The Children’s Place Inc. (NASDAQ: PLCE) reported better-than-expected earnings for the second quarter of 2019 but revenues fell short of estimates. The retailer also lowered its earnings guidance for the full year. Shares crashed 12.7% in premarket hours on Wednesday.
Net sales fell 6.3% year-over-year to $420.5 million, mainly due to a comparable retail sales decrease of 3.8%. The consensus estimate was for revenue of $423 million.
Net income dropped to $1.5 million, or $0.10 per share, from $7.5 million, or $0.45 per share, in the prior-year quarter. Adjusted net income was $3 million, or $0.19 per share. This beat forecasts of $0.18 per share.
Jane Elfers, President and CEO said, “Amidst lingering pressure from the Q1 Gymboree liquidation, we delivered a 3.8% comp decrease in Q2 versus a 13.2% comp increase last year. Sales for the quarter met our expectations, however traffic remained weaker than anticipated which led to a late quarter increase in promotional activity across the sector. Although we exited the quarter with seasonal carryover inventory down double digits, we believe it is prudent to assume an elevated promotional environment for the back half of 2019.”
The Children’s Place opened three stores and closed 13 stores during the quarter. The company ended the quarter with 961 stores and square footage of 4.5 million, down 3% from last year. International franchise partners opened 18 new points of distribution during the quarter, and the company ended the period with 225 international points of distribution open and operated by its eight franchise partners in 19 countries.
The Board declared a quarterly cash dividend of $0.56 per share, payable on October 4, 2019 to shareholders of record on September 23, 2019.
For the third quarter of 2019, the company expects net sales of $530-535 million. Comparable retail sales growth is expected to be 3-4%. Adjusted EPS is expected to be $2.90-3.05.
For the full year of 2019, net sales are expected to be $1.91-1.92 billion. Comparable retail sales are expected to be approx. flat to 2018. The company lowered its outlook for adjusted EPS to a range of $5.40-5.75 from the previous range of $5.75-6.25.