Why Children's Place Shares Popped


Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of children's retail apparel company Children's Place (NAS: PLCE) jumped as much as 12% after the company announced its first-quarter earnings results.

So what: This was definitely one of the more confusing earnings reports I've witnessed in recent weeks, so have fun trying to follow along. Children's Place reported an adjusted profit (excluding one-time items) of $1.10 with a 2% rise in revenue to $438.5 million. The profit was $0.05 ahead of Wall Street's expectations while the sales figure fell about $9 million shy of the consensus figure. Looking forward, the company upped the low end of its previously forecasted annual profit range to $3.15-$3.30 from $3.10-$3.15 and guided to a second-quarter loss of $0.65-$0.70 per share. Analysts had been expecting $3.26 in annual earnings, so the low-end boost was a nice surprise; however, they had expected a loss of only $0.50 in the second-quarter.

Now what: It's up, it's down, it's on, it's not -- how confusing! The key figure here is that same-store sales dipped by 0.7% year over year during an unusually warm period of weather that should have attracted shoppers into its stores. The only real growth driver appears to be cost-cutting, which will only take the company so far. Suffice it to say I'm not buying into today's optimistic action.

Craving more input? Start by adding Children's Place to your free and personalized Watchlist so you can keep up on the latest news with the company.

At the time thisarticle was published Fool contributorSean Williamshas no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen nameTMFUltraLong, track every pick he makes under the screen nameTrackUltraLong, and check him out on Twitter, where he goes by the handle@TMFUltraLong. Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

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