on the derivative is reported as a component of other comprehensive income (“OCI”) and reclassified into earnings within cost of sales (exclusive of depreciation and amortization) in the same period or periods during which the hedged transaction affects earnings. Gains and losses on the derivative representing hedge ineffectiveness are recognized in earnings within selling, general, and administrative expenses, consistent with where the Company records realized and unrealized foreign currency gains and losses on transactions in foreign denominated currencies. During Fiscal 2018, approximately $0.1 million of the effective portion of the gain on the derivative was reclassified into earnings within cost of sales. As of February 2, 2019, the gross value related to hedges of these transactions in OCI was approximately $1.0 million. Assuming February 2, 2019 exchange rates remain constant, $0.7 million of gains, net of tax, related to hedges of these transactions are expected to be reclassified from OCI into earnings over the next 12 months. Changes in fair value associated with derivatives that are not designated and qualified as cash flow hedges are recognized in earnings within selling, general, and administrative expenses. The Company enters into foreign exchange forward contracts with major banks and has risk exposure in the event of nonperformance by either party. However, based on our assessment, the Company believes that obligations under the contracts will be fully satisfied. Accordingly, there was no requirement to post collateral or other security to support the contracts as of February 2, 2019. |
QUARTERLY FINANCIAL DATA |
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Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
QUARTERLY FINANCIAL DATA | QUARTERLY FINANCIAL DATA (UNAUDITED) In the opinion of management, the unaudited consolidated financial statements presented below contain all material adjustments, consisting of normal recurring accruals, necessary to present fairly the Company's financial position and results of operations and have been prepared in a manner consistent with the audited financial statements contained herein. Due to the seasonal nature of the Company's business, the results of operations in any given interim period are not indicative of operating results for a full fiscal year. The following tables reflect quarterly consolidated statements of income for the periods indicated (unaudited):
____________________________________________ (1) Significantly impacting the fourth quarter of Fiscal 2017 was a one-time tax charge of approximately $51.8 million as a result of the Tax Act. See Note 11 for further details. |
SAVINGS AND INVESTMENT PLANS |
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Retirement Benefits [Abstract] | |
SAVINGS AND INVESTMENT PLANS | RETIREMENT AND SAVINGS PLANS 401(k) Plan The Company has adopted The Children's Place 401(k) Savings Plan (the “401(k) Plan”), which qualifies under Section 401(k) of the Internal Revenue Code of 1986, as amended (the “Code”). The 401(k) Plan is a defined contribution plan established to provide retirement benefits for employees. The 401(k) Plan is employee funded up to an elective annual deferral and also provides for Company matching contributions up to a certain percentage amount of the employee's salary. The 401(k) Plan is available for all U.S. employees who have completed 90 days of service with the Company. Following guidance in IRS Notice 98-52 related to the design-based alternative, or “safe harbor,” 401(k) plan method, the Company modified its 401(k) Plan for Company match contributions for non-highly compensated associates, as defined in the Code. For non-highly compensated associates, the Company matches the first 3% of the participant's contribution and 50% of the next 2% of the participant's contribution and the Company match contribution vests immediately. For highly compensated associates, the Company has the discretion to match the lesser of 50% of the participant's contribution or 2.5% of the participant's covered compensation and the Company match contribution vests over 5 years. The Company's matching contributions were approximately $3.5 million in Fiscal 2018, $3.2 million in Fiscal 2017, and $1.8 million in Fiscal 2016. Deferred Compensation Plan The Company has a deferred compensation plan (the “Deferred Compensation Plan”), which is a nonqualified, unfunded plan, for eligible senior level employees. Under the plan, participants may elect to defer up to 80% of his or her base salary and/or up to 100% of his or her bonus to be earned for the year following the year in which the deferral election is made. The Deferred Compensation Plan also permits members of the Board of Directors to elect to defer payment of all or a portion of their retainer and other fees to be earned for the year following the year in which a deferral election is made. In addition, eligible employees and directors of the Company may also elect to defer payment of any shares of Company stock that is earned with respect to deferred stock awards. The Company may, but is not required to, credit participants with additional Company contribution amounts. Deferred amounts are not subject to forfeiture and are deemed invested among investment funds offered under the Deferred Compensation Plan, as directed by each participant. Payments of deferred amounts (as adjusted for earnings and losses) are payable following separation from service or at a date or dates elected by the participant at the time the deferral is elected. Payments of deferred amounts are generally made in either a lump sum or in annual installments over a period not exceeding 15 years. During fiscal 2010, the Deferred Compensation Plan was amended to allow for cash deferrals made by members of the Board of Directors to be invested in shares of the Company’s common stock. Such elections are irrevocable and will be settled in shares of common stock. All other deferred amounts are payable in the form in which they were made; cash deferrals are payable in cash and stock deferrals are payable in stock. Earlier distributions are not permitted except in the case of an unforeseen hardship. The Company has established a rabbi trust that serves as an investment to shadow the Deferred Compensation Plan liability; however, the assets of the rabbi trust are general assets of the Company and, as such, would be subject to the claims of creditors in the event of bankruptcy or insolvency. The investments of the rabbi trust consist of mutual funds and Company stock. The Deferred Compensation Plan liability, excluding Company stock, is included in other long-term liabilities and changes in the balance are recognized as compensation expense. The values of the mutual funds are included in other assets and related earnings and losses are recognized as investment income or loss, which is included in selling, general, and administrative expenses. Company stock deferrals are included in the equity section of the Company’s consolidated balance sheet as treasury stock and as a deferred compensation liability. Deferred stock is recorded at fair market value at the time of deferral, and any subsequent changes in fair market value are not recognized. The Deferred Compensation Plan liability, excluding Company stock, at fair value, was approximately $1.9 million and $1.8 million at February 2, 2019 and February 3, 2018, respectively. The value of the Deferred Compensation Plan assets was approximately $1.9 million and $1.8 million at February 2, 2019 and February 3, 2018, respectively. Company stock was $2.7 million and $2.4 million at February 2, 2019 and February 3, 2018, respectively. Other Plans Under statutory requirements, the Company contributes to retirement plans for its Canadian, Puerto Rican, and Asian operations. Contributions under these plans were approximately $0.8 million, $0.9 million, and $0.5 million in Fiscal 2018, Fiscal 2017, and Fiscal 2016, respectively. |
SUBSEQUENT EVENTS |
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Subsequent Events [Abstract] | |
