QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of | (I.R.S. Employer | |||||||
incorporation or organization) | Identification Number) | |||||||
(Address of principal executive offices) | (Zip Code) |
Title of each class: | Trading Symbol: | Name of each exchange on which registered: | ||||||
x | Accelerated filer | ☐ | ||||||||||||||||||
Non-accelerated filer | ☐ | Smaller reporting company | ||||||||||||||||||
Emerging growth company |
PAGE | ||||||||
Consolidated Balance Sheets as of April 30, 2022, January 29, 2022, and May 1, 2021 | ||||||||
Consolidated Statements of Operations for the thirteen weeks ended April 30, 2022 and May 1, 2021 | ||||||||
Consolidated Statements of Comprehensive Income for the thirteen weeks ended April 30, 2022 and May 1, 2021 | ||||||||
Consolidated Statements of Changes in Stockholders’ Equity for the thirteen weeks ended April 30, 2022 and May 1, 2021 | ||||||||
Consolidated Statements of Cash Flows for the thirteen weeks ended April 30, 2022 and May 1, 2021 | ||||||||
April 30, 2022 | January 29, 2022 | May 1, 2021 | |||||||||||||||
(unaudited) | (unaudited) | ||||||||||||||||
(in thousands, except par value) | |||||||||||||||||
ASSETS | |||||||||||||||||
Current assets: | |||||||||||||||||
Cash and cash equivalents | $ | $ | $ | ||||||||||||||
Accounts receivable | |||||||||||||||||
Inventories | |||||||||||||||||
Prepaid expenses and other current assets | |||||||||||||||||
Total current assets | |||||||||||||||||
Long-term assets: | |||||||||||||||||
Property and equipment, net | |||||||||||||||||
Right-of-use assets | |||||||||||||||||
Tradenames, net | |||||||||||||||||
Deferred income taxes | |||||||||||||||||
Other assets | |||||||||||||||||
Total assets | $ | $ | $ | ||||||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||||||||
Current liabilities: | |||||||||||||||||
Revolving loan | $ | $ | $ | ||||||||||||||
Accounts payable | |||||||||||||||||
Current portion of operating lease liabilities | |||||||||||||||||
Income taxes payable | |||||||||||||||||
Accrued expenses and other current liabilities | |||||||||||||||||
Total current liabilities | |||||||||||||||||
Long-term liabilities: | |||||||||||||||||
Long-term debt | |||||||||||||||||
Long-term portion of operating lease liabilities | |||||||||||||||||
Income taxes payable | |||||||||||||||||
Other tax liabilities | |||||||||||||||||
Other long-term liabilities | |||||||||||||||||
Total liabilities | |||||||||||||||||
Commitments and contingencies (see Note 7) | |||||||||||||||||
Stockholders' equity: | |||||||||||||||||
Preferred stock, $ | |||||||||||||||||
Common stock, $ | |||||||||||||||||
Additional paid-in capital | |||||||||||||||||
Treasury stock, at cost ( | ( | ( | ( | ||||||||||||||
Deferred compensation | |||||||||||||||||
Accumulated other comprehensive loss | ( | ( | ( | ||||||||||||||
Retained earnings | |||||||||||||||||
Total stockholders’ equity | |||||||||||||||||
Total liabilities and stockholders’ equity | $ | $ | $ |
Thirteen Weeks Ended | |||||||||||
April 30, 2022 | May 1, 2021 | ||||||||||
(in thousands, except earnings per share) | |||||||||||
Net sales | $ | $ | |||||||||
Cost of sales (exclusive of depreciation and amortization) | |||||||||||
Gross profit | |||||||||||
Selling, general, and administrative expenses | |||||||||||
Depreciation and amortization | |||||||||||
Operating income | |||||||||||
Interest expense | ( | ( | |||||||||
Interest income | |||||||||||
Income before provision (benefit) for income taxes | |||||||||||
Provision (benefit) for income taxes | ( | ||||||||||
Net income | $ | $ | |||||||||
Earnings per common share | |||||||||||
Basic | $ | $ | |||||||||
Diluted | $ | $ | |||||||||
Weighted average common shares outstanding | |||||||||||
Basic | |||||||||||
Diluted | |||||||||||
Thirteen Weeks Ended | |||||||||||
April 30, 2022 | May 1, 2021 | ||||||||||
(in thousands) | |||||||||||
Net income | $ | $ | |||||||||
Other comprehensive income: | |||||||||||
Foreign currency translation adjustment | ( | ||||||||||
Total comprehensive income | $ | $ |
Thirteen Weeks Ended April 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Additional | Other | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common Stock | Paid-In | Deferred | Retained | Comprehensive | Treasury Stock | Stockholders’ | ||||||||||||||||||||||||||||||||||||||||||||||||||
(in thousands) | Shares | Amount | Capital | Compensation | Earnings | Loss | Shares | Amount | Equity | |||||||||||||||||||||||||||||||||||||||||||||||
Balance, January 29, 2022 | $ | $ | $ | $ | $ | ( | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||||
Vesting of stock awards | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchase and retirement of common stock | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive loss | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferral of common stock into deferred compensation plan | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, April 30, 2022 | $ | $ | $ | $ | $ | ( | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||||
Thirteen Weeks Ended May 1, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Additional | Retained | Other | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Common Stock | Paid-In | Deferred | Earnings | Comprehensive | Treasury Stock | Stockholders’ | ||||||||||||||||||||||||||||||||||||||||||||||||||
(in thousands) | Shares | Amount | Capital | Compensation | (Deficit) | Loss | Shares | Amount | Equity | |||||||||||||||||||||||||||||||||||||||||||||||
Balance, January 30, 2021 | $ | $ | $ | $ | ( | $ | ( | ( | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||||||
Vesting of stock awards | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchase and retirement of common stock | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferral of common stock into deferred compensation plan | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, May 1, 2021 | $ | $ | $ | $ | $ | ( | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||||
Thirteen Weeks Ended | |||||||||||
April 30, 2022 | May 1, 2021 | ||||||||||
