Children's Place (PLCE) Beats On Q3 Earnings, View Soft
Zacks Investment Research | Dec 11, 2019 10:11PM ET
The Children’s Place, Inc. (NASDAQ:PLCE) reported mixed third-quarter fiscal 2019 results, wherein earnings beat estimates but sales lagged the same. However, the company’s earnings declined on a year-over-year basis while sales improved. Further, the company provided soft view for fourth-quarter fiscal 2019 thanks to weaker-than-planned mall traffic so far in the year. Based on the soft fourth-quarter guidance, the company slashed its view for fiscal 2019.
Though the company’s bottom line beat estimates in the reported quarter, investors were not pleased with bleak view for fiscal 2019. Consequently, shares of the company declined roughly 23% on Dec 11.
A Look at Guidance
The company now envisions net sales of $1,862-$1,867 million compared with $1,910-$1,925 million guided previously. The guidance is also lower than sales of $1,938.1 million reported in fiscal 2018. The Zacks Consensus Estimates for fiscal 2019 sales is currently pegged at $1,920 million.
The company forecast comparable retail sales to decrease around 3%. Earlier, the company had guided comparable retail sales to be flat with the fiscal 2018 level. E-commerce penetration is now projected to increase to 31% of net sales from approximately 28% in the prior year. Further, it envisions adjusted operating margin of 5.7-5.9% compared with the prior guidance of 6.1-6.4%. The company recorded 6.6% in fiscal 2018.
The company now anticipates adjusted earnings to be $5.00-$5.20 per share for fiscal 2019 compared with $5.40-$5.75 stated earlier. This reflects a decline from earnings of $6.75 reported in fiscal 2018. The guidance includes an impact of nearly 13 cents from the recently implemented tariffs. Currently, the Zacks Consensus Estimates for fiscal 2019 earnings is pegged at $5.60.
For fourth-quarter fiscal 2019, the company expects net sales of $504-$509 million. The sales guidance is shy of the current Zacks Consensus Estimate of $556.6 million for the fiscal fourth quarter. Comparable retail sales are expected to decrease in mid single-digit compared with the prior-year period. Meanwhile, adjusted operating margin is projected to be 6.1-6.8%.
Adjusted earnings are anticipated to be $1.48-$1.68 in the fiscal fourth quarter, suggesting growth from $1.10 in the prior-year period. The guidance is also significantly lower than the current Zacks Consensus Estimates of $2.13 for the fiscal fourth quarter.
Overall, we note that shares of this Zacks Rank #4 (Sell) company have slipped 42% in the past three months, against the Zacks Investment Research
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