Subsequent Events [Text Block] | SUBSEQUENT EVENTS On March 1, 2019, a wholly-owned subsidiary of the Company was named the successful bidder in the bankruptcy auction to acquire certain intellectual property and related assets (the “Gymboree Assets”) of Gymboree Group, Inc. and related entities. The wholly-owned subsidiary of the Company has agreed to pay $76.0 million in cash for the Gymboree Assets, which include the worldwide rights to the names “Gymboree” and “Crazy 8” and other intellectual property, including trademarks, domain names, copyrights, and customer databases. The purchase price will be funded by cash on hand and borrowings under the Company’s revolving credit facility. The acquisition has been approved by the United States Bankruptcy Court for the Eastern District of Virginia and is subject to other standard closing conditions. In March 2019, the Board of Directors authorized the first quarter Fiscal 2019 dividend of $0.56 per share to be paid on April 26, 2019 to shareholders of record on the close of business on April 15, 2019. Subsequent to February 2, 2019 and through March 19, 2019, the Company repurchased approximately 0.1 million shares for approximately $9.9 million. |
BASIS OF PRESENTATION (Policies) |
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Derivatives, Policy [Policy Text Block] | Derivative Instruments The Company is exposed to gains and losses resulting from fluctuations in foreign currency exchange rates attributable to inventory purchases denominated in a foreign currency. Specifically, its Canadian subsidiary’s functional currency is the Canadian dollar, but purchases inventory from suppliers in U.S. dollars. In order to mitigate the variability of cash flows associated with certain of these forecasted inventory purchases, the Company enters into foreign exchange forward contracts. These contracts typically mature within 12 months. The Company does not use forward contracts to engage in currency speculation, and we do not enter into derivative financial instruments for trading purposes. For derivative instruments that are designated and qualify as cash flow hedges, the effective portion of the gain or loss on the derivative is reported as a component of other comprehensive income (“OCI”) and reclassified into earnings within cost of sales (exclusive of depreciation and amortization) in the same period or periods during which the hedged transaction affects earnings. Gains and losses on the derivative representing hedge ineffectiveness are recognized in earnings within selling, general, and administrative expenses, consistent with where the Company records realized and unrealized foreign currency gains and losses on transactions in foreign denominated currencies. All derivative instruments are presented at gross fair value on the consolidated balance sheets within either prepaid expenses and other current assets or accrued expenses and other current liabilities |
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Fiscal Period, Policy [Policy Text Block] | Fiscal Year The Company's fiscal year is a 52-week or 53-week period ending on the Saturday on or nearest to January 31. Fiscal 2018 was a 52-week year, Fiscal 2017 was a 53-week year, and Fiscal 2016 was a 52-week year. |
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Use of Estimates, Policy [Policy Text Block] | Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and amounts of revenues and expenses reported during the period. Actual results could differ from the assumptions used and estimates made by management, which could have a material impact on the Company's financial position or results of operations. |
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Consolidation, Policy [Policy Text Block] | Consolidation The consolidated financial statements include the accounts of the Company and its wholly‑owned subsidiaries. Intercompany balances and transactions have been eliminated. As of February 2, 2019 and February 3, 2018, the Company did not have any investments in unconsolidated affiliates. FASB ASC 810--Consolidation is considered when determining whether an entity is subject to consolidation. |
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Cash and Cash Equivalents, Policy [Policy Text Block] | Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. |
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Stock-based Compensation | Stock-based Compensation The Company's stock-based compensation plans are administered by the Compensation Committee of the Board of Directors (the “Board”). The Compensation Committee is comprised of independent members of the Board. Effective May 20, 2011, the shareholders approved the 2011 Equity Incentive Plan (the "Equity Plan"). The Equity Plan allows the Compensation Committee to grant multiple forms of stock-based compensation such as stock options, stock appreciation rights, restricted stock awards, deferred stock awards, and performance stock awards. The Company accounts for its stock-based compensation in accordance with the provisions of FASB ASC 718-- Compensation—Stock Compensation. These provisions require, among other things: (a) the fair value at grant date of all stock awards be expensed over their respective vesting periods; (b) the amount of cumulative compensation cost recognized at any date must at least be equal to the portion of the grant-date value of the award that is vested at that date and (c) that compensation expense include a forfeiture estimate for those shares not expected to vest. Also, in accordance with these provisions, for those awards with multiple vest dates, the Company recognizes compensation cost on a straight-line basis over the requisite service period for the entire award |
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Earnings Per Share, Policy [Policy Text Block] | Earnings per Common Share The Company reports its earnings per share in accordance with FASB ASC 260--Earnings Per Share, which requires the presentation of both basic and diluted earnings per share on the statements of operations. The diluted weighted average common shares include adjustments for the potential effects of outstanding stock options, Deferred Awards, and Performance Awards (as both terms are used in Note 4 to these consolidated financial statements), but only in the periods in which such effect is dilutive under the treasury stock method. Included in our basic and diluted weighted average common shares are those shares due to participants in the deferred compensation plan, which are held in treasury stock. Anti-dilutive stock awards are comprised of stock options and unvested deferred, restricted and performance shares which would have been anti-dilutive in the application of the treasury stock method in accordance with FASB ASC 260--Earnings Per Share. In accordance with this topic, the following table reconciles income and share amounts utilized to calculate basic and diluted net income per common share:
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Receivables, Policy [Policy Text Block] | Accounts Receivable Accounts receivable consists of credit and debit card receivables, franchisee and wholesale receivables, landlord construction allowance receivables, and other miscellaneous items. Credit and debit card receivables represent credit and debit card sales, inclusive of private label card sales, for which the respective third party service company has yet to remit the cash. The unremitted balance approximates the last few days of related sales for each reporting period. Bad debt associated with these sales is not material. Franchisee and wholesale receivables represent product sales and sale royalties in which cash has not yet been remitted from our partners. Bad debt associated with these sales is not material. Landlord construction allowance receivables represent landlord contributions to our construction costs of building out the related real estate, primarily new and remodeled stores. Total construction costs are capitalized as property and equipment and the landlord construction allowances are recorded as a lease incentive, a component of deferred rent, which is amortized as a reduction of rent expense over the lease term. |
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Unpaid Policy Claims and Claims Adjustment Expense, Policy [Policy Text Block] | Insurance and Self-Insurance Reserves The Company self-insures and purchases insurance policies to provide for workers' compensation, general liability and property losses, cyber-security coverage, as well as director and officer's liability, vehicle liability, and employee medical benefits. The Company estimates risks and records a liability based on historical claim experience, insurance deductibles, severity factors, and other actuarial assumptions. The Company records the current portions of employee medical benefits, workers compensation, and general liability reserves within accrued expenses and other current liabilities |
