SECAUCUS, N.J. - The Children's Place, Inc. (NASDAQ:PLCE) saw its stock plummet 13% after reporting third quarter earnings and revenue that fell short of analyst expectations.
The children's apparel retailer posted adjusted earnings per share of $2.04, missing the consensus estimate of $2.86. Revenue came in at $390.2 million, well below analysts' projections of $442.07 million.
Net sales decreased 18.8% year-over-year to $390.2 million, driven by lower e-commerce revenue as the company rationalized unprofitable promotional strategies. Comparable retail sales fell 17.1% for the quarter.
Despite the revenue decline, gross profit margin improved 180 basis points to 35.5%, benefiting from lower product input and supply chain costs. The company also reduced adjusted selling, general and administrative expenses by $9.1 million compared to last year.
"We continued our efforts to improve the profitability of the business and provide a foundation for future growth," said Muhammad Umair, President and Interim CEO. "We are laser focused on profitability and willing to proactively sacrifice unprofitable sales to improve operating results for our shareholders."
The Children's Place maintained total liquidity of $94 million as of the end of the quarter. The company opened its first new Gymboree store in over two years early in the fourth quarter.
While acknowledging "significant work ahead" in a promotional fourth quarter environment, management expressed optimism about recent steps to enhance profitability.
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