The Children’s Place (NASDAQ: PLCE), a specialty retailer of children’s apparel and accessories, plummeted in pre-market trading after it raised concerns about its liquidity. The company stated that it was looking at improving its liquidity position and was trying to obtain new financing to sustain its operations. The retailer added that if it was unable to secure new financing, it would look at other “strategic alternatives.”
As of February 3, the specialty retailer had a total liquidity of around $45 million. This includes $13 million of cash and cash equivalents and around $32 million under its credit facility.
Children’s Place also announced its preliminary fourth quarter results that left investors disappointed. The company expects to generate net revenues in the range of $454 million to $456 million, below its prior forecast of between $460 million and $465 million. More importantly, PLCE expects to swing to an adjusted operating loss of -9% to -8% of net sales in Q4 compared to its prior guidance of adjusted operating income of around 2% to 3% of net sales.
The company’s adjusted operating loss as a percentage of sales swung to a loss in Q4 due to higher inventory valuation, lower merchandise margin, and more split shipments to meet e-commerce demand. Split shipments are when multiple product orders from the same customer are fulfilled in separate shipments.
What Is the Stock Price Target for Children’s Place?
Over the past year, PLCE has plunged by more than 50% and is down over 54% in today’s pre-market session at the time of writing. Furthermore, only two analysts have covered PLCE stock over the past three months, and both have Hold ratings.