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Property, Plant and Equipment, Policy [Policy Text Block] | Property and Equipment, Net Property and equipment are stated at cost. Leasehold improvements are depreciated on a straight-line basis over the shorter of the life of the lease or the estimated useful life of the asset. All other property and equipment is depreciated on a straight-line basis based upon their estimated useful lives, with furniture and fixtures and equipment generally ranging from 3-10 years and buildings and improvements generally ranging from 20-25 years. Repairs and maintenance are expensed as incurred. The Company accounts for internally developed software intended for internal use in accordance with provisions of FASB ASC 350--Intangibles-Goodwill and Other. The Company capitalizes development-stage costs such as direct external costs and direct payroll related costs. When development is substantially complete, the Company amortizes the cost of the software on a straight-line basis over the expected life of the software, which is generally 3-10 years. Preliminary project costs and post-implementation costs such as training, maintenance, and support are expensed as incurred. |
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Impairment or Disposal of Long-Lived Assets, Policy [Policy Text Block] | Impairment of Long-Lived Assets The Company periodically reviews its long-lived assets when events indicate that their carrying value may not be recoverable. Such events include a historical trend or projected trend of cash flow losses or a future expectation that the Company will sell or dispose of an asset significantly before the end of its previously estimated useful life. In reviewing for impairment the Company groups its long-lived assets at the lowest possible level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. The Company reviews all stores that have reached comparable sales status, or sooner if circumstances should dictate, on at least an annual basis. The Company believes waiting this period of time allows a store to reach a maturity level where a more comprehensive analysis of financial performance can be performed. For each store that shows indications of impairment, the Company projects future cash flows over the remaining life of the lease and compares the total undiscounted cash flows to the net book value of the related long-lived assets. If the undiscounted cash flows are less than the related net book value of the long-lived assets, they are written down to their fair market value. The Company primarily determines fair market value to be the discounted future cash flows associated with those assets. In evaluating future cash flows, the Company considers external and internal factors. External factors comprise the local environment in which the store resides, including mall traffic, competition, and their effect on sales trends. Internal factors include the Company's ability to gauge the fashion taste of its customers, control variable costs such as cost of sales and payroll, and in certain cases, its ability to renegotiate lease costs. |
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Deferred Charges, Policy [Policy Text Block] | Deferred Financing Costs The Company capitalizes costs directly associated with acquiring third party financing. Deferred financing costs are included in other assets and are amortized as interest expense over the term of the related indebtedness. At February 2, 2019, deferred financing costs, net of accumulated amortization of $3.9 million, were approximately $0.4 million. At February 3, 2018, deferred financing costs, net of accumulated amortization of $3.6 million, were approximately $0.7 million. |
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Advertising Cost, Policy, Expensed Advertising Cost [Policy Text Block] | Advertising and Marketing Costs The Company expenses the cost of advertising over the period the advertising is run or displayed. Included in selling, general, and administrative expenses for Fiscal 2018, Fiscal 2017, and Fiscal 2016 are advertising and other marketing costs of approximately $34.1 million, $29.9 million, and $26.4 million, respectively. |
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Income Tax, Policy [Policy Text Block] | Income Taxes We utilize the liability method of accounting for income taxes as set forth in FASB ASC 740--Income Taxes. Under the liability method, deferred taxes are determined based on the temporary differences between the financial statement and tax basis of assets and liabilities, as well as for net operating losses and tax credit carryforwards. Deferred tax assets and liabilities are measured using currently enacted tax rates that apply to taxable income in effect for the years in which the basis differences and tax assets are expected to be realized. A valuation allowance is recorded when it is more likely than not that any of the deferred tax assets will not be realized. In determining the need for valuation allowances we consider projected future taxable income and the availability of tax planning strategies. If in the future we determine that we would not be able to realize our recorded deferred tax assets, an increase in the valuation allowance would decrease earnings in the period in which such determination is made. We assess our income tax positions and record tax benefits for all years subject to examination based upon our evaluation of the facts, circumstances, and information available at the reporting date. For those tax positions where it is more likely than not that a tax benefit will be sustained, we have recorded the largest amount of tax benefit with a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. For those income tax positions where it is not more likely than not that a tax benefit will be sustained, no tax benefit has been recognized in the financial statements. |
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Foreign Currency Transactions and Translations Policy [Policy Text Block] | Foreign Currency Translation and Transactions The Company has determined that the local currencies of its Canadian and Asian subsidiaries are their functional currencies. In accordance with FASB ASC 830--Foreign Currency Matters, the assets and liabilities denominated in foreign currency are translated into U.S. dollars at the current rate of exchange existing at period-end and revenues and expenses are translated at average monthly exchange rates. Related translation adjustments are reported as a separate component of stockholders' equity. The Company also transacts certain business in foreign denominated currencies primarily with its Canadian subsidiary purchasing inventory in U.S. Dollars, and there are inter-company charges between various subsidiaries. |
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Legal Costs, Policy [Policy Text Block] | Legal Contingencies The Company reserves for the outcome of litigation and contingencies when it determines an adverse outcome is probable and can estimate losses. Estimates are adjusted as facts and circumstances require. The Company expenses the costs to resolve litigation as incurred, net of amounts, if any, recovered through our insurance coverag |
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Fair Value Measurement and Financial Instruments | Fair Value Measurement and Financial Instruments FASB ASC 820-- Fair Value Measurements and Disclosure provides a single definition of fair value, together with a framework for measuring it, and requires additional disclosure about the use of fair value to measure assets and liabilities. This topic defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and establishes a three-level hierarchy, which encourages an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of the hierarchy are defined as follows:
