Children's Place Rises After Quarterly Profit Tops Estimatesby
Children’s Place Inc. rose the most in more than four years after posting third-quarter profit that topped analysts’ estimates and authorizing a new $250 million stock buyback.
Profit in the quarter through Oct. 31 was $1.93 a share, excluding some items, the Secaucus, New Jersey-based company said Tuesday in a statement. Analysts estimated $1.92, on average. The new buyback plan is in addition to $59 million remaining available under the company’s current authorization.
The results show that the kids clothing retailer’s investments in merchandise-planning systems are paying off. Even though unseasonably warm weather weighed on sales of fall and winter apparel last quarter -- causing revenue to miss estimates -- the company was able to avoid slashing prices and eroding its profit margins.
“With the aid of the company’s assortment planning tool, management bought significantly fewer units of cold-weather goods, enabling management to clear through the merchandise profitably,” said Richard Jaffe, an analyst at Stifel Financial Corp.
The company also has worked to cut expenses and add sales through international and wholesale channels. In May, Children’s Place agreed to add two board members in a settlement with activist investors Macellum Advisors and Barington Capital Group, who have been seeking to improve the retailer’s performance and increase its share price.
Children’s Place climbed 13 percent to $54.88 in New York, the biggest gain since November 2011. Even after the rally, the shares are still down 3.7 percent this year.