The Children’s Place swings to Q2 loss, sales down 12.3 percent

The Children’s Place, Inc., for its second quarter reported net sales decrease of 12.3 percent to 368.9 million dollars, primarily as a result of the impact of temporary store closures, along with a decrease in back to school sales beginning in mid-July, partially offset by increased digital sales. The company said in a statement that net loss for the quarter was 46.6 million dollars or 3.19 dollars per diluted share compared to net income of 1.5 million dollars or 10 cents per diluted share, in the three months ended August 3, 2019, while adjusted net loss was 21.7 million dollars or 1.48 dollars per diluted share, compared to adjusted net income of 3 million dollars or 19 cents per diluted share, in the comparable period last year.

Commenting on the trading results, Jane Elfers, the company’s President and Chief Executive Officer, said: “Second quarter digital sales increased 118 percent. Since the temporary store closures in March, we have increased new customers to our digital file by approximately 175 percent, converted our store-only customers to omni-channel customers at a rate approximately three times the pre-pandemic rate and increased our app downloads by nearly 115 percent. Due to the large majority of schools adopting remote or hybrid learning models for the start of the school year, our back to school sales have been significantly impacted and we anticipate a meaningful negative impact on our Q3 results.”

Review of The Children’s Place’s Q2 and H1 results

Gross profit for the second quarter was 67.1 million dollars compared to 138.8 million dollars in the three months ended August 3, 2019, while adjusted gross profit was 93.8 million dollars compared to 138.8 million dollars in the comparable period last year, and deleveraged 760 basis points to 25.4 percent of net sales.

The company added that net sales decreased 25.1 percent to 624.1 million dollars in the six months ended August 1, 2020, while net loss was 161.4 million dollars or 11.04 dollars per diluted share compared to net income of 6 million dollars or 38 cents per diluted share, in the six months ended August 3, 2019. Adjusted net loss was 50.3 million dollars or 3.44 dollars per diluted share, compared to adjusted net income of 8.8 million dollars or 55 cents per diluted share, in the comparable period last year.

Year to date gross profit was 47.4 million dollars compared to 290.8 million dollars in the six months ended August 3, 2019, while adjusted gross profit was 162.1 million dollars compared to 290.3 million dollars in the comparable period last year, and deleveraged 890 basis points to 26 percent of net sales. Operating loss for the first half was 237.6 million dollars compared to operating income of 8.9 million dollars in the six months ended August 3, 2019, while adjusted operating loss was 62.8 million dollars compared to adjusted operating income of 12.5 million dollars in the comparable period last year, and deleveraged 1,160 basis points to negative 10.1 percent of sales.

Consistent with the company’s store fleet optimization initiative, the Children’s Place opened two stores and permanently closed 98 stores in the three months ended August 1, 2020 and ended the quarter with 824 stores. Since the fleet optimization initiative was announced in 2013, the company has closed 373 stores.

Picture:Facebook/The Children's Place