The Company’s cash and cash equivalents, short-term investments, assets of the Company’s Deferred Compensation Plan, accounts receivable, accounts payable, and revolving loan are all short-term in nature. As such, their carrying amounts approximate fair value and fall within Level 1 of the fair value hierarchy. The Company stock included in the Deferred Compensation Plan is not subject to fair value measurement. Our derivative assets and liabilities include foreign exchange forward contracts that are measured at fair value using observable market inputs such as forward rates, our credit risk and our counterparties’ credit risks. Based on these inputs, our derivative assets and liabilities are classified within Level 2 of the valuation hierarchy. The Company’s assets measured at fair value on a nonrecurring basis include long-lived assets. The Company reviews the carrying amounts of such assets when events indicate that their carrying amounts may not be recoverable. Any resulting asset impairment would require that the asset be recorded at its fair value. The resulting fair value measurements of the assets are considered to be Level 3 inputs. Long-lived assets, primarily comprised of property and equipment, held and used with a carrying amount of $6.1 million were written down to their fair value, resulting in an impairment charge of $6.1 million, which was included in earnings for Fiscal 2018. For Fiscal 2017, long-lived assets held and used with a carrying amount of $6.4 million were written down to their fair value, resulting in an impairment charge of $5.2 million, which was included in earnings for Fiscal 2017. For Fiscal 2016, long-lived assets held and used with a carrying amount of $4.2 million were written down to their fair value, resulting in an impairment charge of $4.0 million, which was included in earnings for Fiscal 201 |
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Revenue Recognition, Policy [Policy Text Block] | Revenue Recognition |
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Inventory, Policy [Policy Text Block] | Inventories |
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Cost of Sales, Policy [Policy Text Block] | Cost of Sales (exclusive of depreciation and amortization) In addition to the cost of inventory sold, the Company includes certain buying, design and distribution expenses, shipping and handling costs on merchandise sold directly to customers, and letter of credit fees in its cost of sales. The Company records all occupancy costs in its cost of sales, except administrative office buildings, which are recorded in selling, general, and administrative expenses. All depreciation is reported on a separate line on the Company's consolidated statements of operations. |
BASIS OF PRESENTATION Earnings per Share (Tables) |
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Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] | In accordance with this topic, the following table reconciles income and share amounts utilized to calculate basic and diluted net income per common share:
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REVENUES (Tables) |
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Statement of Financial Position [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Table Text Block] | The following table provides the reconciliation of the contract liability related to gift cards:
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Contract with Customer, Asset and Liability [Table Text Block] | The Company has a points-based customer loyalty program, in which customers earn points based on purchases and other promotional activities. These points can be redeemed for coupons to discount future purchases. A contract liability is estimated based on the standalone selling price of benefits earned by customers through the program and the related redemption experience under the program. The value of each point earned is recorded as deferred revenue and is included within accrued expenses and other current liabilities. The total contract liability related to this program was $2.2 million and $4.1 million as of February 2, 2019 and February 3, 2018, respectively. The following table provides the reconciliation of the contract liability related to this program:
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Revenue from Contract with Customer [Text Block] | 2. REVENUES Adoption of ASC Topic 606, "Revenue from Contracts with Customers" On February 4, 2018, the Company adopted Topic 606 "Revenue from Contracts with Customers" using the modified retrospective method. Results for reporting periods beginning February 4, 2018 are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with the Company's historic accounting under Topic 605 "Revenue Recognition". Upon adoption of this guidance, there was no material impact to the Company's consolidated financial statements. We recorded a net increase to opening retained earnings, net of taxes, of approximately $0.9 million as of February 4, 2018 due to the cumulative impact of adopting Topic 606. The impact primarily related to the accounting for gift card breakage of approximately $2.3 million, partially offset by our private label credit card program of approximately $1.1 million, net of taxes of $0.3 million:
In accordance with the new revenue standard requirements, the disclosure of the impact of adoption on our consolidated balance sheet and income statement were as follows, with the impact primarily related to the accounting for our private label credit card program and gift card breakage:
Revenue Recognition Revenues are recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. The following table presents our revenues disaggregated by geography:
The Company recognizes revenue, including shipping and handling fees billed to customers, upon purchase at the Company's retail stores or when received by the customer if the product was purchased via e-commerce, net of coupon redemptions and anticipated sales returns. The Company deferred approximately $1.2 million and $3.0 million as of February 2, 2019 and February 3, 2018, respectively, based upon estimated time of delivery, at which point control passes to the customer, and is recorded in accrued expenses and other current liabilities. Sales tax collected from customers is excluded from revenue. For the sale of goods with a right of return, the Company recognizes revenue for the consideration it expects to be entitled to and calculates an allowance for estimated sales returns based upon the Company's sales return experience. Adjustments to the allowance for estimated sales returns in subsequent periods are generally not material based on historical data, thereby reducing the uncertainty inherent in such estimates. The allowance for estimated sales returns, which is recorded in accrued expenses and other current liabilities, was approximately $0.9 million and $0.8 million as of February 2, 2019 and February 3, 2018, respectively. Our private label credit card is issued to our customers for use exclusively at The Children's Place stores and online at www.childrensplace.com, and credit is extended to such customers by a third-party financial institution on a non-recourse basis to us. The private label credit card includes multiple performance obligations, including marketing and promoting the program on behalf of the bank and the operation of the loyalty rewards program. Included in the agreement with the third-party financial institution was an upfront bonus paid to the Company. The upfront bonus is recognized as revenue and allocated between brand and reward obligations. As the license of the Company’s brand is the predominant item in the performance obligation, the amount allocated to the brand obligation is recognized on a straight-line basis over the initial term. The amount allocated to the reward obligation is recognized on a point-in-time basis as redemptions under the loyalty program occur. In measuring revenue and determining the consideration the Company is entitled to as part of a contract with a customer, the Company takes into account the related elements of variable consideration, such as additional bonuses, including profit-sharing, over the life of the program. Similar to the upfront bonus, the usage-based royalties and bonuses are recognized as revenue and allocated between the brand and reward obligations. The amount allocated to the brand obligation is recognized on a straight-line basis over the initial term. The amount allocated to the reward obligation is recognized on a point-in-time basis as redemptions under the loyalty program occur. In addition, the annual profit-sharing amount is estimated and recognized quarterly within an annual period when earned. The additional bonuses are amortized over the contract term based on anticipated progress against future targets and level of risk associated with achieving the targets. The Company deferred approximately $0.3 million as of February 2, 2019 in relation to its private label credit card performance obligations. The Company has a points-based customer loyalty program, in which customers earn points based on purchases and other promotional activities. These points can be redeemed for coupons to discount future purchases. A contract liability is estimated based on the standalone selling price of benefits earned by customers through the program and the related redemption experience under the program. The value of each point earned is recorded as deferred revenue and is included within accrued expenses and other current liabilities. The total contract liability related to this program was $2.2 million and $4.1 million as of February 2, 2019 and February 3, 2018, respectively. The following table provides the reconciliation of the contract liability related to this program:
