The Children’s Place reported third quarter net sales decreased 28.9 million dollars or 5.7 percent to 480.2 million dollars. The company’s comparable retail sales decreased 7.3 percent for the quarter.
The company attributed the decrease in net sales to the impact of the continued slowdown in consumer demand resulting from the unprecedented inflation impacting the customer and from other domestic and geo-political concerns weighing on consumer confidence, an increase in promotional activity across the sector, and the impact of permanent store closures.
Commenting on the trading performance, Jane Elfers, the company’s president and CEO said, ““While our core customer remains under significant pressure, we were pleased with our ability to drive top-line above our expectations throughout the third quarter. November is off to a strong start with consolidated retail sales running up low single digits quarter to date versus last year, driven by the continued strength of our digital business.”
Review of The Children’s Place Q3 results
The company added that gross profit and adjusted gross profit for the quarter decreased by 14.8 million dollars to 162.1 million dollars and adjusted gross margin decreased 110 basis points to 33.7 percent of net sales.
Operating income was 45 million dollars, while adjusted operating income was 47.9 million dollars. The third quarter 2023 adjusted operating income dropped 160 basis points to 10 percent of net sales.
Net income for the quarter decreased to 38.5 million dollars or 3.05 dollars per diluted share and adjusted net income decreased to 40.6 million dollars or 3.22 dollars per diluted share.
The Children's Place year-to-date net sales down 8.4 percent
Net sales for the nine month period decreased 104.9 million dollars or 8.4 percent to 1.147 billion dollars and comparable retail sales decreased 8.1 percent.
Gross profit for the period decreased 88 million dollars to 346.4 million dollars and adjusted gross profit decreased 87.4 million dollars to 346.4 million dollars. Adjusted gross margin declined 440 basis points to 30.2 percent.
Operating loss was 22 million dollars in the nine months and adjusted operating loss was 1.6 million dollars. Year-to-date adjusted operating margin declined 550 basis points to negative 0.1 percent of net sales.
Net loss for the period was 25.7 million dollars or 2.06 dollars per diluted share, while adjusted net loss was 10.6 million dollars or 85 cents loss per diluted share.
The Company ended the third quarter with 591 stores. Consistent with the Company’s store fleet optimization initiative, the company permanently closed five stores during the quarter and has permanently closed 608 stores since 2013. The company is planning to close approximately 64 more stores by the end of the fourth quarter, leaving it with a fleet of approximately 530 stores.
The Children’s Place forecasts low-single digit sales increase for Q4
For the fourth quarter of 2023, the company now expects net sales in the range of 460 million dollars to 465 million dollars, representing a low single digit increase.
Adjusted operating profit is expected to be approximately 2 percent to 3 percent of net sales and adjusted net income per diluted share is estimated to be in the range of 25 cents to 45 cents based upon an anticipated weighted average number of shares of 12.6 million.
The company now expects net sales for the full year 2023, to be in the range of 1.605 billion dollars to 1.610 billion dollars, adjusted operating profit is estimated to be in the low single digit percentage range of net sales and adjusted net loss per diluted share is estimated to be in the range of 59 cents to 39 cents based upon an anticipated weighted average number of shares of 12.5 million.
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