The Children's Place Q4 sales decline, reports full year loss

The Children’s Place reported net sales decrease of 7.8 percent to 472.9 million dollars in the fourth quarter driven by the impact of permanent and temporary store closures and the negative impact of reduced operating hours in mall stores, as mandated by the mall owners. Comparable retail sales for the quarter increased 1 percent. Net income for the quarter was 7.8 million dollars or 53 cents per diluted share compared to 24.2 million dollars or 1.61 dollars per diluted share, in the three months ended February 1, 2020. Adjusted net income was 14.9 million dollars or 1.01 dollars per diluted share compared to 28 million dollars or 1.85 dollars per diluted share, in the comparable period last year.

Commenting in the trading results, Jane Elfers, the company’s President and Chief Executive Officer said: “Fourth quarter results exceeded our expectations across all key metrics with sales significantly exceeding our expectations in both our digital and stores channels. For fiscal 2020, we added 1.9 million new digital customers, converted over 1 million of our store-only customers to omni-channel customers, and increased our mobile app downloads by approximately 60 percent.”

Fourth quarter highlights of The Children’s Place results

The company added that fourth quarter gross profit was 139.8 million dollars compared to 166.4 million dollars in the three months ended February 1, 2020. Adjusted gross profit was 143.9 million dollars in the three months ended January 30, 2021, compared to 166.9 million dollars in the comparable period last year, and deleveraged 210 basis points to 30.4 percent of net sales.

Operating income was 14.4 million dollars compared to 29.5 million dollars in the three months ended February 1, 2020, while adjusted operating income was 26 million dollars compared to 35.4 million dollars in the comparable period last year, and deleveraged 140 basis points to 5.5 percent of net sales.

Full year performance of The Children’s Place

The company’s full year net sales decreased 18.6 percent to 1.523 billion dollars as a result of the disruption caused by the COVID-19 pandemic, resulting in a significant acceleration of permanent store closures, extensive temporary store closures, and a significant decrease in back-to-school demand due to schools adopting remote and hybrid learning models, partially offset by increased e-commerce sales.

Gross profit was 333.3 million dollars compared to 655.3 million dollars and adjusted gross profit was 408.8 million dollars compared to 655.3 million dollars in the comparable period last year, and deleveraged 820 basis points to 26.8 percent of net sales.

Operating loss was 199.9 million dollars compared to operating income of 96.4 million dollars and adjusted operating loss was 56.7 million dollars compared to adjusted operating income of 111.3 million dollars in the comparable period last year, and deleveraged 970 basis points to negative 3.7 percent of net sales.

Net loss for the year was 140.4 million dollars or 9.59 dollars per diluted share compared to net income of 73.3 million dollars or 4.68 dollars per diluted share in the twelve months ended January 30, 2021. Adjusted net loss was 53.4 million dollars or 3.65 dollars per diluted share compared to adjusted net income of 83.8 million dollars or 5.36 dollars per diluted share, in the comparable period last year.

“With respect to our fleet optimization initiative, we closed 60 stores during the quarter bringing our total stores closures to 178 for 2020. We plan to close a total of approximately 122 stores in 2021, with 25 planned closures in the first quarter, and 97 closures planned by the end of fiscal 2021, bringing our total closures for the two year period to our previously announced target of 300 closures,” added Elfers.

Image: The Children's Place, Facebook