The Children’s Place: FY17 net sales increase 4.8 percent

The Children’s Place reported net sales increase of 9.4 percent to 570 million dollars in the fourth quarter of 2017 with comparable retail sales rise of 8.2 percent. For the full year, net sales increased 4.8 percent to 1,870.3 million dollars in fiscal 2017, while comparable retail sales increased 5.8 percent in fiscal 2017. The company has also signed an exclusive license agreement for the Greater China market, covering Mainland China, Taiwan, Hong Kong and Macau, with Zhejiang Semir Garment Co. Ltd., parent of Balabala, China’s largest specialty children’s apparel retailer.

Commenting on the company’s performance, Jane Elfers, the company’s President and CEO said in a statement, “We have delivered consistent, industry-leading results for several years, with 2017 being our 4th consecutive year of positive comps. We are uniquely positioned to grow market share and we are focusing our accelerated investments in four key areas: digital technologies, supply chain optimization, our four-wall customer experience and our new China partnership that we announced today.”

The Children’s Place adjusted FY17 net income up 29 percent

Net loss for the fourth quarter was 9.9 million dollars or 0.57 dollar per diluted share compared to net income of 34.2 million dollars or 1.86 dollars per diluted share, in the previous year. Adjusted net income was 45.3 million dollars or 2.52 dollars per diluted share, compared to 34.6 million dollars or 1.88 dollars per diluted share, in the fourth quarter last year.

Net income was 84.7 million dollars or 4.67 dollars per diluted share, in fiscal 2017, compared to 102.3 million dollars or 5.40 dollars per diluted share, the previous year. Adjusted net income was 143.5 million dollars or 7.91 dollars per diluted share compared to 103 million dollars or 5.43 dollars per diluted share. The 2.48 dollars or 46 percent increase in adjusted net income per diluted share includes a 0.93 dollars benefit resulting from the accounting rules for the income tax impact on share-based compensation. Excluding this benefit, adjusted net income per diluted share increased 29 percent.

Gross profit was 209.9 million dollars in the fourth quarter, compared to 187.9 million dollars in the fourth quarter of 2016, while adjusted gross profit was 211.1 million dollars compared to 187.9 million dollars last year, and leveraged 90 basis points to 37 percent of sales. Operating income was 51.9 million dollars compared to 48.7 million dollars in the fourth quarter of 2016. Adjusted operating income in the fourth quarter was 57 million dollars or 10 percent of net sales compared to 50 million dollars in the fourth quarter last year, leveraging 40 basis points compared to last year.

Gross profit was 711.4 million dollars in fiscal 2017 compared to 671.6 million dollars in fiscal 2016, while adjusted gross profit was 713.2 million dollars or 38.1 percent of net sales, leveraging 50 basis points compared to last year. Operating income was 161.5 million dollars compared to 147.4 million dollars in fiscal 2016, while adjusted operating income was 178.9 million dollars or 9.6 percent of net sales, compared to 151.7 million dollars or 8.5 percent of net sales last year, leveraging 110 basis points.

Consistent with the company’s store fleet optimization initiative, 13 stores were closed during the fourth quarter of 2017. The company ended fiscal 2017 with 1,014 stores, a decrease of 2.5 percent compared to the prior year. Since 2013, The Children’s Place has closed 169 stores. The company’s international franchise partners opened 24 points of distribution and closed two in the fourth quarter, and the company ended the quarter with 190 international points of distribution open and operated by its seven franchise partners in 19 countries.

The Children’s Place targets EPS of 12 dollars by 2020

The company is targeting an operating margin of 12 percent and EPS of 12 dollars by the end of 2020. During the 2018 to 2020 period, it expects to invest approximately 50 million dollars in incremental SG&A compared to 2017 levels on our transformation initiatives, consisting of 30 million dollars in 2018, 15 million dollars in 2019 and the remaining 5 million dollars in 2020.

For fiscal 2018, the company expects net income per diluted share will be in the range of 7.95 dollars to 8.20 dollars compared to adjusted net income per diluted share of 7.91 dollars in fiscal 2017. This guidance assumes a comparable retail sales increase of approximately 2.5 percent to 3.5 percent.

The company expects net income per diluted share in the first quarter of 2018 will be in the range of 2.12 dollars to 2.22 dollars compared to adjusted net income per diluted share of 1.95 dollars in the first quarter of 2017. This guidance assumes a low single digit comparable retail sales increase.

Picture:Facebook/The Children's Place