(in thousands) | |||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||
Net income | $ | $ | |||||||||
Reconciliation of net income to net cash used in operating activities: | |||||||||||
Non-cash portion of operating lease expense | |||||||||||
Depreciation and amortization | |||||||||||
Non-cash stock-based compensation expense | |||||||||||
Deferred income tax provision (benefit) | ( | ||||||||||
Other non-cash charges, net | |||||||||||
Changes in operating assets and liabilities: | |||||||||||
Inventories | ( | ( | |||||||||
Accounts receivable and other assets | ( | ( | |||||||||
Prepaid expenses and other current assets | ( | ||||||||||
Income taxes payable, net of prepayments | |||||||||||
Accounts payable and other current liabilities | ( | ||||||||||
Lease liabilities | ( | ( | |||||||||
Other long-term liabilities | |||||||||||
Net cash used in operating activities | ( | ( | |||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||
Capital expenditures | ( | ( | |||||||||
Change in deferred compensation plan | ( | ||||||||||
Net cash used in investing activities | ( | ( | |||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||
Borrowings under revolving credit facility | |||||||||||
Repayments under revolving credit facility | ( | ( | |||||||||
Purchase and retirement of common stock, including shares surrendered for tax withholdings and transaction costs | ( | ( | |||||||||
Payment of debt issuance costs | ( | ||||||||||
Net cash provided by financing activities | |||||||||||
Effect of exchange rate changes on cash and cash equivalents | ( | ||||||||||
Net increase in cash and cash equivalents | |||||||||||
Cash and cash equivalents, beginning of period | |||||||||||
Cash and cash equivalents, end of period | $ | $ |
Thirteen Weeks Ended | |||||||||||
April 30, 2022 | May 1, 2021 | ||||||||||
(in thousands) | |||||||||||
OTHER CASH FLOW INFORMATION: | |||||||||||
Net cash paid (received) for income taxes | $ | ( | $ | ||||||||
Cash paid for interest | |||||||||||
Increase (decrease) in accrued capital expenditures | ( |
Thirteen Weeks Ended | |||||||||||
April 30, 2022 | May 1, 2021 | ||||||||||
(in thousands) | |||||||||||
Net sales: | |||||||||||
South | $ | $ | |||||||||
Northeast | |||||||||||
West | |||||||||||
Midwest | |||||||||||
International and other | |||||||||||
Total net sales | $ | $ |
April 30, 2022 | ||||||||||||||||||||||||||
Useful Life | Gross Amount | Accumulated Amortization | Net Amount | |||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||
Gymboree tradename (1) | Indefinite | $ | $ | — | $ | |||||||||||||||||||||
Crazy 8 tradename (1) | ( | |||||||||||||||||||||||||
Customer databases (2) | ( | |||||||||||||||||||||||||
Total intangibles | $ | $ | ( | $ |
January 29, 2022 | ||||||||||||||||||||||||||
Useful Life | Gross Amount | Accumulated Amortization | Net Amount | |||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||
Gymboree tradename (1) | Indefinite | $ | $ | — | $ | |||||||||||||||||||||
Crazy 8 tradename (1) | ( | |||||||||||||||||||||||||
Customer databases (2) | ( | |||||||||||||||||||||||||
Total intangibles | $ | $ | ( | $ |
May 1, 2021 | ||||||||||||||||||||||||||
Useful Life | Gross Amount | Accumulated Amortization | Net Amount | |||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||
Gymboree tradename (1) | Indefinite | $ | $ | — | $ | |||||||||||||||||||||
Crazy 8 tradename (1) | ( | |||||||||||||||||||||||||
Customer databases (2) | ( | |||||||||||||||||||||||||
Total intangibles | $ | $ | ( | $ |
April 30, 2022 | January 29, 2022 | May 1, 2021 | ||||||||||||||||||
(in thousands) | ||||||||||||||||||||
Property and equipment: | ||||||||||||||||||||
Land and land improvements | $ | $ | $ | |||||||||||||||||
Building and improvements | ||||||||||||||||||||
Material handling equipment | ||||||||||||||||||||
Leasehold improvements | ||||||||||||||||||||
Store fixtures and equipment | ||||||||||||||||||||
Capitalized software | ||||||||||||||||||||
Construction in progress | ||||||||||||||||||||
Less accumulated depreciation and amortization | ( | ( | ( | |||||||||||||||||
Property and equipment, net | $ | $ | $ |
Thirteen Weeks Ended | |||||||||||
April 30, 2022 | May 1, 2021 | ||||||||||
(in thousands) | |||||||||||
Fixed operating lease cost | $ | $ | |||||||||
Variable operating lease cost (1) | |||||||||||
Total operating lease cost | $ | $ |
April 30, 2022 | |||||
(in thousands) | |||||
Remainder of 2022 | $ | ||||
2023 | |||||
2024 | |||||
2025 | |||||
2026 | |||||
Thereafter | |||||
Total lease payments | |||||
Less: imputed interest | ( | ||||
Present value of operating lease liabilities | $ | ||||
April 30, 2022 | January 29, 2022 | May 1, 2021 | |||||||||||||||
(in millions) | |||||||||||||||||
Credit facility maximum | $ | $ | $ | ||||||||||||||
Borrowing base (1) | |||||||||||||||||
Outstanding borrowings | |||||||||||||||||
Letters of credit outstanding—standby | |||||||||||||||||
Utilization of credit facility at end of period | |||||||||||||||||
Availability (2) | $ | $ | $ | ||||||||||||||
Interest rate at end of period |
First Quarter 2022 | Fiscal 2021 | First Quarter 2021 | |||||||||||||||
Average end of day loan balance during the period | $ | $ | $ | ||||||||||||||
Highest end of day loan balance during the period | $ | $ | $ | ||||||||||||||
Average interest rate |
Thirteen Weeks Ended | ||||||||||||||||||||||||||
April 30, 2022 | May 1, 2021 | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||
Share repurchases related to: | ||||||||||||||||||||||||||
Share repurchase program | $ | $ | ||||||||||||||||||||||||
Shares acquired and held in treasury | $ | $ |
Thirteen Weeks Ended | |||||||||||
April 30, 2022 | May 1, 2021 | ||||||||||
(in thousands) | |||||||||||
Deferred Awards | $ | $ | |||||||||
Performance Awards | |||||||||||
Total stock-based compensation expense (1) | $ | $ |
Thirteen Weeks Ended | |||||||||||
April 30, 2022 | May 1, 2021 | ||||||||||
(in thousands) | |||||||||||
Net income | $ | $ | |||||||||
Basic weighted average common shares outstanding | |||||||||||
