Kids apparel retailer The Children’s Place (PLCE) delivered mixed second-quarter financial results. While earnings topped the consensus estimate, revenues fell short. Furthermore, the company did not issue guidance, citing uncertainty triggered by COVID-19.
Shares fell 6.54% following the news and closed at $94 on August 18.
Net sales increased 12.2% year-over-year to $413.9 million in Q2 but fell short of consensus estimates of $417.31 million. The increase in sales can be mainly attributed to the strong customer response to The Children’s Place’s product assortment. Notably, sales could have been much higher had the company not experienced store closures and reduced operating hours in malls owing to COVID-19 restrictions.
Additionally, adjusted net income increased to $25.7 million in Q2. Diluted earnings per share landed at $1.71 compared to an adjusted loss of $2.68 a share reported in the same quarter last year. Analysts were expecting earnings of $0.31 a share. (See The Children’s Place stock charts on TipRanks)
In other positive news, The Children’s Place’s digital business continues to grow at an impressive rate, accounting for 43% of total sales in the second quarter. Active mobile users were also up in the double digits.
“We continue to invest in marketing and technology to support this profitable growth, as we target an industry-leading steady state annual digital penetration of 50%,” said The Children’s Place CEO Jane Elfers.
Yesterday, B.Riley Financial analyst Susan Anderson reiterated a Buy rating on the stock and increased the price target to $136 from $130, implying 44.68%% upside potential to current levels.
Consensus among analysts is a Moderate Buy based on 4 Buys and 2 Holds. The average Children’s Place price target of $120 implies 27.66% upside potential to current levels.
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