Children's Place net sales up 0.6% to $373.6 mn in Q2 2017

The company’s net income was $14.3 million, or $0.79 per diluted share, in Q2 2017, compared to a net loss of $2 million, or $0.11 per diluted share, the previous year. Adjusted net income was $15.6 million, or $0.86 per diluted share, compared to an adjusted net loss of $0.2 million, or $0.01 per diluted share, in the second quarter last year. This $0.87 increase in adjusted net income per diluted share includes a $0.68 benefit resulting from the new accounting rules for the income tax impact on share-based compensation.

Adjusted gross profit was $128.7 million in the second quarter, compared to $123.9 million last year, and leveraged 100 basis points to 34.4 per cent of sales, driven by increases in AUR and merchandise margin resulting from strong product acceptance and inventory management, inclusive of the impact of the increased penetration of the e-commerce business which runs at a lower gross margin rate.

Selling, general and administrative (SG&A) expenses were $108.2 million compared to $107.9 million in the second quarter of 2016. Adjusted SG&A was $107.6 million compared to $107.9 million in the second quarter last year and leveraged 30 basis points as a percentage of sales primarily as a result of decreased store expenses, including lower store compensation expenses and credit card fees, partially offset by increased expenses related to the investment in our transformation initiatives and increased administrative compensation expenses.

Operating income was $3.2 million, compared to a net operating loss of $2.9 million in the second quarter of 2016. Adjusted operating income in the second quarter of 2017 was $5.1 million, or 1.4 per cent of net sales, compared to adjusted operating income of $0.1 million in the second quarter last year, leveraging 140 basis points compared to last year.

For the second quarter, the company’s adjusted results exclude net expenses of approximately $1.3 million, compared to excluded net expenses of approximately $1.8 million in the second quarter of 2016, comprising certain items which the company believes are not reflective of the performance of its core business.

In the first half of fiscal 2017, net sales increased 2.5 per cent to $810.3 million. Comparable retail sales increased 4.7 per cent in the first half of fiscal 2017. Net income of The Children’s Place was $50.5 million, or $2.76 per diluted share, in the first half of fiscal 2017, compared to net income of $24 million, or $1.24 per diluted share, the previous year. Adjusted net income was $51.6 million, or $2.82 per diluted share, compared to $25.6 million, or $1.32 per diluted share. This $1.50 increase in adjusted net income per diluted share includes an $0.87 benefit resulting from the new accounting rules for the income tax impact on share-based compensation.  

Gross profit of the company was $299 million in the first half of fiscal 2017, compared to $289.2 million last year. Adjusted gross profit was $299.6 million, or 37 per cent of net sales, leveraging 40 basis points compared to last year.

SG&A expenses in the first half of fiscal 2017 were $220.4 million, compared to $217.1 million last year. Adjusted SG&A was $214.5 million, compared to $217.5 million last year, leveraging 100 basis points compared to last year.

Operating income of the company was $45.5 million, compared to operating income of $36.7 million in fiscal 2016. Adjusted operating income was $53.5 million, or 6.6 per cent of net sales, compared to $39.3 million, or 5 per cent of net sales last year, an increase of 36 per cent.

During the first half of fiscal 2017, the company’s adjusted results exclude net expenses of approximately $1 million, compared to excluded net expenses of approximately $1.6 million during the first half of fiscal 2016, comprising certain items which the company believes are not reflective of the performance of its core business.

“We continued to deliver outstanding operating results in the second quarter. Comparable retail sales, gross margin, operating margin and earnings per diluted share were above last year and exceeded the high end of our guidance range. Our second quarter comparable retail sales increased 3.1%\ per cent, on top of a positive 2.4 per cent comp in the second quarter of 2016 and store traffic showed sequential improvement compared to the first quarter. We saw increases in ADS driven by higher AUR and UPT, as well as merchandise margin expansion in the quarter. And, we repurchased $25 million in stock and paid $7 million in dividends in the quarter,” said Jane Elfers, president and chief executive officer, The Children’s Place. (KD)

Fibre2Fashion News Desk – India