The Children’s Place reported a 9.3% fall in net sales to $345.6m in the three months ended 29 July (Q2) which it attributed to a slowdown in consumer demand on the back of higher inflation, increased promotions and permanent store closures.
The Children's Place Q2 overview
- Comparable retail sales decreased 9.0% for the quarter.
- Gross profit during the second quarter fell to $87.8m from $115.5m.
- Operating loss widened from $13.8m to $36.9m while net loss grew from $13.3m to $35.4m.
H1 results overview
- Net sales fell 10.2% year on year to $76m.
- Operating loss of $67m from operating income of $5.4m
- Net loss of $64.2m from net income of $6.5m.
President and CEO Jane Elfers said: “Our Q2 results exceeded our guidance on both the top and bottom-lines. The top-line beat was the result of a strong digital performance fuelled by a strong start to back to school, driven by our successful first-to-market back to school digital marketing strategies, and our on-trend product assortments. In addition, our wholesale channel delivered another outstanding quarter driven by the strength of our Amazon partnership. The bottom-line beat was the result of our continued strong focus on expense management. With respect to monthly sales cadence, May was our weakest month, June improved significantly with the kick-off of our back to school strategy and July was our strongest month of the quarter.
"We are a more resilient and streamlined company today than we were pre-pandemic, and we will continue to grow stronger as we move through the balance of this year and beyond. It is early days, but our back to school momentum has continued into Q3, and we are looking forward to capitalising on our transformation to a digital-first operating model by delivering our back half outlook for our shareholders.”
The Children’s Place narrows guidance for FY
For the back half of 2023 (combined third and fourth quarters) The Children's Place continues to expect to deliver double-digit operating margin, driven by the combination of decreasing input and supply chain costs embedded in its inventory, the benefit from reduced inventory levels and strong expense discipline.
The company is narrowing its previously provided guidance for the full year 2023 and now expects net sales for the full year to be in the range of $1.575bn to $1.585bn, adjusted operating profit is estimated to be in the range of 2.7% to 3.0% of net sales and net income per diluted share is estimated to be in the range of $1.00 to $1.25 based upon an anticipated weighted average number of shares of 12.6m.