The Company's policy with respect to gift cards is to record revenue as and when the gift cards are redeemed for merchandise. The Company recognizes gift card breakage income in proportion to the pattern of rights exercised by the customer when the Company expects to be entitled to breakage, and the Company determines that it does not have a legal obligation to remit the value of the unredeemed gift card to the relevant jurisdiction as unclaimed or abandoned property. With the adoption of Topic 606, gift card breakage is recorded within net sales during Fiscal 2018 and within selling, general, and administrative expenses during Fiscal 2017 prior to adoption of Topic 606. Prior to their redemption, gift cards are recorded as a liability, included within accrued expenses and other current liabilities. The total contract liability related to gift cards issued was $17.9 million and $16.1 million as of February 2, 2019 and February 3, 2018, respectively. The liability is estimated based on expected breakage that considers historical patterns of redemption. The following table provides the reconciliation of the contract liability related to gift cards:
The Company has an international expansion program through territorial agreements with franchisees. The Company generates revenues from the franchisees from the sale of product and, in certain cases, sales royalties. The Company records net sales and cost of goods sold on the sale of product to franchisees when the franchisee takes ownership of the product. The Company records net sales for royalties when the applicable franchisee sells the product to their customers. Under certain agreements, the Company receives a fee from applicable franchisees for exclusive territorial rights and based on the opening of new stores in such franchisee's licensed territory. The Company records these territorial fees as deferred revenue and amortizes the fee into gross sales over the life of the territorial agreement. In accordance with the new revenue standard requirements, the disclosure of the impact of adoption on our consolidated balance sheet and income statement were as follows, with the impact primarily related to the accounting for our private label credit card program and gift card breakage:
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Disaggregation of Revenue [Table Text Block] | The following table presents our revenues disaggregated by geography:
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STOCKHOLDERS' EQUITY STOCKHOLDERS' EQUITY (Tables) |
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Stockholders' Equity Attributable to Parent [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Repurchase Agreements [Table Text Block] |
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STOCK-BASED COMPENSATION (Tables) |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of stock-based compensation expense |
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Schedule of changes in unvested deferred awards |
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Schedule of unvested performance awards |
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PROPERTY AND EQUIPMENT (Tables) |
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Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and equipment |
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CREDIT FACILITY (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of credit facility |
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PREPAID EXPENSES AND OTHER CURRENT ASSETS Prepaid Expenses (Tables) |
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Schedule of Other Assets [Table Text Block] | Other non-current assets are comprised of the following:
Other non-current assets are comprised of the following:
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Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Table Text Block] | Prepaid expenses and other current assets are comprised of the following:
Other non-current assets are comprised of the following:
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ACCRUED EXPENSES AND OTHER CURRENT LIABILTIES Accrued (Tables) |
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ACCRUED [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accrued Liabilities [Table Text Block] |
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COMMITMENTS AND CONTINGENCIES Sublease (Tables) |
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COMMITMENTS AND CONTINGENCIES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Rent Expense [Table Text Block] |
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Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block] |
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INCOME TAXES Taxes by Country (Tables) |
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INCOME TAXES [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Income before Income Tax, Domestic and Foreign [Table Text Block] |
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Schedule of Components of Income Tax Expense (Benefit) [Table Text Block] |
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Schedule of Effective Income Tax Rate Reconciliation [Table Text Block] |
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Schedule of Deferred Tax Assets and Liabilities [Table Text Block] |
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Summary of Positions for which Significant Change in Unrecognized Tax Benefits is Reasonably Possible [Table Text Block] |
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SEGMENT INFORMATION (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of segment level financial information |
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Reconciliation of Assets from Segment to Consolidated [Table Text Block] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Disclosure on Geographic Areas, Long-Lived Assets in Individual Foreign Countries by Country [Table Text Block] | Company's long-lived assets are located in the following countries:
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QUARTERLY FINANCIAL DATA Quarterly Financial Data (Tables) |
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Feb. 03, 2018 |
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Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Quarterly Financial Information [Table Text Block] |
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_______________________________________ |
BASIS OF PRESENTATION (Details) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||||||||
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Feb. 02, 2019 |
Nov. 03, 2018 |
Aug. 04, 2018 |
May 05, 2018 |
Feb. 03, 2018 |
Oct. 28, 2017 |
Jul. 29, 2017 |
Apr. 29, 2017 |
Feb. 02, 2019 |
Feb. 03, 2018 |
Jan. 28, 2017 |
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Stock awards | |||||||||||||||||
Property, Plant, and Equipment, Fair Value Disclosure | $ 6,100 | $ 6,400 | $ 6,100 | $ 6,400 | $ 4,200 | ||||||||||||
Asset impairment charges | 464 | [1] | $ 396 | $ 3,979 | $ 1,257 | 529 | [2] | $ 3,203 | $ 974 | $ 484 | $ 6,096 | $ 5,190 | $ 4,026 | ||||
Dilutive effect of stock awards | 263 | 582 | 375 | ||||||||||||||
Business Exit Costs | 191 | $ (1,246) | $ 0 | $ 0 | (4) | $ 4 | $ 6 | $ 4 | $ (1,055) | $ 10 | $ 282 | ||||||
