Yahoo Finance Why Is The Children's Place (PLCE) Up 24.8% Since Last Earnings Report?
It has been about a month since the last earnings report for The Children's Place (PLCE). Shares have added about 24.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is The Children's Place due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
The Children's Place Q4 Loss Wider Than Estimates
The Children’s Place reported dismal fourth-quarter fiscal 2024 results, wherein the bottom line beat the Zacks Consensus Estimate and the top line met the same. Also, this pure-play children’s specialty apparel retailer witnessed a year-over-year decline in both metrics.
Q4 in Detail
The Children’s Place posted an adjusted loss per share of $7.38, wider than the Zacks Consensus Estimate of an adjusted loss of $2.61. The company posted an adjusted loss of $3.87 per share in the year-ago quarter.
Net sales of $455 million declined 0.2% year over year primarily due to a decrease in retail sales, driven by fewer stores and reduced foot traffic. However, this was somewhat mitigated by the robust e-commerce performance. Meanwhile, comparable retail sales saw a rise of 4.8% in the quarter.
The company saw robust growth in its digital and mobile platforms in the fourth quarter of fiscal 2023. The U.S. mobile app sales increased 31% year over year. Mobile app traffic also grew 32%. This highlights a strong trend toward mobile shopping among consumers. Digital penetration for the quarter stood at 57%, which represents the proportion of total sales generated through digital channels, emphasizing the company's effective digital-first strategy.
Notably, mobile transactions accounted for 81% of all digital interactions, showcasing the success of the company's mobile-first approach and its ability to cater to the evolving preferences of consumers who are increasingly opting for shopping via smartphones. This performance points to a successful digital strategy that supports the company's overall business resilience and customer engagement.
Adjusted gross profit was $98.9 million, up $19.2 million from $79.7 million reported in the year-ago quarter. The adjusted gross margin leveraged 420 basis points (bps) to 21.7% due to lower product input costs, including cotton and supply-chain expenses, which had affected margins in the prior year. However, these gains were somewhat diminished by margin pressures from aggressive promotional strategies.
Adjusted selling, general and administrative (“SG&A”) expenses were $118.7 million, down from $128.5 million in the year-ago quarter. Adjusted SG&A, as a percentage of sales, leveraged 210 bps to 26.1%. This mainly resulted from decreases in equity-based compensation, and significant cuts in store and home office payroll. However, it was partially offset by planned increases in marketing expenditure and higher professional fees.
Store Update
In the past three months, the company shuttered 68 stores. It closed 90 stores in the 12 months ending on Feb 3, 2024.
At the end of the fourth quarter, the company operated 523 stores with 2.6 million square feet, marking a 12.8% reduction in square footage from the previous year. Following the launch of its fleet optimization initiative in 2013, the company has permanently closed 676 stores.
Other Financial Aspects
The Children’s Place ended the quarter with cash and cash equivalents of $13.6 million. The company had $226.7 million outstanding on its revolving credit facility as of Feb 3, 2024. It generated $135.4 million in operating cash flows in the three months ended Feb 3, 2024, and $92.8 million over the 12 months ending on the same date. Stockholders' deficit at the end of the fourth quarter was $9 million.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.
VGM Scores
Currently, The Children's Place has a great Growth Score of A, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
The Children's Place has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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The Children's Place, Inc. (PLCE) : Free Stock Analysis Report
