Net sales was $480.2m in the three months ended 28 October 2023, compared to $509.1m in the same period last year.
The company explained this decrease in net sales was primarily due to the impact of the continued slowdown in consumer demand resulting from unprecedented inflation impacting its customer and from other domestic and geo-political concerns weighing on consumer confidence, along with an increase in promotional activity across the sector, and the impact of permanent store closures.
Operating income dropped to $45m from $57.8m in the same quarter of the previous year. Net income fell from $42.9m in Q3 2022 to $38.5m in Q3 2023.
Jane Elfers, president and chief executive officer at The Children's Place Inc, pointed out the company's bottom-line results were also negatively impacted in the third quarter by higher than planned distribution costs driven by a combination of largely unplanned but addressable factors.
She continued: "First, higher fulfilment costs, including the increased utilisation of third party fulfilment services, stemming from shipping significantly more ecommerce units than planned due to higher volumes coupled with an outsized increase in packages resulting from lower transaction size as our consumer remains under pressure in the current environment. Second, significantly higher labour costs than planned due to the increased ecommerce demand and a very tight labour market. Third, a delay of certain planned freight and fulfilment savings."
However, Elfers said the Q3 results exceeded the company's expectations on the top line.
She explained the top line beat was driven by another quarter of industry-leading digital performance, fuelled by a double digit increase in ecommerce traffic, with strong Back-to-School results in August and the success of the company's seasonal categories in September and October.
Keeping in line with the company’s "store fleet optimisation initiative," the company permanently closed five stores during the third quarter of 2023 and has permanently closed 608 stores since 2013.
The Children's Place plans to close approximately 64 more stores by the end of the fourth quarter, leaving the company with a fleet of approximately 530 stores as it enters 2024.