Dilutive effect of stock awards | |||||||||||
Diluted weighted average common shares outstanding | |||||||||||
Thirteen Weeks Ended | |||||||||||
April 30, 2022 | May 1, 2021 | ||||||||||
(in thousands) | |||||||||||
Net sales: | |||||||||||
The Children’s Place U.S. | $ | $ | |||||||||
The Children’s Place International (1) | |||||||||||
Total net sales | $ | $ | |||||||||
Operating income: | |||||||||||
The Children’s Place U.S. | $ | $ | |||||||||
The Children’s Place International | |||||||||||
Total operating income | $ | $ | |||||||||
Operating income as a percentage of net sales: | |||||||||||
The Children’s Place U.S. | |||||||||||
The Children’s Place International | |||||||||||
Total operating income as a percentage of net sales | |||||||||||
Depreciation and amortization: | |||||||||||
The Children’s Place U.S. | $ | $ | |||||||||
The Children’s Place International | |||||||||||
Total depreciation and amortization | $ | $ | |||||||||
Capital expenditures: | |||||||||||
The Children’s Place U.S. | $ | $ | |||||||||
The Children’s Place International | |||||||||||
Total capital expenditures | $ | $ |
Thirteen Weeks Ended | |||||||||||
April 30, 2022 | May 1, 2021 | ||||||||||
Average Translation Rates (1) | |||||||||||
Canadian dollar | 0.7895 | 0.7948 | |||||||||
Hong Kong dollar | 0.1279 | 0.1288 | |||||||||
Chinese renminbi | 0.1570 | 0.1539 |
Thirteen Weeks Ended | |||||||||||
April 30, 2022 | May 1, 2021 | ||||||||||
Net sales | 100.0 | % | 100.0 | % | |||||||
Cost of sales (exclusive of depreciation and amortization) | 60.8 | 56.8 | |||||||||
Gross profit | 39.2 | 43.2 | |||||||||
Selling, general, and administrative expenses | 30.1 | 24.5 | |||||||||
Depreciation and amortization | 3.8 | 3.6 | |||||||||
Operating income | 5.3 | 15.1 | |||||||||
Income before provision (benefit) for income taxes | 4.8 | 14.1 | |||||||||
Provision (benefit) for income taxes | (0.6) | 3.7 | |||||||||
Net income | 5.5 | % | 10.4 | % | |||||||
Number of Company stores, end of period | 665 | 724 |
Thirteen Weeks Ended | |||||||||||
April 30, 2022 | May 1, 2021 | ||||||||||
(in thousands) | |||||||||||
Net sales: | |||||||||||
The Children’s Place U.S. | $ | 327,961 | $ | 399,659 | |||||||
The Children’s Place International | 34,389 | 35,822 | |||||||||
Total net sales | $ | 362,350 | $ | 435,481 | |||||||
April 30, 2022 | January 29, 2022 | May 1, 2021 | |||||||||||||||
(in millions) | |||||||||||||||||
Credit facility maximum | $ | 350.0 | $ | 350.0 | $ | 360.0 | |||||||||||
Borrowing base (1) | 350.0 | 279.7 | 330.4 | ||||||||||||||
Outstanding borrowings | 249.5 | 175.3 | 196.9 | ||||||||||||||
Letters of credit outstanding—standby | 7.4 | 7.4 | 7.4 | ||||||||||||||
Utilization of credit facility at end of period | 256.9 | 182.7 | 204.3 | ||||||||||||||
Availability (2) | $ | 93.1 | $ | 97.0 | $ | 126.1 | |||||||||||
Interest rate at end of period | 2.0% | 1.6% | 4.0% |
First Quarter 2022 | Fiscal 2021 | First Quarter 2021 | |||||||||||||||
Average end of day loan balance during the period | $ | 251.2 | $ | 187.0 | $ | 210.3 | |||||||||||
Highest end of day loan balance during the period | $ | 308.6 | $ | 269.7 | $ | 260.6 | |||||||||||
Average interest rate | 2.0% | 3.6% | 4.0% |
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 | ||||||||||||||||||||||
1/30/22-2/26/22 (1) | 231,384 | $ | 67.63 | 230,440 | $ | 241,713 | ||||||||||||||||||||
2/27/22-4/2/22 | 380,343 | 53.43 | 380,343 | 221,391 | ||||||||||||||||||||||
4/3/22-4/30/22 (2) | 54,308 | 51.50 | 54,308 | 218,594 | ||||||||||||||||||||||
Total | 666,035 | $ | 58.21 | 665,091 | $ | 218,594 |
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. | |||||||||||
Date: | June 1, 2022 | By: | /S/ Jane T. Elfers | ||||||||
Jane T. Elfers | |||||||||||
Chief Executive Officer and President | |||||||||||
(Principal Executive Officer) | |||||||||||
Date: | June 1, 2022 | By: | /S/ Robert Helm | ||||||||
Robert Helm | |||||||||||
Chief Financial Officer | |||||||||||
(Principal Financial Officer) | |||||||||||
Date: | June 1, 2022 | By: | /S/ JANE T. ELFERS | ||||||||
JANE T. ELFERS Chief Executive Officer and President (Principal Executive Officer) |
Date: | June 1, 2022 | By: | /S/ ROBERT HELM | ||||||||
ROBERT HELM Chief Financial Officer (Principal Financial Officer) |
By: | /S/ JANE T. ELFERS | |||||||
Chief Executive Officer and President (Principal Executive Officer) |
By: | /S/ ROBERT HELM | |||||||
Chief Financial Officer (Principal Financial Officer) |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
Apr. 30, 2022 |
Jan. 29, 2022 |
May 01, 2021 |
---|---|---|---|
Statement of Financial Position [Abstract] | |||
Preferred stock, par value (in usd per share) | $ 1.00 | $ 1.00 | $ 1.00 |
Preferred stock, shares authorized (in shares) | 1,000,000 | 1,000,000 | 1,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 | 0 |
Common stock, par value (in usd per share) | $ 0.10 | $ 0.10 | $ 0.10 |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 | 100,000,000 |
Common stock, shares issued (in shares) | 13,422,000 | 13,964,000 | 14,693,000 |
Common stock, shares outstanding (in shares) | 13,360,000 | 13,903,000 | 14,635,000 |
Treasury stock (in shares) | 62,000 | 61,000 | 58,000 |
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | |
---|---|---|
Apr. 30, 2022 |
May 01, 2021 |
|
Income Statement [Abstract] | ||
Net sales | $ 362,350 | $ 435,481 |
Cost of sales (exclusive of depreciation and amortization) | 220,445 | 247,275 |
Gross profit | 141,905 | 188,206 |
Selling, general, and administrative expenses | 109,036 | 106,738 |
Depreciation and amortization | 13,615 | 15,561 |
Operating income | 19,254 | 65,907 |
Interest expense | (1,710) | (4,414) |
Interest income | 5 | 3 |
Income before provision (benefit) for income taxes | 17,549 | 61,496 |
Provision (benefit) for income taxes | (2,282) | 16,291 |
Net income | $ 19,831 | $ 45,205 |
Earnings per common share | ||
Basic (in usd per share) | $ 1.46 | $ 3.08 |
Diluted (in usd per share) | $ 1.43 | $ 3.01 |
Weighted average common shares outstanding | ||
Basic (in shares) | 13,621 | 14,670 |
