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Press release from GlobeNewswire (a Nasdaq OMX company)

The Children's Place Reports First Quarter 2013 Results

Thursday, May 23, 2013

The Children's Place Reports First Quarter 2013 Results

04:00 EDT Thursday, May 23, 2013

SECAUCUS, N.J., May 23, 2013 (GLOBE NEWSWIRE) -- The Children's Place Retail Stores, Inc. (Nasdaq:PLCE), the largest pure-play children's specialty apparel retailer in North America, today announced financial results for the thirteen weeks ended May 4, 2013.

Jane Elfers, President and Chief Executive Officer, said, "After a difficult start to the quarter, April sales improved significantly with the return of more seasonable weather. Our expenses throughout the quarter were well-controlled. We exceeded our earnings forecast for the first quarter and we are raising guidance for the year to reflect these improved results."

Elfers continued, "Customer response to our summer line has been positive, and we are well-positioned in key categories for back-to-school and holiday selling."

First Quarter 2013 Results

In the first quarter of 2013, net sales declined 3.5% to $423.2 million, compared to $438.5 million in the first quarter the prior year. Comparable retail sales declined 5.5%.

Gross profit declined 8.6% to $163.3 million, due to deleverage of fixed expenses on negative comparable retail sales and higher supply chain costs as the Company invested in its sourcing capabilities.

As a result of the Company's strong expense management, selling, general and administrative expenses declined 2.7% to $119.0 million during the first quarter of 2013. Adjusted SG&A declined 0.9% to $118.5 million.

Operating income was $28.5 million, compared to $37.1 million in the first quarter of 2012. Adjusted operating income was $28.4 million, compared to $42.7 million the previous year.

Net income and adjusted net income was $19.3 million, or $0.83 per diluted share, in the first quarter of 2013. This compares to GAAP net income of $24.7 million, or $1.00 per diluted share, in the first quarter of 2012, and adjusted net income of $28.3 million, or $1.14 per diluted share, the previous year.

Adjusted SG&A, adjusted operating income and adjusted net income are Non-GAAP measures. The Company believes the excluded transactions are not indicative of the performance of its core business and that by providing this supplemental disclosure to investors it will facilitate comparisons of its past and present performance. A reconciliation to GAAP financial information is included in this press release in Table 3.

The Company opened 20 stores and closed four, ending the first quarter with 1,111 stores.

Share Repurchase Program

The Company repurchased 512 thousand shares for approximately $24.2 million during the first quarter of 2013. At the end of the quarter, $56.2 million of the $100 million share repurchase program authorized in November 2012 remained available for future share repurchases.

Outlook

The Company updated its guidance to reflect first quarter results and now projects that adjusted earnings per diluted share will be between $3.05 and $3.20 for fiscal 2013, assuming comparable retail sales are flat to slightly negative. This compares to its initial guidance of $2.90 to $3.10, assuming negative low-single digit comparable retail sales.

The Company provided initial guidance for the second quarter of fiscal 2013, and is forecasting an adjusted loss per share between $(0.50) and $(0.55), assuming flat comparable retail sales. This compares to an adjusted loss per share of $(0.62) in the second quarter of 2012.

This earnings guidance assumes that currency exchange rates will remain where they are today and does not include the impact of further potential share repurchases.

Conference Call Information

The Children's Place will host a conference call to discuss its first quarter fiscal 2013 results today at 8:00 a.m. Eastern Time. The call will be broadcast live at http://investor.childrensplace.com. An audio archive will be available on the Company's website approximately one hour after the conclusion of the call.

About The Children's Place Retail Stores, Inc.

The Children's Place is the largest pure-play children's specialty apparel retailer in North America. The Company designs, contracts to manufacture and sells fashionable, high-quality merchandise at value prices, primarily under the proprietary "The Children's Place" brand name. As of May 4, 2013, the Company operated 1,111 stores and an online store at www.childrensplace.com.

Forward Looking Statements

This press release (and the above referenced call) may contain certain forward-looking statements regarding future circumstances, including statements relating to the Company's positioning, and forecasts regarding earnings per diluted share from continuing operations. These forward-looking statements are based upon the Company's current expectations and assumptions and are subject to various risks and uncertainties that could cause actual results and performance to differ materially. Some of these risks and uncertainties are described in the Company's filings with the Securities and Exchange Commission, including in the "Risk Factors" section of its annual report on Form 10-K for the fiscal year ended February 2, 2013. Included among the risks and uncertainties that could cause actual results and performance to differ materially are the risk that the Company will be unsuccessful in gauging fashion trends and changing consumer preferences, the risks resulting from the highly competitive nature of the Company's business and its dependence on consumer spending patterns, which may be affected by the continued weakness in the economy or by other factors such as increases in the cost of gasoline and food, the risk that the cost of raw materials or energy prices will increase beyond current expectations or that the Company is unable to offset cost increases through value engineering or price increases, and the uncertainty of weather patterns. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they were made. The Company undertakes no obligation to release publicly any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. The inclusion of any statement in this release does not constitute an admission by the Company or any other person that the events or circumstances described in such statement are material.

