Children’s Place Retail Stores Inc. (PLCE)
Q2, 2009 Earnings Call
August 20, 2009; 10:00 am ET
Chuck Crovitz - Interim Chief Executive Officer
Sue Riley - Executive Vice President, Finance and Administration
Dina Sweeney - Group Vice President of Merchandising
Jane Singer - Investor Relations
Betty Chen - Wedbush Morgan
Rick Patel - Bank of America
Kimberly Greenberger - Citigroup
Brian Tunick - JP Morgan
Richard Jaffe - Stifel Nicolaus
John Zolidis - Buckingham Research
Janet Kloppenburg - JJK Research
John Morris - BMO Capital Markets
Dorothy Lakner - Caris & Co.
Linda Tsai - MKM Partners
Marnie Shapiro - The Retail Tracker
Previous Statements by PLCE
» Children’s Place Retail Stores, Inc. Q3 2009 Earnings Call Transcript
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» The Children’s Place Inc Q3 2008 Earnings Call Transcript
It is now my pleasure to turn the conference over to Jane Singer.
Thank you, Lundy. Good morning, everyone and thank you for joining us today for a review of The Children’s Place Retails Stores, Inc. second quarter 2009 financial results. Participating on this morning’s call are Chuck Crovitz, Interim Chief Executive Officer and Sue Riley, Executive Vice President of Finance and Administration.
Dina Sweeney, Group Vice President of Merchandising is on hand to answer questions at the end of Management’s remarks, but I must warn you in advance that she has come down with a little bit of laryngitis, so if she has trouble talking later Chuck or Sue may jump in to help her out.
Before we begin, I would like to remind participants that any forward-looking remarks made today are subject to the Safe Harbor statement found in this morning’s press release as well as in our SEC filings. These forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially.
The company undertakes no obligation to publicly release any revision to these forward-looking statements to reflect events or circumstances after the date hereof. Please also note that a reconciliation of certain non-GAAP financial measures discussed on this call is contained in this morning’s press release which can be found on our www.childrensplace.com website.
Now I’ll turn the call over to Chuck for his opening remarks.
Thank you, Jane. Good morning, everyone and thank you for joining us today. We continue to face the challenging retail environment in the second quarter of 2009 and at the same time we are up against the best second quarter in the company’s history in 2008.
We had a number of headwinds including the difficult economic environment, the negative impact of foreign exchange and lower mall traffic and these headwinds hampered our sales results during the second quarter. Nevertheless, we have made significant headway in our e-commerce business, our cost cutting initiatives and the rollout of our new value-engineered store format.
To briefly highlight the second quarter of 2009 results, our net sales declined 7% compared to the second quarter of 2008 with comparable retail sales down 9%. Our loss from continuing operations, including unusual and one-time items was $12.4 million or $0.42 per share, compared to an adjusted loss of $0.03 per share last year.
A couple of bright spots during the second quarter include the continued strong growth of our online business, which increased 24% this year on top of more than a 90% increase during the second quarter of last year and our shoe business which delivered a solid increase in sales and margin.
To briefly update you on the progress we achieved on our three growth initiatives, I mentioned earlier that our e-com business is continuing to thrive, the move to the fulfillment center in Alabama which enhanced our efficiencies as well as increased levels of marketing support. During the second quarter of 2009 e-com accounted for 6.5 % of net sales compared with less than 5% last year.
Also, we remain on plan to open approximately 35 new stores in 2009, which will increase our fleet by a net of approximately 30 stores for the year. About half the new stores opened year-to-date are in the new Tech II formats.
This new format is easier to shop, it’s been engineered to with stand higher traffic and it costs 35% to 40% less to build than the previous prototype and this gives us greater flexibility in the types of locations and markets where we can operate profitably.
More than half of the new stores we have built year-to-date are located in value oriented centers primarily in strip malls. Finally, we are ahead of schedule and realizing the plan $20 million in cost savings that we announced in February, significant progress has been made across the organization to increase efficiencies and lower spending which Sue will review in a few minutes.
As we enter the important back-to-school season we are pleased with early customer response to our fall one line particularly the wear now product. Nevertheless, we are planning conservatively for the fall season due to ongoing weakness in the economic environment, cautious consumer sentiment and significant volatility we continue to experience in our business.
During the past year we have observed customers shopping closer to need, shopping less frequently and waiting for great deals before making a purchase, and we have no reason to believe that these behaviors will change significantly during the latter half of 2009.
Promotions are very important in this environment and we are testing new ways to offer our customers even greater value. For example, in July we offered a backpack promotion which required a minimum purchase of $30, and in August we offered a free graphic t-shirt with the purchase of two pairs of denim.