Diluted (in shares) | 13,841 | 15,002 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Apr. 30, 2022 |
May 01, 2021 |
|
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | ||
Net income | $ 19,831 | $ 45,205 |
Other comprehensive income: | ||
Foreign currency translation adjustment | (482) | 886 |
Total comprehensive income | $ 19,349 | $ 46,091 |
BASIS OF PRESENTATION |
3 Months Ended |
---|---|
Apr. 30, 2022 | |
Accounting Policies [Abstract] | |
BASIS OF PRESENTATION | BASIS OF PRESENTATION Description of Business The Children’s Place, Inc. and subsidiaries (collectively, 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 and ‘tweens.’ The Company designs, contracts to manufacture, sells at retail and wholesale, and licenses to sell trend right, high-quality merchandise predominantly at value prices, primarily under the Company’s proprietary “The Children’s Place”, “Place”, “Baby Place”, “Gymboree”, and “Sugar & Jade” 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 Canadian-based wholesale business, as well as revenue from international franchisees. Each segment includes an e-commerce business located at www.childrensplace.com, www.gymboree.com, and www.sugarandjade.com. Terms that are commonly used in the notes to the Company’s consolidated financial statements are defined as follows: •First Quarter 2022 — The thirteen weeks ended April 30, 2022 •First Quarter 2021 — The thirteen weeks ended May 1, 2021 •SEC — U.S. Securities and Exchange Commission •U.S. GAAP — Generally Accepted Accounting Principles in the United States •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 Basis of Presentation The unaudited consolidated financial statements and accompanying notes to consolidated financial statements are prepared in accordance with U.S. GAAP for interim financial information and the rules and regulations of the SEC. Accordingly, certain information and footnote disclosures normally included in the annual consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Intercompany balances and transactions have been eliminated. As of April 30, 2022, January 29, 2022 and May 1, 2021, 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. In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly the consolidated financial position of the Company as of April 30, 2022 and May 1, 2021, the results of its consolidated operations for the thirteen weeks ended April 30, 2022 and May 1, 2021, consolidated comprehensive income for the thirteen weeks ended April 30, 2022 and May 1, 2021, consolidated cash flows for the thirteen weeks ended April 30, 2022 and May 1, 2021, and consolidated changes in stockholders’ equity for the thirteen weeks ended April 30, 2022 and May 1, 2021. The consolidated balance sheet as of January 29, 2022 was derived from audited financial statements. Due to the seasonal nature of the Company’s business, the results of operations for the thirteen weeks ended April 30, 2022 and May 1, 2021 are not necessarily indicative of operating results for a full fiscal year. These consolidated financial statements should be read in conjunction with the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 29, 2022. 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. 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. Critical accounting estimates inherent in the preparation of the consolidated financial statements include impairment of long-lived assets, income taxes, stock-based compensation, and inventory valuation. Recent Accounting Standards Updates There are no pending accounting standards updates that are currently expected to have a material impact on the Company.
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REVENUES |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
REVENUES | REVENUES Revenues are recognized when control of the promised goods or services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The following table presents the Company’s 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 sales of $5.3 million and $6.7 million within Accrued expenses and other current liabilities as of April 30, 2022 and May 1, 2021, respectively, based upon estimated time of delivery, at which point control passes to the customer. 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 have not been 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 $1.7 million as of April 30, 2022 and May 1, 2021. The Company’s private label credit card is issued to customers for use exclusively at The Children’s Place stores and online at www.childrensplace.com, www.gymboree.com, and www.sugarandjade.com, and credit is extended to such customers by a third-party financial institution on a non-recourse basis to the Company. The private label credit card includes multiple performance obligations for the Company, 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 private label credit card 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 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 liabilities related to this program were $1.8 million and $4.3 million as of April 30, 2022 and May 1, 2021, respectively. 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. Gift card breakage is recorded within Net sales. Prior to their redemption, gift cards are recorded as a liability within Accrued expenses and other current liabilities. The liability is estimated based on expected breakage that considers historical patterns of redemption. The gift card liability balance as of April 30, 2022, January 29, 2022, and May 1, 2021 was $13.3 million, $12.1 million, and $12.7 million, respectively. In the First Quarter 2022, the Company recognized Net sales of $2.3 million related to the gift card liability balance that existed at January 29, 2022. The Company has an international program of 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 each franchisee for exclusive territorial rights and based on the opening of new stores. The Company records these territorial fees as deferred revenue and amortizes the fee into net sales over the life of the territorial agreement.
