CORRECTED – CORRECTED-UPDATE 2-Children’s Place Q1 beats, sees strong margin

(Corrects para 17 to clarify that the company reported
first-quarter earnings of $1.00 a share, up from 80 cents a
share a year earlier, not up 80 cents a share)

* Q1 EPS cont ops $1.00 vs est $0.90

* Raises FY10 gross margin view to 60-80 basis pts

* Sees higher Q2 gross margin

* Sees sequential improvement in Q2 comp sales

* Shares rise as much as 6 pct
(Recasts; adds conference call details, analyst comments,
share movement)

By Shradhha Sharma

BANGALORE, May 20 (BestGrowthStock) – Children’s Place Retail
Stores Inc’s (PLCE.O: ) quarterly results beat market estimates,
helped by strong gross margins and robust online sales, and it
forecast higher gross margins and improving comparable store
sales in the second quarter.

The children’s apparel retailer’s shares rose as much as 6

“Given the stronger gross margin in the first quarter we
now expect a gross margin upside of 60 to 80 basis points for
fiscal 2010 compared to our previous guidance of positive 40 to
60 basis points,” Chief Executive Jane Elfers said on a
conference call.

She added that second-quarter gross margin was also
expected to be higher than last year, as a result of stronger
inital mark-ups (the difference between the cost of a good sold
and its retail price) and forex gains. [ID:nWNAB2516]

The company, which competes with Gymboree Corp (GYMB.O: ) and
Gap Inc’s (GPS.N: ) Baby Gap line among others, also expects to
see a sequential improvement in second-quarter comparable

Children’s Place’s comparable retail sales, a key metric of
retail health, fell 0.5 percent in the first quarter. They
slipped 2 percent in the United States and 5 percent in Canada.

Wedbush Securities analyst Betty Chen said she was
impressed by newly appointed CEO Elfers’ swiftness in
delivering better-than-expected first-quarter results.

“It looks like many of her strategies to work on the
product, marketing and inventory planning will continue to
improve throughout the year.”
Children’s Place, which had gone without a permanent chief
since 2007, named Elfers as CEO in December. [ID:nBNG445025]

Shares of the Secaucus, New Jersey-based company have risen
42 percent since then.

On Thursday, they touched a high of $43.91 in morning
trade, but pared most of their gains later and were trading up
25 cents at $41.75 in midday trade on Nasdaq.


First-quarter online sales at Children’s Place rose 22
percent, and CEO Elfers said that in the long term, the company
saw an opportunity to drive additional online sales by
expanding into new categories and outside the United States.

Analyst Chen said the company’s online business would
continue to be a growth vehicle, as it launched in new
countries like Canada.
Earlier on Thursday, Children’s Place raised its 2010 earnings
outlook to a range of $3.05 to $3.15 a share, from an earlier
forecast between $2.90 and $3.10 a share, expecting positive
low single-digit comparable sales.

Analysts on average expect 2010 earnings of $3.11 a share,
according to Thomson Reuters I/B/E/S.

Children’s Place also forecast a second-quarter loss from
continuing operations of 33 cents to 38 cents a share.

For the first quarter, Children’s Place reported earnings
from continuing operations of $1.00 a share, up from 80 cents a
share, a year earlier. Net sales at the company rose 5 percent
to $422.1 million.

Analysts were looking for 90 cents a share on revenue of
$417.62 million. [ID:nWNAB2485]

Stock Basics

(Reporting by Shradhha Sharma in Bangalore; Editing by Don
Sebastian and Maju Samuel)

CORRECTED – CORRECTED-UPDATE 2-Children’s Place Q1 beats, sees strong margin