The Children’s Place Retail Stores Inc. said Thursday that it expects to close 125 underperforming stores through 2016 as part of its efforts to improve its profitability.
The retailer also reported disappointing quarterly revenue and gave a dismal forecast.
Children’s Place, like many of its peers, has been dealing with sluggish sales as consumers remain somewhat reticent about spending. That was compounded in its most recent quarter by cold weather that prompted many shoppers to stay home, and the discount-focused retail environment. Retailers from Macy’s and J.C. Penney to Sony and RadioShack have announced more than 1,300 store closings in the past few weeks.
The Secaucus, N.J., company said that its net income fell 18 percent to $15.7 million, or 69 cents per share, for the quarter that ended Feb. 1. That’s down from $19.1 million, or 80 cents per share, in the prior year. It took a $9.4 million charge during the most recent quarter, largely for impairment charges and store-closure expenses. It earned 96 cents per share on an adjusted basis, versus analyst estimates of 95 cents per share, according to FactSet.
Revenue dropped 8 percent to $467.5 million, falling short of analyst expectations of $484.8 million.
Children’s Place said that its revenue from stores open at least a year fell 4.3 percent. This is considered a key indicator of a retailer’s financial performance, as it strips away the impact of recently opened and closed stores.
The company opened 53 stores and closed 41 during 2013, as part of its multiyear plan. It ended the year with 1,107 stores. In 2014, the company plans to open 35 stores and close 30. It also wants to double its international store count to between 65 and 70 locations. The 125 store closings include the 41 shut last year.
Children’s Place said it is providing cautious guidance for 2014 given severe weather in February and March and an intense promotional environment. The company expects to earn between 58 and 66 cents per share on an adjusted basis for its first quarter. Analysts had forecast 94 cents per share.
Revenue at its established stores is expected to drop 2 to 4 percent.
Children’s Place said it expects to earn between $2.85 and $3.05 per share for the year; analysts were anticipating $3.65. The company said revenue from established stores will be flat to down 1 percent.
The company’s disappointing revenue and outlook sent its shares down $4.04, or 7.4 percent, to $50.66 Thursday.
The bad news overshadowed its new $100 million share-repurchase program and plans to institute a quarterly dividend, its first since becoming a public company in 1997. The dividend of 13.25 cents per share is payable on April 17 to shareholders of record as of March 27.
The Children’s Place Retail Stores also said that it is changing its name to The Children’s Place Inc. to better reflect its position as a children’s brand.