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INTANGIBLE ASSETS |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INTANGIBLE ASSETS | INTANGIBLE ASSETS The Company’s intangible assets were as follows:
____________________________________________ (1)Included within Tradenames, net on the Consolidated Balance Sheets. (2)Included within Other assets on the Consolidated Balance Sheets.
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PROPERTY AND EQUIPMENT, NET |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PROPERTY AND EQUIPMENT, NET | PROPERTY AND EQUIPMENT, NET Property and equipment consisted of the following:
At April 30, 2022 and May 1, 2021, the Company reviewed its store related long-lived assets for indicators of impairment, and performed a recoverability test if indicators were identified. Based on the results of the analyses performed, the Company did not record significant asset impairment charges in the First Quarter 2022 or First Quarter 2021.
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LEASES |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LEASES | LEASESThe Company has operating leases for retail stores, corporate offices, distribution facilities, and certain equipment. The Company’s leases have remaining lease terms ranging from less than one year up to ten years, some of which include options to extend the leases for up to five years, and some of which include options to terminate the lease early. The Company records all occupancy costs in Cost of sales, except costs for administrative office buildings, which are recorded in Selling, general, and administrative expenses. As of the periods presented, the Company’s finance leases were not material to the Consolidated Balance Sheets, Consolidated Statements of Operations, or Consolidated Statements of Cash Flows. The following components of lease expense were recognized in the Company’s Consolidated Statements of Operations:
____________________________________________ (1)Includes short term leases with lease periods of less than 12 months as well as lease abatements accounted for as reductions to variable lease costs under the COVID-19 expedient of $0.8 million and $8.0 million during the First Quarter 2022 and First Quarter 2021, respectively. As of April 30, 2022, the weighted-average remaining operating lease term was 4.3 years, and the weighted-average discount rate for operating leases was 4.9%. Cash paid for amounts included in the measurement of operating lease liabilities during the First Quarter 2022 was $23.8 million. ROU assets obtained in exchange for new operating lease liabilities were $21.1 million during the First Quarter 2022. As of April 30, 2022, the maturities of operating lease liabilities were as follows:
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DEBT |
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DEBT | DEBT On November 16, 2021, the Company completed the refinancing of its previous $360.0 million asset-based revolving credit facility (the “Previous ABL Credit Facility”) and previous $80.0 million term loan (the “Previous Term Loan”) with a new lending group led by an affiliate of Wells Fargo Bank, National Association (“Wells Fargo”) by entering into a fourth amendment to its Credit Agreement, dated as of May 9, 2019, with the lenders party thereto. The new debt consists of a revolving credit facility with $350.0 million of availability (the “ABL Credit Facility”) and a $50.0 million term loan (the “Term Loan”). ABL Credit Facility and Term Loan The Company and certain of its subsidiaries maintain the $350 million ABL Credit Facility and the $50 million Term Loan with Wells Fargo, Truist Bank, 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, Swing Line Lender and Term Agent. Both the ABL Credit Facility and the Term Loan mature in November 2026, and both of these debt facilities have lower interest rates, reduced reporting requirements, and increased flexibility under the covenants compared to the Previous ABL Credit Facility and Previous Term Loan. The ABL Credit Facility includes a $25 million Canadian sublimit and a $50 million sublimit for standby and documentary letters of credit. Borrowings outstanding under the ABL Credit Facility bear interest, at the Company’s option, at: (i)the prime rate, plus a margin of 0.375% or 0.625% 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, three, or six months, as selected by the Company, plus a margin of 1.125% or 1.375% based on the amount of the Company’s average excess availability under the facility. The Company is charged a fee of 0.20% on the unused portion of the commitments. Letter of credit fees range from 0.563% to 0.683% for commercial letters of credit and from 0.625% to 0.875% 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 ABL Credit Facility is determined by a borrowing base consisting of certain credit card receivables, certain trade receivables, certain inventory, and the fair market value of certain real estate, subject to certain reserves. The outstanding obligations under the ABL Credit Facility 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 ABL Credit Facility contains covenants, which include conditions on stock buybacks and the payment of cash dividends or similar payments. These covenants also limit the ability of the Company and its subsidiaries to incur certain liens, to incur certain indebtedness, to make certain investments, acquisitions, or dispositions or to change the nature of its business. Credit extended under the ABL Credit Facility is secured by a first priority security interest in substantially all of the Company’s U.S. and Canadian assets other than intellectual property, certain furniture, fixtures, equipment, and pledges of subsidiary capital stock, and a second priority security interest in the Company’s intellectual property, certain furniture, fixtures, equipment, and pledges of subsidiary capital stock. The table below presents the components of the Company’s ABL Credit Facility and Previous ABL Credit Facility:
____________________________________________ (1)Lower of the credit facility maximum or the total borrowing base collateral. (2)The sub-limit availability for letters of credit was $42.6 million at April 30, 2022, January 29, 2022, and May 1, 2021. The Term Loan bears interest, payable monthly, at (a) the LIBOR Rate plus 2.50% for any portion that is a LIBOR loan, or (b) the base rate plus 1.75% for any portion that is a base rate loan. The Term Loan is pre-payable at any time without penalty, and does not require amortization. For the First Quarter 2022, the Company recognized $0.4 million in interest expense related to the Term Loan. The Term Loan is secured by a first priority security interest in the Company’s intellectual property, certain furniture, fixtures, equipment, and pledges of subsidiary capital stock, and a second priority security interest in the collateral securing the ABL Credit Facility on a first-priority basis. The Term Loan is guaranteed by each of the Company’s subsidiaries that guarantees the ABL Credit Facility and contains substantially the same covenants as provided in the ABL Credit Facility. Both the ABL Credit Facility and the Term Loan contain customary events of default, which include (subject in certain cases to customary grace and cure periods), nonpayment of principal or interest, breach of covenants, failure to pay certain other indebtedness, and certain events of bankruptcy, insolvency or reorganization.