Amortization of Financing Costs | (3,900) | (3,600) | (3,900) | (3,600) | |||||||||||||
Deferred Finance Costs, Net | 400 | 700 | 400 | 700 | |||||||||||||
Advertising Expense | $ 34,100 | 29,900 | $ 26,400 | ||||||||||||||
Deferred Compensation Plan | |||||||||||||||||
Maximum percentage of base salary elected to be deferred (as a percent) | 80.00% | ||||||||||||||||
Maximum percentage of bonus elected to be deferred (as a percent) | 100.00% | ||||||||||||||||
Deferred compensation plan liability | 1,900 | 1,800 | $ 1,900 | 1,800 | |||||||||||||
Cash Surrender Value of Life Insurance | 1,900 | 1,800 | 1,900 | 1,800 | |||||||||||||
Deferred compensation - Company stock | (2,685) | (2,436) | (2,685) | (2,436) | |||||||||||||
Derivative Asset, Notional Amount | 17,900 | 17,900 | |||||||||||||||
Derivative Asset, Fair Value, Gross Asset | $ 1,900 | $ 1,600 | $ 1,900 | $ 1,600 | |||||||||||||
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BASIS OF PRESENTATION (Details 2) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Feb. 02, 2019 |
Nov. 03, 2018 |
Aug. 04, 2018 |
May 05, 2018 |
Feb. 03, 2018 |
Oct. 28, 2017 |
Jul. 29, 2017 |
Apr. 29, 2017 |
Feb. 02, 2019 |
Feb. 03, 2018 |
Jan. 28, 2017 |
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Prepaid Advertising | $ 1,421 | $ 3,892 | $ 1,421 | $ 3,892 | |||||||
Property, Plant, and Equipment, Fair Value Disclosure | 6,100 | 6,400 | 6,100 | 6,400 | $ 4,200 | ||||||
Business Exit Costs | 191 | $ (1,246) | $ 0 | $ 0 | (4) | $ 4 | $ 6 | $ 4 | (1,055) | 10 | $ 282 |
Accumulated Amortization, Deferred Finance Costs | $ (3,900) | $ (3,600) | $ (3,900) | $ (3,600) | |||||||
Document Period End Date | Feb. 02, 2019 |
REVENUES (Details) - USD ($) $ in Thousands |
12 Months Ended | |
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Feb. 02, 2019 |
Feb. 03, 2018 |
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Statement of Financial Position [Abstract] | ||
Deferred Revenue, Current | $ 2,180 | $ 3,803 |
Cumulative Effect on Retained Earnings, Net of Tax | $ 875 | |
Revenue Recognition, Sales Returns, Changes in Estimated Returns | 946 | 835 |
Deferred Revenue and Credits, Current | $ 300 | |
Contract with Customer, Liability | 2,200 | $ 4,100 |
Gift Card Liability, Current | $ 17,900 | $ 16,100 |
STOCK-BASED COMPENSATION (Details) - USD ($) shares in Thousands, $ in Thousands |
12 Months Ended | ||||
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Feb. 02, 2019 |
Feb. 03, 2018 |
Jan. 28, 2017 |
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Stock-based compensation expense | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant | 756,502 | ||||
Total stock- based compensation expense | [1] | $ 27,415 | $ 30,797 | $ 28,040 | |
Tax benefit related to stock-based compensation | $ 7,200 | 8,200 | 11,100 | ||
Document Period End Date | Feb. 02, 2019 | ||||
Restricted stock | |||||
Stock-based compensation expense | |||||
Total stock- based compensation expense | $ 12,849 | 11,891 | 8,906 | ||
Performance awards | |||||
Stock-based compensation expense | |||||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition | 1 year 2 months 12 days | ||||
Total stock- based compensation expense | $ 14,566 | 18,906 | 19,134 | ||
Cost of Sales [Member] | |||||
Stock-based compensation expense | |||||
Total stock- based compensation expense | $ 3,500 | $ 4,000 | $ 3,600 | ||
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PROPERTY AND EQUIPMENT (Details) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Feb. 02, 2019
USD ($)
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Nov. 03, 2018
USD ($)
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Aug. 04, 2018
USD ($)
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May 05, 2018
USD ($)
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Feb. 03, 2018
USD ($)
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Oct. 28, 2017
USD ($)
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Jul. 29, 2017
USD ($)
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Apr. 29, 2017
USD ($)
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Feb. 02, 2019
USD ($)
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Feb. 03, 2018
USD ($)
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Jan. 28, 2017
USD ($)
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Property, Plant and Equipment [Line Items] | |||||||||||||||||
numberofstorestestedforimpairment | 972 | 1,014 | 972 | 1,014 | 1,039 | ||||||||||||
net book value | $ 81,400 | $ 79,400 | $ 81,400 | $ 79,400 | $ 91,400 | ||||||||||||
Less accumulated depreciation and amortization | (674,098) | (648,628) | (674,098) | (648,628) | |||||||||||||
Property and equipment, net | 260,357 | 258,537 | 260,357 | 258,537 | |||||||||||||
Asset impairment charges | 464 | [1] | $ 396 | $ 3,979 | $ 1,257 | 529 | [2] | $ 3,203 | $ 974 | $ 484 | 6,096 | $ 5,190 | $ 4,026 | ||||
Number of underperforming stores | 21 | 28 | |||||||||||||||
fullyimpairedstores | 11 | ||||||||||||||||
partiallyimpairedstores | 17 | ||||||||||||||||
Land and land improvements | |||||||||||||||||
Property, Plant and Equipment [Line Items] | |||||||||||||||||
Property and equipment, gross | 3,403 | 3,403 | 3,403 | $ 3,403 | |||||||||||||
Building and improvements | |||||||||||||||||
Property, Plant and Equipment [Line Items] | |||||||||||||||||
Property and equipment, gross | 35,568 | 35,548 | 35,568 | 35,548 | |||||||||||||
Material handling equipment | |||||||||||||||||
Property, Plant and Equipment [Line Items] | |||||||||||||||||
Property and equipment, gross | 51,934 | 50,102 | 51,934 | 50,102 | |||||||||||||
Leasehold improvements | |||||||||||||||||
Property, Plant and Equipment [Line Items] | |||||||||||||||||
Property and equipment, gross | 301,233 | 308,465 | 301,233 | 308,465 | |||||||||||||
Store fixtures and equipment | |||||||||||||||||
Property, Plant and Equipment [Line Items] | |||||||||||||||||
Property and equipment, gross | 273,430 | 262,363 | 273,430 | 262,363 | |||||||||||||
Capitalized software | |||||||||||||||||
Property, Plant and Equipment [Line Items] | |||||||||||||||||
Property and equipment, gross | 254,064 | 237,786 | 254,064 | 237,786 | |||||||||||||
Construction in progress | |||||||||||||||||
Property, Plant and Equipment [Line Items] | |||||||||||||||||
Property and equipment, gross | $ 14,823 | $ 9,498 | $ 14,823 | $ 9,498 | |||||||||||||
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CREDIT FACILITY (Details) - USD ($) $ in Millions |
12 Months Ended | |||
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Feb. 02, 2019 |
Feb. 03, 2018 |
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Credit facilities | ||||
Sublimit availability | $ 43.0 | $ 43.0 | ||
Borrowing capacity, accordion feature | 50.0 | |||
Deferred financing costs, remaining unamortized balance | 0.4 | 0.7 | ||
Line of Credit Facility, Maximum Borrowing Capacity | 250.0 | 250.0 | ||
Line of credit facility, current borrowing capacity | 250.0 | 250.0 | ||
Outstanding borrowings | 48.9 | 21.5 | ||
Utilization of credit facility at end of period | 55.9 | 28.5 | ||
Availability | [1] | $ 194.1 | $ 221.5 | |
Interest rate at end of period (as a percent) | 6.00% | 5.00% | ||
Average loan balance during the period | $ 64.4 | $ 45.8 | ||
Highest end of day loan balance during the period | $ 156.4 | $ 98.2 | ||
Average interest rate (as a percent) | 4.30% | 2.90% | ||
Standby Letters of Credit [Member] | ||||
Credit facilities | ||||
Letters of credit outstanding | $ 7.0 | $ 7.0 | ||
Credit Agreement | ||||
Credit facilities | ||||
Letters of Credit sublimit | $ 50.0 | |||
Line of credit facility, unused line fee percentage (as a percent) | 0.25% | |||
Deferred financing costs gross | $ 4.3 | |||
Deferred financing costs, remaining unamortized balance | 0.4 | |||
Line of Credit Facility, Maximum Borrowing Capacity | $ 250.0 | |||
Credit Agreement | Prime rate | ||||
Credit facilities | ||||
Basis spread on variable rate, low end of range (as a percent) | 0.50% | |||
Basis spread on variable rate, high end of range (as a percent) | 0.75% | |||
Credit Agreement | LIBOR | ||||
Credit facilities | ||||
Basis spread on variable rate, low end of range (as a percent) | 1.25% | |||
Basis spread on variable rate, high end of range (as a percent) | 1.50% | |||
Debt Instrument, Description of Variable Rate Basis | one, two, three, or six | |||
Credit Agreement | Letter of Credit [Member] | ||||
