admin The Children’s Place, Inc. reported a decrease in net sales of 35.3 million dollars or 9.3 percent to 345.6 million dollars in the second quarter.
The company attributed the decline to the impact of a slowdown in consumer demand resulting from the unprecedented inflation impacting customers, an increase in promotional activity across the sector, and the impact of permanent store closures. Comparable retail sales decreased 9 percent for the quarter.
The company is narrowing its previously provided guidance for the full year and now expects net sales to be in the range of 1.575 billion dollars to 1.585 billion dollars, adjusted operating profit to be in the range of 2.7 percent to 3 percent of net sales and net income per diluted share to be in the range of 1 dollar to 1.25 dollars.
Commenting on the financial results, Jane Elfers, the company’s president and CEO said: “Our Q2 results exceeded our guidance on both the top- and bottom-lines. The top-line beat was the result of a strong digital performance fueled by a strong start to back-to-school. In addition, our wholesale channel delivered another outstanding quarter driven by the strength of our Amazon partnership.”
Review of The Children’s Place Q2 results
The company’s gross profit decreased 27.7 million dollars to 87.8 million dollars and adjusted gross profit decreased 27 million dollars to 87.8 million dollars. Adjusted gross margin declined 480 basis points to 25.4 percent of net sales.
Operating loss was 36.9 million dollars and adjusted operating loss was 25 million dollars, while adjusted operating loss declined 410 basis points to negative 7.2 percent of net sales.
Net loss was 35.4 million dollars or 2.82 dollars per diluted share, while adjusted net loss was 26.5 million dollars or 2.12 dollars.
The Children’s Place posts 10.2 percent decline in H1
Net sales decreased 76 million dollars or 10.2 percent to 667.2 million dollars in the six months period. Comparable retail sales decreased 8.6 percent.
Gross profit for the quarter decreased 73.2 million dollars to 184.2 million dollars, while adjusted gross profit decreased 72.5 million dollars to 184.2 million dollars. Adjusted gross margin dropped 690 basis points to 27.6 percent of net sales.
Operating loss was 67 million dollars and adjusted operating loss was 49.5 million dollars compared to the first half of 2022. Year-to-date adjusted operating loss declined 860 basis points to negative 7.4 percent of net sales.
Net loss was 64.2 million dollars or 5.16 dollars per diluted share, in the six months ended July 29, 2023 and adjusted net loss was 51.2 million dollars or 4.12 dollars per diluted share.
The company permanently closed three stores during the second quarter and has permanently closed 603 stores since 2013. The company is planning to close a total of approximately 80 – 100 stores this year.
The Children’s Place cuts outlook
For the back half of 2023, the company continues to expect to deliver double-digit operating margin. Net sales for the combined 3rd and 4th quarters are expected to be in the range of 910 million dollars to 920 million dollars, representing a decrease in the mid-single digit percentage range as compared to the prior fiscal year.
Adjusted operating income for the six-month period is expected to be approximately 10 percent of net sales and adjusted net income per diluted share is estimated to be in the range of 5 dollars to 5.25 dollars.
For the third quarter of 2023, the company expects net sales in the range of 470 million dollars to 475 million dollars, representing an approximately 7 percent decrease as compared to the prior year third quarter.
Adjusted operating profit for the quarter is expected to be approximately 13.5 percent of net sales and adjusted net income per diluted share is estimated to be in the range of 3.55 dollars to 3.65 dollars based upon an anticipated weighted average number of shares of 12.7 million.
