Children's Place Retail Stores, Inc. (PLCE) Tuesday reported a lower fourth-quarter profit, reflecting a tax provision, despite about 11 percent increase in revenues, with growth in comparable retail sales. Adjusted earnings and revenues beat analysts' expectations. The company forecast first quarter and fiscal 2013 earnings below analysts' view. In pre-market trading, the shares are down about 6 percent.
The company said its outlook reflected unfavorable weather and weak macro-economic environment affecting consumer spending.
The pure-play children's specialty apparel retailer had announced earlier that it was changing its accounting policy to report its inventory on the cost method instead of the retail inventory method and that it will capitalize additional supply chain costs instead of reporting them as period expenses, effective in the fourth quarter.
As per the cost method, the company's net income declined to $19.13 million or $0.80 per share from $23.33 million or $0.93 per share in the previous year.
Under the retail method, the company reported a drop in quarterly net income to $22.12 million or $0.93 per share from $24.23 million or $0.97 per share in the prior year. The retail method excludes impact of change in method of accounting for inventory.
Non-GAAP earnings at the retail method in the recent quarter was $1.15 per share, while the company posted $0.87 per share in the preceding year. On average, 13 analysts polled by Thomson Reuters expected earnings per share of $1.04 for the quarter. Analysts' estimates typically exclude one-time items.
Provision for income taxes was $6.88 million, compared to a benefit of $2.14 million a year earlier.
Net sales for the quarter, including $21.6 million of sales in the 53rd week, increased 11.3 percent year-on-year to $509.22 million, which came above analysts' estimate of $496.04 million. Comparable retail sales, excluding the 53rd week, improved 4.3 percent from last year.
The company repurchased 863 thousand shares in the quarter for about $41.2 million.
Commenting on the full-year results, Jane Elfers, president and chief executive officer of the company said, "We continued to make significant progress during 2012 and had a strong finish to the year. We delivered record sales of $1.8 billion in fiscal 2012 and a 2% increase in comparable retail sales."
Looking ahead to the first quarter, the company expects non-GAAP earnings per share to be in the range of $0.60 to $0.65. This guidance assumes negative high-single digit comparable retail sales for the quarter, it said. Analysts expect earnings of $1.19 per share for the quarter.
For fiscal 2013, the company anticipates non-GAAP earnings per share to be between $2.90 and $3.10, assuming negative low-single digit comparable retail sales. Thirteen analysts estimate full-year earnings per share of $3.59.
During the quarter, the firm opened four stores and closed 11 and in fiscal 2012, it opened 64 stores and closed 18, ending the year with 1,095 stores.
PLCE closed Monday's regular trading at $45.99 on the Nasdaq. In the pre-market activity, the shares are down 5.44 percent.
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