Credit facilities | ||||
Letters of credit facility fee, low end of range (as a percent) | 0.625% | |||
Letters of credit facility fee, high end of range (as a percent) | 0.75% | |||
Credit Agreement | Standby Letters of Credit [Member] | ||||
Credit facilities | ||||
Letters of credit facility fee, low end of range (as a percent) | 0.75% | |||
Letters of credit facility fee, high end of range (as a percent) | 1.00% | |||
|
PREPAID EXPENSES AND OTHER CURRENT ASSETS Prepaid Expenses (Details) - USD ($) $ in Thousands |
Feb. 02, 2019 |
Feb. 03, 2018 |
---|---|---|
Other | $ 13,544 | $ 12,489 |
Prepaid property expense | 6,738 | 7,093 |
Prepaid income taxes | 7,223 | 21,069 |
Prepaid marketing | 1,421 | 3,892 |
Prepaid maintenance contracts | 5,109 | 6,444 |
Other | 7,179 | 7,958 |
Prepaid expenses and other current assets | $ 27,670 | $ 46,456 |
ACCRUED EXPENSES AND OTHER CURRENT LIABILTIES Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands |
Feb. 02, 2019 |
Feb. 03, 2018 |
---|---|---|
Accrued Expenses [Abstract] | ||
Customer liabilities | $ 17,086 | $ 18,791 |
Accrued salaries and benefits | 12,378 | 42,073 |
Sales taxes and other taxes payable | 3,330 | 5,432 |
Accrued store expenses | 7,090 | 5,796 |
Deferred revenue | 2,180 | 3,803 |
Accrued real estate expenses | 6,265 | 5,171 |
Accrued construction-in-progress | 6,107 | 2,709 |
Accrued insurance | 3,068 | 2,814 |
Accrued marketing | 2,434 | 3,342 |
Accrued freight | 3,217 | 4,509 |
Deferred revenue for MyPlace Rewards loyalty program | 2,220 | 4,138 |
Accrued professional fees | 7,091 | 6,707 |
Other | 14,289 | 16,568 |
Accrued expenses and other current liabilities | $ 86,755 | $ 121,853 |
COMMITMENTS AND CONTINGENCIES COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Feb. 02, 2019 |
Feb. 03, 2018 |
Jan. 28, 2017 |
|
Operating Leased Assets [Line Items] | |||
Minimum rentals | $ 153,017 | $ 154,493 | $ 157,647 |
Additional rent based upon sales | 2,042 | 1,924 | 1,367 |
Sublease income | (1,395) | $ (2,592) | $ (2,275) |
2012 | 143,601 | ||
2013 | 117,037 | ||
2014 | 86,788 | ||
2015 | 57,734 | ||
2016 | 32,218 | ||
Thereafter | 50,263 | ||
Total minimum lease payments | 487,641 | ||
Loss Contingency Accrual | 2,200 | ||
Loss Contingency, Estimate of Possible Loss | 2,800 | ||
Purchase Commitments Construction [Member] | |||
Operating Leased Assets [Line Items] | |||
Unrecorded Unconditional Purchase Obligation | 14,500 | ||
Purchase Commitments Merchandise [Member] | |||
Operating Leased Assets [Line Items] | |||
Unrecorded Unconditional Purchase Obligation | $ 122,400 |
INCOME TAXES (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Feb. 02, 2019 |
Nov. 03, 2018 |
Aug. 04, 2018 |
May 05, 2018 |
Feb. 03, 2018 |
Oct. 28, 2017 |
Jul. 29, 2017 |
Apr. 29, 2017 |
Feb. 02, 2019 |
Feb. 03, 2018 |
Jan. 28, 2017 |
|||||||
Current Income Tax Expense (Benefit), Continuing Operations [Abstract] | |||||||||||||||||
U.S. | $ 49,820 | $ 100,288 | $ 90,990 | ||||||||||||||
Foreign | 58,704 | 60,915 | 56,023 | ||||||||||||||
Income (loss) from continuing operations before income taxes | $ 12,913 | [1] | $ 63,774 | $ 9,076 | $ 22,761 | $ 51,980 | [2] | $ 64,049 | $ 2,928 | $ 42,246 | 108,524 | 161,203 | 147,013 | ||||
Federal | 594 | 31,334 | 34,056 | ||||||||||||||
State | 2,519 | (1,341) | 8,527 | ||||||||||||||
Foreign | 10,019 | 11,618 | 11,473 | ||||||||||||||
Total current | 13,132 | 41,611 | 54,056 | ||||||||||||||
Federal | (3,418) | 30,828 | (8,068) | ||||||||||||||
State | (2,324) | 3,546 | (1,691) | ||||||||||||||
Foreign | 174 | 520 | 380 | ||||||||||||||
Total deferred | (5,568) | 34,894 | (9,379) | ||||||||||||||
Total tax provision | 889 | [1] | 13,861 | 1,590 | (8,776) | 61,878 | [2] | 19,972 | (11,362) | 6,017 | $ 7,564 | $ 76,505 | $ 44,677 | ||||
Effective tax rate from continuing operations (as a percent) | 7.00% | 47.50% | 30.40% | ||||||||||||||
Deferred Income Taxes, Current – | |||||||||||||||||
Calculated income tax provision at federal statutory rate | $ 22,790 | $ 55,246 | $ 51,455 | ||||||||||||||
State income taxes, net of federal benefit | 154 | 1,449 | 4,443 | ||||||||||||||
Foreign tax rate differential | (3,801) | (10,794) | (10,116) | ||||||||||||||
Nondeductible expenses | 861 | 514 | 2,514 | ||||||||||||||
Excess tax benefits related to stock compensation | 7,200 | 8,200 | 11,100 | ||||||||||||||
Employee Service Share-based Compensation, Tax Benefit from Exercise of Stock Options | (11,804) | (14,665) | |||||||||||||||
U.S. transition taxes on deemed repatriation of foreign earnings | 338 | 37,607 | 0 | ||||||||||||||
Revaluation of deferred tax assets and liabilities | $ (295) | $ 5,646 | $ 0 | ||||||||||||||
Foreign withholding and state tax on unremitted earnings | -244 | 7483 | 0 | ||||||||||||||
Unrecognized tax expense (benefit) | $ (1,092) | $ 3,199 | $ 1,673 | ||||||||||||||
Foreign tax credits | (62) | (28) | 19 | ||||||||||||||
Other | (310) | (897) | 259 | ||||||||||||||
Total tax provision | 889 | [1] | $ 13,861 | $ 1,590 | (8,776) | 61,878 | [2] | $ 19,972 | $ (11,362) | 6,017 | 7,564 | 76,505 | 44,677 | ||||
Assets | |||||||||||||||||
Inventory | 3,401 | 2,506 | 3,401 | 2,506 | |||||||||||||
Noncurrent – | |||||||||||||||||
Property and equipment | (9,288) | (16,911) | (9,288) | (16,911) | |||||||||||||
Deferred rent | 7,491 | 8,755 | 7,491 | 8,755 | |||||||||||||
Equity compensation | 9,321 | 11,500 | 9,321 | 11,500 | |||||||||||||
Reserves and other | 9,859 | 12,864 | 9,859 | 12,864 | |||||||||||||
Net Operating Loss Carryover | 721 | 2,284 | 721 | 2,284 | |||||||||||||
Valuation allowance | (721) | (2,284) | (721) | (2,284) | |||||||||||||
Net noncurrent | 17,750 | 12,698 | 17,750 | 12,698 | |||||||||||||
Total deferred tax asset, net | 17,750 | 12,698 | 17,750 | 12,698 | |||||||||||||
Deferred Tax Assets, Operating Loss Carryforwards, Foreign | 300 | 300 | |||||||||||||||
Deferred Tax Assets, Tax Credit Carryforwards, Alternative Minimum Tax | 600 | 600 | |||||||||||||||
Beginning Balance | $ 3,905 | $ 6,326 | 3,905 | 6,326 | |||||||||||||
Additions for current year tax positions | 1,209 | 1,154 | |||||||||||||||
Additions for prior year tax positions | 101 | 252 | |||||||||||||||
Reductions for prior year tax positions | (118) | 0 | |||||||||||||||
Settlements | (48) | (3,156) | |||||||||||||||
Reductions due to a lapse of the applicable statute of limitations | (44) | (564) | |||||||||||||||
Unrecognized Tax Benefits, Ending Balance | 5,002 | 3,905 | 5,002 | 3,905 | 6,326 | ||||||||||||
Unrecognized Tax Benefits that Would Impact Effective Tax Rate | 5,000 | 5,000 | |||||||||||||||
Significant Change in Unrecognized Tax Benefits is Reasonably Possible, Amount of Unrecorded Benefit | 400 | 400 | |||||||||||||||
Unrecognized Tax Benefits, Income Tax Penalties and Interest Accrued | 100 | 100 | 100 | 100 | |||||||||||||
Unrecognized Tax Benefits, Income Tax Penalties and Interest Expense | 100 | 900 | $ 300 | ||||||||||||||
Deferred Income Tax Expense (Benefit), Continuing Operations [Abstract] | |||||||||||||||||
Prepaid expenses | (958) | (2,613) | (958) | (2,613) | |||||||||||||
Foreign and state tax on unremitted earnings | (1,806) | (3,107) | (1,806) | (3,107) | |||||||||||||
Deferred Tax Assets, Capital Loss Carryforwards | $ (270) | $ (296) | $ (270) | $ (296) | |||||||||||||
|
SEGMENT INFORMATION (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Feb. 02, 2019 |
Nov. 03, 2018 |
Aug. 04, 2018 |
May 05, 2018 |
Feb. 03, 2018 |
Oct. 28, 2017 |
Jul. 29, 2017 |
Apr. 29, 2017 |
Feb. 02, 2019 |
Feb. 03, 2018 |
Jan. 28, 2017 |
|||||||||||||||
Segment information | |||||||||||||||||||||||||
Impairment of Long-Lived Assets Held-for-use | $ 464 | [1] | $ 396 | $ 3,979 | $ 1,257 | $ 529 | [2] | $ 3,203 | $ 974 | $ 484 | $ 6,096 | $ 5,190 | $ 4,026 | ||||||||||||
Percentage of entity-wide sales qualifying purchaser as major customer (as a percent) | 10.00% | ||||||||||||||||||||||||
Net sales: | |||||||||||||||||||||||||
Total net sales | 530,557 | [1] | 522,495 | 448,718 | 436,314 | 569,972 | [2] | 490,026 | 373,601 | 436,676 | $ 1,938,084 | 1,870,275 | 1,785,316 | ||||||||||||
Gross Profit: | |||||||||||||||||||||||||
Gross Profit | 164,232 | [1] | 204,366 | 154,806 | 160,192 | 209,926 | [2] | 202,433 | 128,405 | 170,591 | 683,596 | 711,355 | 671,593 | ||||||||||||
Operating income (loss): | |||||||||||||||||||||||||
Total operating income (loss) | 13,643 | [1] | 64,605 | 10,022 | 23,058 | 51,858 | [2] | 64,149 | 3,219 | 42,284 | $ 111,328 | $ 161,510 | $ 147,408 | ||||||||||||
