Children’s Place Tanks 4.1% on Mixed Q4 Results & Uncertain Outlook

Children’s Place (NASDAQ: PLCE) shares were down 4.1% on March 9, after the specialty retailer of children’s apparel and accessories reported mixed Q4 results. Earnings grew almost three times and impressively beat estimates, but revenues fell short of Street’s expectations.

Investors were further disappointed by the company’s decision to refrain from providing an EPS guidance due to lack of visibility going forward.

Q4 Numbers

Notably, adjusted earnings of $3.02 per share almost trebled year-over-year, and significantly beat analysts’ expectations of $2.81 per share. The company reported earnings of $1.01 per share for the prior-year period.

However, revenues jumped 7.4% year-over-year to $507.8 million, but lagged consensus estimates of $535.65 million. The increase in revenues reflected a surge in comparable retail sales, which increased 13.3%.

Positively, adjusted gross margins improved 776 basis points to 38.2%.

FY2022 Outlook

The company refrained from issuing the FY2022 outlook based on a lack of near-term visibility on demand in the absence of the stimulus that boosted the economy last year.

However, based on the shift to being a digital-first company since the beginning of COVID-19, the company forecast to achieve double-digit earnings per share as well as operating margin for FY2022.

CEO Comments

Looking ahead into FY2022, PLCE CEO, Jane Elfers, cautioned, “We are facing significant headwinds in 2022 including decade-high cotton pricing, record inflation, lapping unprecedented stimulus payments from last year, and continued global freight disruptions.”

However, she added, “we believe that the accelerated structural reset to a digital first company that we have accomplished since the onset of the pandemic now positions us to deliver EPS and operating margins significantly above pre-pandemic levels and to establish double digit EPS and double digit operating margin as our new baseline for FY 2022 and beyond.”

Wall Street’s Take

Following mixed Q4 results, Citigroup analyst Paul Lejuez decreased the price target on Children’s Place to $60 (7.8% upside potential) from $72 and reiterated a Hold rating.

Lejuez thinks that the stock’s risk/reward is fairly balanced at current levels.

The rest of the Wall Street community is cautiously optimistic about the stock, with a Moderate Buy consensus rating based on 3 Buys and 2 Holds. The average Children’s Place stock price projection of $82.20 implies 48.24% upside potential to current levels, at the time of writing.

Bloggers Weigh In

TipRanks data shows that financial blogger opinions are 100% Bullish on PLCE stock, compared to a sector average of 69%.

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