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SEC Filings, Earing Reports, Press Releases
Children's Place Retail Stores Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: December 4, 2009 11:16AM
Children's Place Retail Stores Inc. (PLCE) filed Quarterly Report for the period ended 2009-10-31.
Highlight of Business Operations:
On July 29, 2009, we entered into a securities purchase agreement (the Securities Purchase Agreement) with Ezra Dabah, our former Chief Executive Officer, Renee Dabah and certain related trusts (collectively, the Sellers) pursuant to which we agreed to purchase from the Sellers an aggregate of approximately 2.45 million shares of our common stock at a price of $28.88 per share, which represented a discount of 5% to the average of the closing prices of our common stock of the three days ended July 28, 2009 (the Sale). On August 3, 2009, the Sale was completed with us making total payments to the Sellers of approximately $70.8 million. In addition, we incurred approximately $2.7 million in transaction costs related to the Sale, which are included in the cost of the acquired shares. Immediately after the Sale, the acquired shares of common
In April 2008, the Company entered into a settlement and release of claims agreement with Hoop and the official committee of unsecured creditors in the Cases (the Settlement Agreement), which was approved by the U.S. Bankruptcy Court on April 29, 2008. Under the Settlement Agreement, the Company agreed to provide transitional services and to forgive all pre- and post-bankruptcy petition claims against the Hoop Entities. Such claims included intercompany charges for shared services of approximately $24.9 million, a capital contribution made on March 18, 2008 of approximately $8.3 million, payment of severance and other employee costs for the Companys employees servicing Hoop of approximately $7.7 million, and $6.8 million of professional fees and other costs the Company has incurred during the Cases, as well as claims that might be asserted against the Company in the Cases. As of October 31, 2009, the Company has paid approximately $45.8 million related to the Settlement Agreement, and has remaining accruals of $1.9 million, primarily for legal claims and related costs, and severance.
Net sales decreased by $8.1 million, or 1%, to $1,180.8 million in Year-To-Date 2009 from $1,188.9 million during Year-To-Date 2008. Our Comparable Retail Sales decreased 3% during Year-To-Date 2009 compared to a 5% increase during Year-To-Date 2008. During Year-To-Date 2009, we opened 34 The Childrens Place stores and closed one. During Year-To-Date 2008, we opened 22 The Childrens Place stores and closed six.
During Year-To-Date 2009, we reported income from continuing operations of $54.7 million, or $1.88 per diluted share, compared to $50.6 million, or $1.72 per diluted share, during Year-To-Date 2008. During Year-To-Date 2009, the following factors significantly impacted our business:
In addition to the translation impact noted above, the gross margin of our Canadian subsidiary is also impacted by its purchases of inventory, which is priced in U.S. Dollars. The effects of these purchases on our gross profit were decreases of approximately $0.6 million and $4.4 million for the thirteen and thirty-nine weeks ended October 31, 2009 compared to a decrease of approximately $2.4 million for the thirteen weeks ended November 1, 2008 and an increase of approximately $1.5 million for the thirty-nine weeks ended November 1, 2008.
We grant restricted shares and deferred stock awards to our employees and non-employee directors and performance awards to certain key members of management. The fair value of these awards is based on the average of the high and low selling price of our common stock on the grant date. Compensation expense is recognized ratably over the related service period reduced for estimated forfeitures of those awards not expected to vest due to employee turnover. While actual forfeitures could vary significantly from those estimated, a 10% change in our forfeiture rate would impact our net income by approximately $0.4 million. In addition, the number of performance shares earned is dependant upon our operating results over a specified time period. The expense for performance shares is based on an estimate of the number of shares we think will vest based on our earnings-to-date plus our estimate of future earnings for the remaining performance period. To the extent that actual operating results differ from our estimates, future performance share compensation expense could be significantly different. A 50% decrease in our projected future earnings could decrease our equity compensation, pre-tax, by approximately $2.5 million, and a 50% increase in our projected future earnings could increase our equity compensation, pre-tax, by approximately $0.3 million.
Kenneth Fisher of Fisher Asset Management, LLC, Paul Tudor Jones of The Tudor Group.