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The Children’s Place Retail Stores, Inc. (PLCE)
F4Q08 Earnings Call
March 19, 2009 10:00 am ET
Jane Singer – Investor Relations
Chuck Crovitz – Interim Chief Executive Officer
Susan Riley – Executive Vice President, Finance and Administration
Richard Flaks – Senior Vice President, Planning, Allocation and IT
Richard Paradise – Senior Vice President, Chief Financial Officer
Dina Sweeney – Group Vice President, Merchandising
Kimberly Greenberger – Citigroup
John Zolidis – Buckingham Research
Margaret Whitfield – Sterne Agee
Analyst for Brian Tunick – JP Morgan
Betty Chin – Wedbush Morgan
Janet Kloppenburg – JJK Research
Marni Shipiro – The Retail Tracker
Linda Tsai – MKM Partners
Dana Telsey – Telsey Advisory Group
Tom Filandro – Susquehanna Financial
Welcome to today’s program. (Operator Instructions) It is now my pleasure to turn the conference over to Ms. Jane Singer. Please go ahead.
Previous Statements by PLCE
» Children’s Place Retail Stores, Inc. Q3 2009 Earnings Call Transcript
» Children’s Place Retail Stores Inc. Q2 2009 Earnings Call Transcript.
» The Children’s Place Inc Q3 2008 Earnings Call Transcript
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 will turn the call over to Chuck for his opening remarks.
Thank you Jane. Good morning everyone and thank you for joining us today. As you saw in this morning’s press release The Children’s Place reported solid fourth quarter and full year 2008 financial results. We also undertook four significant actions during the year to strengthen our business and help ensure the long-term success of the company. These include reducing inventory levels, identifying opportunities to reduce our cost structure, strengthening our balance sheet and cash flow and exiting the Disney Store North America business.
To briefly review the highlights of our financial performance our net sales were flat for the fourth quarter and comparable store sales declined 5% due in large part to the negative impact of foreign exchange. Net sales increased 7% for the year with comparable store sales up 2% for the year. E-commerce sales increased an impressive 70% in the fourth quarter and increased 64% for the year.
Excluding unusual and one-time items, income from continuing operations for the fourth quarter increased 10% to $21.3 million or $0.72 per share. It increased almost 60% to $66 million or $2.23 per share for the year. We also strengthened our balance sheet and cash position throughout the year. Sue will elaborate on this in a few minutes but it is noteworthy that The Children’s Place improved its year-end cash position by nearly $150 million net of debt during fiscal 2008.
We are proud of our performance particularly in light of recent industry trends. According to NPD spending on children’s apparel in the U.S. declined 3.2% during the fourth quarter of 2008 and declined 1.7% for the fiscal year. Three shifts in shopping patterns appear to be happening in the market. Consumers are going to malls less frequently, they are making a greater proportion of their purchases on sale merchandise rather than full price and they are delaying purchases and buying much closer to need. We expect that all three factors will continue to impact the overall growth of the children’s apparel market during 2009.
The Children’s Place expanded market share in 2008 from 3.6 to 3.9%. Nevertheless, it is clear that the global macro economic conditions are impacting the children’s apparel market in significant ways. Our business is not immune to these external pressures and we are managing accordingly. We are carefully reviewing our promotional and marketing programs to ensure they are as effective as possible in this environment. We have undertaken a number of initiatives to address shifts in consumer purchasing trends in order to drive top line growth in 2009.
However, we expect comparable store sales will remain challenged until the economy begins to improve. Here are some examples of the initiatives we have under way. In line with consumer shopping patterns we have moved to more of a “wear now” strategy. For example, we kept winter merchandise in our stores during January and February 2009 because we expected that moms shopping closer to need would be looking for warm replacement clothes if the cold weather persisted. It did and the strategy worked to our advantage as the sales of winter product helped drive volume during the months of January and February.
From a marketing perspective we are focused on increasing the efficiency of our marketing programs and driving traffic. We are continuing our targeted direct mail efforts which have been effective drivers of traffic and sales and we have reduced spending in some of our print publications this year as we increase our online marketing and email campaigning as well as integrated marketing programs.