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COMMITMENTS AND CONTINGENCIES |
3 Months Ended |
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Apr. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Legal and Regulatory 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 sought to represent a class of California purchasers and sought, 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 January 28, 2020, the date of preliminary approval by the court of the settlement. The Company submitted its memorandum in support of final approval of the class settlement on March 2, 2021. On March 29, 2021, the court granted final approval of the class settlement and denied plaintiff’s motion for attorney’s fees, with the amount of attorney’s fees to be decided after the class recovery amount has been determined. The settlement provides merchandise vouchers for qualified class members who submit valid claims, as well as payment of legal fees and expenses and claims administration expenses. Vouchers were distributed to class members on November 15, 2021 and they will be eligible for redemption in multiple rounds through November 2023. In connection with the settlement, the Company recorded a reserve for $5.0 million in its consolidated financial statements in the first quarter of 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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STOCKHOLDERS' EQUITY |
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Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCKHOLDERS’ EQUITY | STOCKHOLDERS’ EQUITY Share Repurchase Programs In March 2018, the Board of Directors authorized a $250.0 million share repurchase program (the “2018 Share Repurchase Program”). In November 2021, the Board of Directors approved another $250.0 million share repurchase program (the “2021 Share Repurchase Program”), which added to the then remaining availability under the 2018 Share Repurchase Program. Under these programs, the Company may repurchase shares on 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 the programs at any time and may thereafter reinstitute purchases, all without prior announcement. As of April 30, 2022, there was $218.6 million remaining under the 2021 Share Repurchase Program. From March 2020 through July 2021, the Company suspended share repurchases, other than to satisfy withholding tax requirements of equity award recipients, due to the COVID-19 pandemic. 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 repurchases shares of vesting stock awards and makes payments to taxing authorities as required by law to satisfy the withholding tax requirements of all equity award recipients. The Company’s payment of the withholding taxes in exchange for the surrendered shares constitutes a repurchase of its common stock. The Company also acquires shares of its common stock in conjunction with liabilities owed under the Company’s deferred compensation plan, which are held in treasury. The following table summarizes the Company’s share repurchases:
In accordance with the 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 determined using a pro-rata allocation based on total shares outstanding. For all shares retired in the First Quarter 2022 and First Quarter 2021, $25.8 million and $1.9 million was charged to Retained earnings, respectively. Dividends In March 2020, the Company announced it had temporarily suspended its dividend payments due to the COVID-19 pandemic. Future declarations of quarterly dividends and the establishment of future record and 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 financial performance, and other investment priorities.
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STOCK-BASED COMPENSATION |
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Share-based Payment Arrangement [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. The following table summarizes the Company’s stock-based compensation expense:
____________________________________________ (1)Stock-based compensation expense recorded within Cost of sales (exclusive of depreciation and amortization) amounted to $0.6 million and $1.0 million in the First Quarter 2022 and First Quarter 2021, respectively. All other stock-based compensation expense is included in Selling, general, and administrative expenses.
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EARNINGS PER COMMON SHARE |
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EARNINGS PER COMMON SHARE | EARNINGS PER COMMON SHARE The following table reconciles net income and share amounts utilized to calculate basic and diluted earnings per common share:
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INCOME TAXES |
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Apr. 30, 2022 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The Company computes income taxes using the liability method. This method requires recognition of deferred tax assets and liabilities, measured by enacted rates, attributable to temporary differences between the financial statement and income tax basis of assets and liabilities. The Company’s deferred tax assets and liabilities are comprised largely of differences relating to depreciation and amortization, rent expense, inventory, stock-based compensation, net operating loss carryforwards, tax credits, and various accruals and reserves. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted in response to the COVID-19 pandemic. The CARES Act allows net operating losses (“NOLs”) incurred in taxable years 2018, 2019, and 2020 to be carried back to each of the five preceding taxable years to offset 100% of taxable income and to generate a refund of previously paid income taxes. Pursuant to the CARES Act, the Company carried back the taxable year 2020 tax loss of approximately $150.0 million to prior years. During the First Quarter 2022, the Company received $22.0 million of this income tax refund and the remaining balance of $19.1 million as of April 30, 2022, is included within Prepaid expenses and other current assets on the Consolidated Balance Sheets. The Company’s effective income tax rate for the First Quarter 2022 was a benefit of 13.0%, or $2.3 million, compared to a provision of 26.5%, or $16.3 million, during the First Quarter 2021. The decrease in the effective income tax rate for the First Quarter 2022 compared to the First Quarter 2021 was primarily driven by the release of a reserve of $6.4 million for unrecognized tax benefits as a result of a settlement with a taxing authority in the First Quarter 2022. The Company accrues interest and penalties related to unrecognized tax benefits as part of the provision for income taxes. The total amount of unrecognized tax benefits was $2.3 million, $8.7 million, and $7.9 million as of April 30, 2022, January 29, 2022, and May 1, 2021, respectively, and is included within non-current liabilities. Additional interest expense recognized in the First Quarter 2022 and First Quarter 2021 related to unrecognized tax benefits was not significant. The Company is subject to tax in the United States and foreign jurisdictions, including Canada and Hong Kong. The Company files a consolidated U.S. 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 tax years 2016 and prior. Management believes that an adequate provision has been made for any adjustments that may result from tax examinations. However, the outcome of tax audits cannot be predicted with certainty. If any issues arise as a result of a tax audit, and are resolved in a manner not consistent with management’s expectations, the Company could be required to adjust its provision for income tax in the period such resolution occurs.
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SEGMENT INFORMATION |
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SEGMENT INFORMATION | SEGMENT INFORMATIONIn 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, www.gymboree.com, and www.sugarandjade.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-based 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 to external customers are derived from merchandise sales, and the Company has no customers that individually account for more than 10% of its net sales. As of April 30, 2022, The Children’s Place U.S. had 583 stores and The Children’s Place International had 82 stores. As of May 1, 2021, The Children’s Place U.S. had 624 stores and The Children’s Place International had 100 stores. The following tables provide segment level financial information:
____________________________________________ (1)Net sales from The Children’s Place International are primarily derived from Canadian operations. The Company’s 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.