Operating income (loss) as a percent of net sales: | |||||||||||||||||||||||||
Total operating income (loss) (as a percent) | 5.74423% | 8.63563% | 8.25669% | ||||||||||||||||||||||
Depreciation and amortization: | |||||||||||||||||||||||||
Total depreciation and amortization | 17,479 | [1] | 17,404 | 16,595 | 17,406 | 19,699 | [2] | 16,789 | 15,979 | 15,692 | $ 68,884 | $ 68,159 | $ 65,734 | ||||||||||||
Capital expenditures: | |||||||||||||||||||||||||
Total capital expenditures | 71,114 | 58,657 | 34,684 | ||||||||||||||||||||||
Business Exit Costs | 191 | $ (1,246) | $ 0 | $ 0 | (4) | $ 4 | $ 6 | $ 4 | (1,055) | 10 | 282 | ||||||||||||||
Total assets: | |||||||||||||||||||||||||
Total assets | 727,046 | 940,228 | 727,046 | 940,228 | |||||||||||||||||||||
Geographic Areas, Long-Lived Assets [Abstract] | |||||||||||||||||||||||||
Disclosure on Geographic Areas, Long-Lived Assets in Entity's Country of Domicile | [3] | 273,901 | 271,026 | 273,901 | 271,026 | ||||||||||||||||||||
The Children's Place U.S. | |||||||||||||||||||||||||
Net sales: | |||||||||||||||||||||||||
Total net sales | 1,727,907 | 1,650,620 | 1,567,556 | ||||||||||||||||||||||
Operating income (loss): | |||||||||||||||||||||||||
Total operating income (loss) | $ 86,983 | $ 132,152 | $ 113,376 | [4] | |||||||||||||||||||||
Operating income (loss) as a percent of net sales: | |||||||||||||||||||||||||
Total operating income (loss) (as a percent) | 5.03401% | 8.0062% | 7.23266% | ||||||||||||||||||||||
Depreciation and amortization: | |||||||||||||||||||||||||
Total depreciation and amortization | $ 61,487 | $ 60,732 | $ 58,626 | ||||||||||||||||||||||
Capital expenditures: | |||||||||||||||||||||||||
Total capital expenditures | 67,476 | 57,360 | 33,447 | ||||||||||||||||||||||
Total assets: | |||||||||||||||||||||||||
Total assets | 651,728 | 750,670 | 651,728 | 750,670 | |||||||||||||||||||||
Geographic Areas, Long-Lived Assets [Abstract] | |||||||||||||||||||||||||
Disclosure on Geographic Areas, Long-Lived Assets in Entity's Country of Domicile | [3] | 261,932 | 258,660 | 261,932 | 258,660 | ||||||||||||||||||||
The Children's Place Canada [Member] | |||||||||||||||||||||||||
Net sales: | |||||||||||||||||||||||||
Total net sales | [5] | 210,177 | 219,655 | 217,760 | |||||||||||||||||||||
Operating income (loss): | |||||||||||||||||||||||||
Total operating income (loss) | $ 24,345 | $ 29,358 | $ 34,032 | ||||||||||||||||||||||
Operating income (loss) as a percent of net sales: | |||||||||||||||||||||||||
Total operating income (loss) (as a percent) | 11.58309% | 13.36551% | 15.62821% | ||||||||||||||||||||||
Depreciation and amortization: | |||||||||||||||||||||||||
Total depreciation and amortization | $ 7,397 | $ 7,427 | $ 7,108 | ||||||||||||||||||||||
Capital expenditures: | |||||||||||||||||||||||||
Total capital expenditures | 3,638 | 1,297 | $ 1,237 | ||||||||||||||||||||||
Total assets: | |||||||||||||||||||||||||
Total assets | 75,318 | 189,558 | 75,318 | 189,558 | |||||||||||||||||||||
Geographic Areas, Long-Lived Assets [Abstract] | |||||||||||||||||||||||||
Disclosure on Geographic Areas, Long-Lived Assets in Entity's Country of Domicile | [3] | 10,718 | 11,119 | 10,718 | 11,119 | ||||||||||||||||||||
The Children's Place Asia [Member] [Member] | |||||||||||||||||||||||||
Geographic Areas, Long-Lived Assets [Abstract] | |||||||||||||||||||||||||
Disclosure on Geographic Areas, Long-Lived Assets in Entity's Country of Domicile | [3] | $ 1,251 | $ 1,247 | $ 1,251 | $ 1,247 | ||||||||||||||||||||
|
DERIVATIVE INSTRUMENTS (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Feb. 02, 2019 |
Feb. 03, 2018 |
Jan. 28, 2017 |
|
Document Period End Date | Feb. 02, 2019 | ||
Derivative Asset, Notional Amount | $ 17,900 | ||
Derivative Asset, Fair Value, Gross Asset | 1,900 | $ 1,600 | |
Derivative, Gain (Loss) on Derivative, Net | 100 | ||
Other Comprehensive Income (Loss), Derivatives Qualifying as Hedges, Net of Tax | $ 75 | $ 160 | $ 983 |
QUARTERLY FINANCIAL DATA Quarterly Financial Data (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Feb. 02, 2019 |
Nov. 03, 2018 |
Aug. 04, 2018 |
May 05, 2018 |
Feb. 03, 2018 |
Oct. 28, 2017 |
Jul. 29, 2017 |
Apr. 29, 2017 |
Feb. 02, 2019 |
Feb. 03, 2018 |
Jan. 28, 2017 |
|||||||
Net sales | $ 530,557 | [1] | $ 522,495 | $ 448,718 | $ 436,314 | $ 569,972 | [2] | $ 490,026 | $ 373,601 | $ 436,676 | $ 1,938,084 | $ 1,870,275 | $ 1,785,316 | ||||
Gross profit | 164,232 | [1] | 204,366 | 154,806 | 160,192 | 209,926 | [2] | 202,433 | 128,405 | 170,591 | 683,596 | 711,355 | 671,593 | ||||
Selling, general and administrative expenses | 132,455 | [1] | 123,207 | 124,210 | 118,471 | 137,844 | [2] | 118,288 | 108,227 | 112,127 | 498,343 | 476,486 | 454,143 | ||||
Asset impairment charges | 464 | [1] | 396 | 3,979 | 1,257 | 529 | [2] | 3,203 | 974 | 484 | 6,096 | 5,190 | 4,026 | ||||
Other costs (income) | 191 | (1,246) | 0 | 0 | (4) | 4 | 6 | 4 | (1,055) | 10 | 282 | ||||||
Depreciation and amortization | 17,479 | [1] | 17,404 | 16,595 | 17,406 | 19,699 | [2] | 16,789 | 15,979 | 15,692 | 68,884 | 68,159 | 65,734 | ||||
Operating income (loss) | 13,643 | [1] | 64,605 | 10,022 | 23,058 | 51,858 | [2] | 64,149 | 3,219 | 42,284 | 111,328 | 161,510 | 147,408 | ||||
Income (loss) from continuing operations before income taxes | 12,913 | [1] | 63,774 | 9,076 | 22,761 | 51,980 | [2] | 64,049 | 2,928 | 42,246 | 108,524 | 161,203 | 147,013 | ||||
Provision (benefit) for income taxes | 889 | [1] | 13,861 | 1,590 | (8,776) | 61,878 | [2] | 19,972 | (11,362) | 6,017 | $ 7,564 | $ 76,505 | $ 44,677 | ||||
Income (loss) from continuing operations | $ 12,024 | [1] | $ 49,913 | $ 7,486 | $ 31,537 | $ (9,898) | [2] | $ 44,077 | $ 14,290 | $ 36,229 | |||||||
Diluted earnings (loss) per share from continuing operations | $ 0 | [1] | $ 3.03 | $ 0.45 | $ 1.78 | $ (0.57) | [2] | $ 2.44 | $ 0 | $ 1.97 | $ 6.01 | $ 4.67 | $ 5.40 | ||||
Diluted weighted average common shares outstanding (in shares) | 16,277 | 16,496 | 16,715 | 17,734 | 17,359 | 18,090 | 18,177 | 18,401 | 16,805 | 18,151 | 18,959 | ||||||
State | $ 2,519 | $ (1,341) | $ 8,527 | ||||||||||||||
Share-based Compensation | $ 27,415 | $ 30,797 | $ 28,040 | ||||||||||||||
Cash dividends declared and paid per common share | $ 0.5000 | $ 0.5000 | $ 0.5000 | $ 0.5000 | |||||||||||||
|
SAVINGS AND INVESTMENT PLANS SAVINGS AND INVESTMENT PLANS (Details) |
12 Months Ended | ||
---|---|---|---|
Feb. 02, 2019
USD ($)
|
Feb. 03, 2018
USD ($)
|
Jan. 28, 2017
USD ($)
|
|
RETIREMENT AND SAVINGS PLANS [Abstract] | |||
First Three Percent of Company Match | 3.00% | ||
Fifty Percent of Next Two Percent Company Match | 50.00% | ||
Next Two Percent of Company Match | 2.00% | ||
Highly Compensated 401k Match | 50.00% | ||
Highly Compensated 2.5 Percent Match | 2.50% | ||
highlycompensatedvestyears | 5 | ||
Defined Benefit Plan, Plan Assets, Contributions by Employer | $ 3,500,000 | $ 3,200,000 | $ 1,800,000 |
Deferred Compensation Arrangements Maximum Percentage of Base Salary | 80.00% | ||
Deferred Compensation Arrangements Maximum Percentage of Bonus | 100.00% | ||
Deferred compensation plan liability | $ 1,900,000 | 1,800,000 | |
Cash Surrender Value of Life Insurance | 1,900,000 | 1,800,000 | |
Common Stock Issued, Employee Trust, Deferred | $ (2,685,000) | $ (2,436,000) |
SUBSEQUENT EVENTS (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Feb. 02, 2019 |
Nov. 03, 2018 |
Aug. 04, 2018 |
May 05, 2018 |
Feb. 03, 2018 |
Oct. 28, 2017 |
Jul. 29, 2017 |
Apr. 29, 2017 |
Feb. 02, 2019 |
Feb. 03, 2018 |
Jan. 28, 2017 |
|
Subsequent Events | |||||||||||
Stock Repurchased and Retired During Period, Shares | (2,095) | (1,011) | (1,947) | ||||||||
Common Stock, Dividends, Per Share, Cash Paid | $ 0.5000 | $ 0.5000 | $ 0.5000 | $ 0.5000 | |||||||
Business Exit Costs | $ 191 | $ (1,246) | $ 0 | $ 0 | $ (4) | $ 4 | $ 6 | $ 4 | $ (1,055) | $ 10 | $ 282 |
Line of Credit Facility, Maximum Borrowing Capacity | 250,000 | $ 250,000 | 250,000 | $ 250,000 | |||||||
Line Of Credit Facility Accordion Borrowing Capacity | $ 50,000 | $ 50,000 | |||||||||
2014 Share Repurchase Program [Member] [Member] | |||||||||||
Subsequent Events | |||||||||||
Stock Repurchased and Retired During Period, Shares | 0 | 0 | 310 | ||||||||
Value of shares repurchased | $ 0 | $ 0 | $ 20,726 |
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