Specialty retailer of kids’ apparel, The Children’s Place (PLCE), reported third-quarter earnings of $3.07 per share, narrowly missing the Street consensus of $3.08 per share. Similar to the prior sequential quarter, higher expenses and an aggressive promotional environment hurt the company’s bottom line.
PLCE shares fell 10% during pre-market trading.
Revenue grew 6.6% to $522.5 million, bypassing analysts’ estimate of $501.6 million. The top line was driven by a comparable retail sales increase of 9.5% and about $5 million due to the new revenue recognition rules.
CEO Jane Elfers said, “Moving on to Q4, due to stronger than anticipated digital demand in the back-half of 2018, we were forced to accelerate online access to our brick-and-mortar inventory and our ship from store fulfillment capabilities, resulting in an anticipated incremental fulfillment cost of $5 million, or $0.24 in EPS in Q4.”
The New Jersey-based retailer slashed its adjusted earnings outlook for the full year to a range of $7.69 to $7.79, compared to previous guidance of $8.09 to $8.29. Meanwhile, the net sales target for this period was lifted to a range of $1.955 to $1.960 billion, compared to the prior guidance of $1.945 to $1.955 billion. The guidance assumes a positive mid-single digit comparable retail sales increase.
During the fourth quarter, the company expects adjusted EPS between $2.07 and $2.17. Net sales for this period is anticipated to be $547 to $552 million, assuming a positive low-single digit comparable retail sales increase.
During the third quarter, the company closed four stores and did not open any new ones, in line with its store fleet optimization initiative. The company ended the quarter with 988 stores. The Children’s Place has shuttered 195 stores since the launch of the fleet optimization initiative in 2013.
The stock has fallen over 12% so far this year and over 4% in the trailing 52-weeks period.