Children's Place Retail Stores, Inc. expects 60% decline in Q3 earnings
Children's Place Retail Stores, Inc. (Nasdaq: PLCE), a specialty retailer of children's merchandise under The Children's Place and Disney Store brand names, said this morning that it expects a 60% decline in third-quarter earnings below its guidance on account of lower sales.
The news sent shares tumbling to a new 52-week low. Shares of The Children's Place were down 8.14%, or $1.98, to $22.24 at 11:25 a.m. ET. Shares of The Children's Place have been trading in the range of $23.86 to $71.81 for the past 52 weeks.
For the month of September, The Children’s Place comparable store sales decreased approximately 3% for the five weeks ended Oct. 6, 2007, compared with a 16% increase last year. As a result, the Secaucus, N.J.-based company said it now anticipates that third-quarter earnings per share will clock in at least 60% below the low end of its previous guidance range of $0.94 to $1.02.
The retailer noted that inventory levels were higher than expected due to lackluster sales. As a result, The Children’s Place said it took substantial unplanned markdowns during September, which produced lower-than-forecasted margins.
The company also said the expected decline is in part due to an estimated charge of approximately $0.07 per share for severance payments to be made to the company's former chief executive officer pursuant to the terms of his employment agreement with the company.
Guiding ahead, The Children’s Place said it expects such trends to continue through the remainder of the year. For the fourth quarter, the small-cap company said that if current sales and margin trends continue into the fourth quarter, the company's earnings per share will be significantly below the low end of its previous fourth quarter and full-year earnings per share guidance of $1.79 to $1.86 and $2.25 to $2.40, respectively. Eleven analysts polled by Thomson Financial were expecting earnings of $2.29 per share for the fiscal year.
Final September sales results will be reported on Oct. 11.
