Children's Place Sees Wider Second-Quarter Loss
Children's Place Retail Stores said Monday that June same-store sales fell 4%, forcing the company to forecast a wider net loss for its fiscal second quarter than analysts had expected.
Children's Place shares were down $4.65 at $47.87 in morning trade on the Nasdaq.
The apparel retailer, whose shares fell 9% to their lowest in more than a year, said it expects a net loss of 94 cents to 98 cents per share, including $2 million in costs related to a stock option investigation, for the second quarter ending August 4.
Analysts on average had been expecting a loss of 59 cents per share, excluding items, according to Reuters Estimates.
Disappointing sales at the company's Children's Place and Disney Store chains forced it to cut prices deeper than planned, hurting gross margins.
Sales at stores open at least a year, the closely watched metric known as same-store sales, fell 4 percent at The Children's Place and 3% at the Disney Store chain.
"In the month of June, sales came in below our expectations at both brands," said Ezra Dabah, the company's chief executive. "We believe our assortments at both brands were not as focused and compelling as last year, which has been compounded by continuing mall traffic declines."
The company remains "cautiously optimistic" about the second half of the year, which includes the important back-to-school and holiday shopping seasons.
It will update its full-year earnings outlook on August 23, when it reports second-quarter results. By then it will have received an initial response from consumers to its back-to-school merchandise, the company said.
Children's Place also said it is making progress toward finalizing its historical financial statements to reflect the correct measurement dates for its past stock option grants and expects to become current in its regulatory filings with the U.S. Securities and Exchange Commission by the end of August.