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BASIS OF PRESENTATION (Policies) |
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Apr. 30, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The unaudited consolidated financial statements and accompanying notes to consolidated financial statements are prepared in accordance with U.S. GAAP for interim financial information and the rules and regulations of the SEC. Accordingly, certain information and footnote disclosures normally included in the annual consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Intercompany balances and transactions have been eliminated. As of April 30, 2022, January 29, 2022 and May 1, 2021, 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. In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly the consolidated financial position of the Company as of April 30, 2022 and May 1, 2021, the results of its consolidated operations for the thirteen weeks ended April 30, 2022 and May 1, 2021, consolidated comprehensive income for the thirteen weeks ended April 30, 2022 and May 1, 2021, consolidated cash flows for the thirteen weeks ended April 30, 2022 and May 1, 2021, and consolidated changes in stockholders’ equity for the thirteen weeks ended April 30, 2022 and May 1, 2021. The consolidated balance sheet as of January 29, 2022 was derived from audited financial statements. Due to the seasonal nature of the Company’s business, the results of operations for the thirteen weeks ended April 30, 2022 and May 1, 2021 are not necessarily indicative of operating results for a full fiscal year. These consolidated financial statements should be read in conjunction with the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 29, 2022.
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Fiscal Year | Fiscal YearThe Company’s fiscal year is a 52-week or 53-week period ending on the Saturday on or nearest to January 31. |
Use of Estimates | 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. Critical accounting estimates inherent in the preparation of the consolidated financial statements include impairment of long-lived assets, income taxes, stock-based compensation, and inventory valuation.
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Recent Accounting Standards Updates | Recent Accounting Standards Updates There are no pending accounting standards updates that are currently expected to have a material impact on the Company.
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REVENUES (Tables) |
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Schedule of Disaggregation of Revenue | The following table presents the Company’s revenues disaggregated by geography:
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INTANGIBLE ASSETS (Tables) |
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Schedule of Intangible Assets and Goodwill | The Company’s intangible assets were as follows:
____________________________________________ (1)Included within Tradenames, net on the Consolidated Balance Sheets. (2)Included within Other assets on the Consolidated Balance Sheets.
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PROPERTY AND EQUIPMENT, NET (Tables) |
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Schedule of Property, Plant and Equipment | Property and equipment consisted of the following:
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LEASES (Tables) |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Lease, Cost | The following components of lease expense were recognized in the Company’s Consolidated Statements of Operations:
____________________________________________ (1)Includes short term leases with lease periods of less than 12 months as well as lease abatements accounted for as reductions to variable lease costs under the COVID-19 expedient of $0.8 million and $8.0 million during the First Quarter 2022 and First Quarter 2021, respectively.
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Schedule of Lessee, Operating Lease, Liability, Maturity | As of April 30, 2022, the maturities of operating lease liabilities were as follows:
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DEBT (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Line of Credit Facilities | The table below presents the components of the Company’s ABL Credit Facility and Previous ABL Credit Facility:
____________________________________________ (1)Lower of the credit facility maximum or the total borrowing base collateral. (2)The sub-limit availability for letters of credit was $42.6 million at April 30, 2022, January 29, 2022, and May 1, 2021.
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STOCKHOLDERS' EQUITY (Tables) |
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Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Shares Repurchases | The following table summarizes the Company’s share repurchases:
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STOCK-BASED COMPENSATION (Tables) |
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Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Company’s Stock-Based Compensation Expense | The following table summarizes the Company’s stock-based compensation expense:
____________________________________________ (1)Stock-based compensation expense recorded within Cost of sales (exclusive of depreciation and amortization) amounted to $0.6 million and $1.0 million in the First Quarter 2022 and First Quarter 2021, respectively. All other stock-based compensation expense is included in Selling, general, and administrative expenses.
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EARNINGS PER COMMON SHARE (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Basic and Diluted Earnings Per Common Share | The following table reconciles net income and share amounts utilized to calculate basic and diluted earnings per common share:
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SEGMENT INFORMATION (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting | The following tables provide segment level financial information:
____________________________________________ (1)Net sales from The Children’s Place International are primarily derived from Canadian operations. The Company’s foreign subsidiaries, primarily in Canada, have operating results based in foreign currencies and are thus subject to the fluctuations of the corresponding translation rates into U.S. dollars.
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BASIS OF PRESENTATION (Details) |
3 Months Ended |
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Apr. 30, 2022
segment
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Accounting Policies [Abstract] | |
Number of reportable segments | 2 |
REVENUES - Disaggregation by Geography (Details) - USD ($) $ in Thousands |
3 Months Ended | |
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Apr. 30, 2022 |
May 01, 2021 |
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Disaggregation of Revenue [Line Items] | ||
Total net sales | $ 362,350 | $ 435,481 |
South | ||
Disaggregation of Revenue [Line Items] | ||
Total net sales | 136,372 | 165,738 |
Northeast | ||
