World News: 12:00 GMT Wednesday 15th May 2019. [The Children's Place, Inc. via Globe Newswire via SPi World News]
SECAUCUS, N.J., May 15, 2019 (GLOBE NEWSWIRE) -- , the largest pure-play children’s specialty apparel retailer in North America, today announced financial results for the first quarter ended May 4, 2019.
Jane Elfers, President and Chief Executive Officer announced, “Our Q1 results significantly exceeded our expectations despite our 70% store overlap with the approximately 800 Gymboree and Crazy 8 liquidations that occurred in Q1 and the headwind of a later Easter. Our sales began to accelerate in mid-March and continued to strengthen through the end of the quarter, resulting in positive comparable retail sales in excess of 20% for the month of April. Our product clearly resonated with our customers and our inventory is well positioned entering Q2.”
Ms. Elfers continued, “With respect to the Gymboree integration, we are on track for an early 2020 launch. Importantly, the recent launch of Tiny Collections, the curated toddler line we developed in response to Gymboree’s failed merchandising strategy, is performing above expectations, generating a significantly higher AUR as compared to our TCP-branded product.”
Ms. Elfers concluded, “Several years ago, we developed a multi-pronged strategy to position the company to successfully compete in a period of rapid digital change. Fast forward to today-- we are a global omni-channel retailer with a best-in-class management team. Our product offering is consistently well-received, our real estate portfolio is optimized, our digital investments have been accelerated to position us to continue to capture market share, and our diversified sourcing strategy provides us with a key competitive advantage. The successful execution of these strategic initiatives has uniquely positioned us to succeed during a period of digital disruption and unprecedented industry consolidation. We look forward to continuing to deliver for our shareholders in 2019 and beyond.”
Net income was $4.5 million, or $0.28 per diluted share, in the first three months of 2019, compared to net income of $31.5 million, or $1.78 per diluted share, in the first three months of 2018. Adjusted net income was $5.8 million, or $0.36 per diluted share, compared to adjusted net income of $33.2 million, or $1.87 per diluted share, in the first three months of last year.
Gross profit was $152.0 million in the first three months of 2019, compared to $160.2 million in the first three months of 2018. Adjusted gross profit was $151.4 million in the first three months of 2019, compared to $161.5 million last year, and deleveraged 30 basis points to 36.7% of net sales, primarily as a result of the deleverage of fixed expenses resulting from the decline in comparable retail sales, and increased penetration of our ecommerce business, which operates at a lower gross margin rate. Despite an adverse impact on merchandise margin rate due to the Gymboree liquidation, merchandise margins increased primarily as a result of higher realized prices and lower product costs.
Selling, general, and administrative expenses were $128.0 million in the first three months of 2019, compared to $118.5 million in the first three months of 2018. Adjusted SG&A was $127.2 million in the first three months of 2019, compared to $118.7 million last year, and deleveraged 360 basis points to 30.8% of net sales, primarily as a result of the deleverage of fixed expenses resulting from the decline in comparable retail sales and higher incentive compensation expense.
Operating income was $5.0 million in the first three months of 2019, compared to operating income of $23.1 million in the first three months of 2018. Adjusted operating income was $6.6 million in the first three months of 2019, compared to adjusted operating income of $25.4 million last year, and deleveraged 420 basis points to 1.6% of sales.
For the first three months of 2019, the Company’s adjusted results exclude net expenses of approximately $1.3 million, as compared to excluded net expenses of approximately $1.7 million in the first three months of 2018, comprising certain items which the Company believes are not reflective of the performance of its core business. For the first three months of 2019, these excluded items are primarily related to accelerated depreciation, asset impairment charges, restructuring costs, and consulting costs incurred in connection with the integration of the Gymboree brand, partially offset by income associated with the exit of a store lease. For the first three months of 2018, these excluded items are primarily related to restructuring costs, including an inventory write-off associated with the transition of our China business to a franchise partner, and asset impairment charges, partially offset by income associated with insurance proceeds related to a claim settlement.
The Company’s international franchise partners opened nine points of distribution in the first quarter, and the Company ended the quarter with 212 international points of distribution open and operated by its eight franchise partners in 20 countries.
Since 2009, the Company has repurchased approximately $1.2 billion of its common stock and, since 2014, paid approximately $109 million in dividends. At the end of the first quarter of 2019, approximately $206 million remained available for future share repurchases under the Company’s existing share repurchase program.
For fiscal 2019, the Company updated outlook includes:
For the second quarter of 2019, the Company expects:
Contact: Anthony Attardo, CFA, Director, Investor Relations, (201) 453-6693
Globe Newswire: 12:00 GMT Wednesday 15th May 2019
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