The Children’s Place rallies on signs of turnaround; earnings, forecast beat

The Children’s Place, Inc. (NASDAQ:PLCE) rallied 8% on Thursday morning after providing better-than-expected guidance.

For the back half of 2023, the retailer expects double-digit operating margin driven by the combination of decreasing input and supply chain costs embedded in its inventory, the benefit from reduced inventory levels and expense discipline.

Net sales are expected to be in the range of $910M to $920M, better than the expected $896M.

For the third quarter, the company expects sales between $470M to $475M, versus the average analyst estimate of $466.4M. Adjusted net income per diluted share is estimated to be in the range of $3.55 to $3.65, compared to the estimate of $3.67.

“We are a more resilient and streamlined company today than we were pre-pandemic, and we will continue to grow stronger as we move through the balance of this year and beyond,” Chief Executive Officer Jane Elfers said in a statement.

“Our Back-to-School momentum has continued into Q3, and we are looking forward to capitalizing on our transformation to a digital-first operating model by delivering our back half outlook for our shareholders.”

For the second quarter, Children’s Place (PLCE) said non-GAAP EPS of -$2.12 beat the average analyst estimate by $0.01. Revenue of $345.6M beat by $2.96M.

Net sales for the full year should be in the range of $1.575B to $1.585B, which compares to the expected $1.56B.

The company ended the second quarter with 596 stores and square footage of 2.9 million, a decrease of 9% compared to the prior year. PLCE has closed 603 stores since 2013 and decreased total square footage by 2.4 million square feet. The company will close 80 to 100 stores this year.

The stock has two Strong Buy ratings from Wall Street analysts and two Holds.

Shares of PLCE are down 41% over the past 12 months.