Through The Fly's Eyes: Children's Place
from Louis Jacobs of Theflyonthewall.com
Bad Times In Toyland
Children's merchandise retailer Children's Place (PLCE) reported lower
than anticipated earnings today. The company previously reported a
guidance EPS of 94c-$1.02, but third quarter results are now expected
to be at least 60% lower than the low-end of that figure.
Children's Place interim CEO Chuck Crovitz said that "the results
primarily reflect inventory levels that are higher than we would like
given current sales trends." He also suggested that higher fuels costs
have led to limited clothing and home-good purchases. Consequently,
the company will try to clear out inventory through substantial
discounts.
The lowered earnings expectations only add to the problems the company
has experienced as of late. Two weeks ago, former CEO Ezra Dabah
resigned after an internal investigation found that he violated
policies for securities trades. The company also stripped former Chief
Creative Officer, Nina Miner, after she was also found violating the
company's code of business conduct. Furthermore, the company is a
target of a class-action lawsuit alleging that shareholders were
misled by company executives which led an artificially inflated stock
price.
As a result, the company's stock has sagged this past year. The stock
is down more than 7% in today's trading to $22.59, well below it's
52-week high of $71.81. Analysts are also bearish as Sterne, Agee and
Leach, Inc. downgraded Children's Place stock to "Hold" from "Buy" due
to lowered guidance, the impending lawsuit and corporate governance
issues.
The forecast for Children's Place remains murky. While the company has
a licensing agreement with Disney (DIS), which is always a best
seller, the credit and mortgage crisis has affected consumer sentiment
more than anticipated. So long as the credit woes and sky-high fuel
costs continue, sales are likely to remain depressed as consumers will
be looking to curb spending during these uncertain times.
posted by BB at 2:47 PM
1 Comments:
* Working closely with the Childrens Place over the past year has
been a frustrating experience. Lack business know how is rampant
throughout the purchasing and logistics teams. TCP is run a like a
bad family business. I would not be surprised to see the company
completely restructured following the sale. Hopefully they will
hire competent people this time around.
By Anonymous Anonymous, at 9:35 AM
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