Table 1
THE CHILDREN'S PLACE RETAIL STORES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
     
     
  First Quarter Ended
  May 4, April 28,
  2013 2012
Net sales  $ 423,164  $ 438,508
Cost of sales  259,896  259,863
Gross profit  163,268  178,645
Selling, general and administrative expenses  119,008  122,283
Asset impairment charges  --   1,250
Other costs (income)  (1,023)  834
Depreciation and amortization   16,824  17,218
Operating income  28,459  37,060
Interest income (expense), net  60  (51)
Income before taxes  28,519  37,009
Provision for income taxes  9,247  12,275
Net income   $ 19,272  $ 24,734
     
     
Earnings per common share    
Basic  $ 0.84  $ 1.01
Diluted  $ 0.83  $ 1.00
     
Weighted average common shares outstanding    
Basic  23,043  24,535
Diluted  23,289  24,691
     
Table 2
THE CHILDREN'S PLACE RETAIL STORES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
       
  May 4, February 2, April 28,
  2013 2013* 2012
Assets:      
Cash and cash equivalents  $ 186,260  $ 194,128  $ 204,826
Short-term investments  15,000  15,000  -- 
Accounts receivable  22,223  18,490  18,656
Inventories  251,285  266,976  220,486
Other current assets  46,845  50,641  45,936
Total current assets  521,613  545,235  489,904
       
Property and equipment, net  334,443  330,101  329,058
Other assets, net  49,016  48,074  54,423
Total assets  $ 905,072  $ 923,410  $ 873,385
       
Liabilities and Stockholders' Equity:      
Accounts payable  $ 69,644  $ 87,461  $ 34,784
Accrued expenses and other current liabilities  107,170  104,045  91,990
Total current liabilities  176,814  191,506  126,774
       
Other liabilities  106,848  110,955  110,606
Total liabilities  283,662  302,461  237,380
       
Stockholders' equity  621,410  620,949  636,005
       
Total liabilities and stockholders' equity  $ 905,072  $ 923,410  $ 873,385
       
* Derived from the audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended February 2, 2013.
Table 3
THE CHILDREN'S PLACE RETAIL STORES, INC.
RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION TO GAAP (1)
(In thousands, except per share amounts)
(Unaudited)
                 
                 
  Net Sales Gross Profit Selling, General and Administrative Asset Impairment Charge and Other Costs (Income) Depreciation and Amortization  Operating Income (Loss) Net Income EPS Diluted
                 
As Reported First Quarter 2013  $ 423,164  $ 163,268  $ 119,008  $ (1,023)  $ 16,824  $ 28,459  $ 19,272  $ 0.83
Non-GAAP adjustments:                
DC Exit Costs        1,023    (1,023)  (614)  (0.03)
Early Store Closure      (160)  --   (419)  579  348  0.01
Asia Reorganization      (340)  --   (13)  353  295  0.01
Total Non-GAAP adjustments  --   --   (500)  1,023  (432)  (91)  29  0.00
As Adjusted First Quarter 2013  $ 423,164  $ 163,268  $ 118,508  $ --   $ 16,392  $ 28,368  $ 19,301  $ 0.83
                 
As Reported First Quarter 2012  $ 438,508  $ 178,645  $ 122,283  $ 2,084  $ 17,218  $ 37,060  $ 24,734 $1.00
Non-GAAP adjustments:                
DC Exit Costs      --   (834)    834  500  0.02
Store impairment        (1,250)    1,250  750  0.03
Restructuring severance costs      (1,971)  --     1,971  1,183  0.05
Obsolete supply and fixture costs      (719)  --     719  431  0.02
Accelerated depreciation for Canadian store remodels          (893)  893  656  0.03
Total Adjustments  --   --   (2,690)  (2,084)  (893)  5,667  3,520  0.14
As Adjusted First Quarter 2012  $ 438,508  $ 178,645  $ 119,593  $ --   $ 16,325  $ 42,727  $ 28,254  $ 1.14
                 
(1) Table may not add due to rounding                
                 
Table 4
THE CHILDREN'S PLACE RETAIL STORES, INC.
CONDENSED CONSOLIDATED CASH FLOWS
(In thousands)
(Unaudited)
     
  Thirteen Weeks Ended
  May 4, April 28,
  2013 2012
     
Net income  $ 19,272  $ 24,734
Non-cash adjustments  20,138  21,415
Working Capital  (1,547)  21,785
Net cash provided by operating activities  37,863  67,934
     
     
Net cash used in investing activities  (22,112)  (22,074)
     
     
Net cash used in financing activities  (23,020)  (19,211)
     
     
Effect of exchange rate changes on cash  (599)  1,522
     
     
Net increase (decrease) in cash and cash equivalents  (7,868)  28,171
     
     
Cash and cash equivalents, beginning of period  194,128  176,655
     
     
Cash and cash equivalents, end of period  186,260  204,826
     
CONTACT: Jane Singer, Vice President, Investor Relations
(201) 453-6955

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