Disaggregation of Revenue [Line Items] | ||
Total net sales | 75,396 | 95,022 |
West | ||
Disaggregation of Revenue [Line Items] | ||
Total net sales | 50,132 | 62,223 |
Midwest | ||
Disaggregation of Revenue [Line Items] | ||
Total net sales | 43,613 | 60,804 |
International and other | ||
Disaggregation of Revenue [Line Items] | ||
Total net sales | $ 56,837 | $ 51,694 |
REVENUES - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | ||
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Apr. 30, 2022 |
Jan. 29, 2022 |
May 01, 2021 |
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Disaggregation of Revenue [Line Items] | |||
Deferred revenue | $ 1.7 | $ 1.7 | |
Contract liability | 1.8 | 4.3 | |
Accrued Expenses and Other Current Liabilities | |||
Disaggregation of Revenue [Line Items] | |||
Deferred revenue, current | 5.3 | 6.7 | |
Gift Cards | |||
Disaggregation of Revenue [Line Items] | |||
Gift card liability | 13.3 | $ 12.1 | $ 12.7 |
Net sales | $ 2.3 |
LEASES - Narrative (Details) $ in Millions |
3 Months Ended |
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Apr. 30, 2022
USD ($)
| |
Lessee, Lease, Description [Line Items] | |
Option to extend lease | 5 years |
Operating lease, weighted average remaining lease term | 4 years 3 months 18 days |
Operating lease, weighted average discount rate | 4.90% |
Operating lease, payments | $ 23.8 |
Right-of-use asset obtained in exchange for operating lease liability | $ 21.1 |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Lessee, operating lease, remaining lease term | 1 year |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Lessee, operating lease, remaining lease term | 10 years |
LEASES - Lease Cost (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Apr. 30, 2022 |
May 01, 2021 |
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Leases [Abstract] | ||
Fixed operating lease cost | $ 22,970 | $ 25,758 |
Variable operating lease cost | 15,118 | 3,374 |
Total operating lease cost | 38,088 | 29,132 |
Reduction of lease cost, lease abatement | $ 800 | $ 8,000 |
LEASES - Lease Liability Maturity (Details) $ in Thousands |
Apr. 30, 2022
USD ($)
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Leases [Abstract] | |
Remainder of 2022 | $ 81,935 |
2023 | 60,543 |
2024 | 30,697 |
2025 | 18,292 |
2026 | 15,679 |
Thereafter | 33,671 |
Total lease payments | 240,817 |
Less: imputed interest | (22,140) |
Present value of operating lease liabilities | $ 218,677 |
COMMITMENTS AND CONTINGENCIES (Details) $ in Millions |
Apr. 29, 2017
USD ($)
|
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Commitments and Contingencies Disclosure [Abstract] | |
Loss contingency, estimate of possible loss | $ 5.0 |
STOCKHOLDERS' EQUITY - Narrative (Details) - USD ($) |
3 Months Ended | |||
---|---|---|---|---|
Apr. 30, 2022 |
May 01, 2021 |
Nov. 30, 2021 |
Mar. 31, 2018 |
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Equity, Class of Treasury Stock [Line Items] | ||||
Stock repurchased and retired during period, value | $ 38,699,000 | $ 2,374,000 | ||
Retained Earnings | ||||
Equity, Class of Treasury Stock [Line Items] | ||||
Stock repurchased and retired during period, value | 25,832,000 | $ 1,852,000 | ||
2018 Share Repurchase Program | ||||
Equity, Class of Treasury Stock [Line Items] | ||||
Stock repurchase program, authorized amount | $ 250,000,000 | $ 250,000,000 | ||
Stock repurchase program, remaining authorized repurchase amount | $ 218,600,000 |
STOCKHOLDERS' EQUITY - (Share Repurchases) (Details) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | |
---|---|---|
Apr. 30, 2022 |
May 01, 2021 |
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Stockholders' Equity Note [Abstract] | ||
Share repurchase program (in shares) | 665 | 29 |
Share repurchase program | $ 38,699 | $ 2,374 |
Shares acquired and held in treasury (in shares) | 1 | 1 |
Shares acquired and held in treasury | $ 69 | $ 69 |
STOCK-BASED COMPENSATION - Schedule of Stock-based Compensation Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Apr. 30, 2022 |
May 01, 2021 |
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Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Total stock-based compensation expense | $ 7,562 | $ 7,916 |
Cost of Sales | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Total stock-based compensation expense | 600 | 1,000 |
Deferred Awards | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Total stock-based compensation expense | 3,425 | 3,579 |
Performance Awards | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Total stock-based compensation expense | $ 4,137 | $ 4,337 |
EARNINGS PER COMMON SHARE (Details) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | |
---|---|---|
Apr. 30, 2022 |
May 01, 2021 |
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Earnings Per Share [Abstract] | ||
Net income | $ 19,831 | $ 45,205 |
Basic weighted average common shares outstanding (in shares) | 13,621 | 14,670 |
Dilutive effect of stock awards (in shares) | 220 | 332 |
Diluted weighted average common shares outstanding (in shares) | 13,841 | 15,002 |
INCOME TAXES (Details) - USD ($) $ in Thousands |
3 Months Ended | |||
---|---|---|---|---|
Mar. 27, 2020 |
Apr. 30, 2022 |
May 01, 2021 |
Jan. 29, 2022 |
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Income Tax Disclosure [Abstract] | ||||
Estimated tax loss | $ 150,000 | |||
Income taxes receivable | $ 19,100 | |||
Proceeds from tax refunds | $ 22,000 | |||
Effective income tax rate reconciliation, percent | (13.00%) | 26.50% | ||
Provision (benefit) for income taxes | $ (2,282) | $ 16,291 | ||
Unrecognized tax benefits | 2,300 | $ 7,900 | $ 8,700 | |
Reserves for unrecognized tax benefits | $ 6,400 |
SEGMENT INFORMATION - Narrative (Details) - store |
Apr. 30, 2022 |
May 01, 2021 |
---|---|---|
The Children’s Place U.S. | ||
Segment Reporting Information [Line Items] | ||
Number of stores | 583 | 624 |
The Children’s Place International | ||
Segment Reporting Information [Line Items] | ||
Number of stores | 82 | 100 |
SEGMENT INFORMATION - Segment Reporting (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Apr. 30, 2022 |
May 01, 2021 |
|
Segment Reporting Information [Line Items] | ||
Net sales | $ 362,350 | $ 435,481 |
Operating income | $ 19,254 | $ 65,907 |
Operating income as a percent of net sales | 5.30% | 15.10% |
Depreciation and amortization | $ 13,615 | $ 15,561 |
Capital expenditures | 10,723 | 6,726 |
Operating Segments | The Children’s Place U.S. | U.S. | ||
Segment Reporting Information [Line Items] | ||
Net sales | 327,961 | 399,659 |
Operating income | $ 16,869 | $ 63,912 |
Operating income as a percent of net sales | 5.10% | 16.00% |
Depreciation and amortization | $ 12,587 | $ 14,311 |
Capital expenditures | 10,357 | 6,487 |
Operating Segments | The Children’s Place International | International | ||
Segment Reporting Information [Line Items] | ||
Net sales | 34,389 | 35,822 |
Operating income | $ 2,385 | $ 1,995 |
Operating income as a percent of net sales | 6.90% | 5.60% |
Depreciation and amortization | $ 1,028 | $ 1,250 |
Capital expenditures | $ 366 | $ 239 |
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