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Children's Place (PLCE)
NASDAQ:PLCE
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Children's Place
(NASDAQ:PLCE)
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Rating:38Underperform
Price Target:
$4.50
▲(2.27% Upside)
The overall stock score is heavily influenced by significant financial challenges, including declining revenues, persistent losses, and high leverage. Technical analysis indicates bearish momentum, with the stock trading below key moving averages and showing oversold conditions. Valuation metrics are unattractive due to a negative P/E ratio and lack of dividend yield. These factors collectively result in a low overall stock score.
Positive Factors
Loyalty Program
The loyalty program strengthens customer retention and repeat purchases, providing a stable revenue stream and competitive advantage in customer engagement.
E-commerce Platform
The dual presence in retail and online platforms allows Children's Place to capture a wider market, adapting to consumer shifts towards online shopping.
Product Range
A diverse product range helps mitigate risks associated with single product dependency and attracts a broader customer base, enhancing market position.
Negative Factors
Declining Revenue
Declining revenue indicates challenges in market demand or competitive positioning, impacting long-term growth and profitability potential.
High Leverage
High leverage limits financial flexibility and increases risk, potentially affecting the company's ability to invest in growth opportunities.
Weak Cash Generation
Weak cash generation constrains operational capabilities and limits the ability to fund new initiatives or manage debt effectively.
Children's Place (PLCE) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$104.41M
Dividend YieldN/A
Average Volume (3M)674.93K
Price to Earnings (P/E)―
Beta (1Y)2.64
Revenue Growth-10.09%
EPS Growth81.44%
CountryUS
Employees2,530
SectorConsumer Cyclical
Sector Strength84
IndustryApparel - Retail
Share Statistics
EPS (TTM)-0.18
Shares Outstanding22,167,889
10 Day Avg. Volume444,083
30 Day Avg. Volume674,934
Financial Highlights & Ratios
PEG Ratio0.03
Price to Book (P/B)-2.10
Price to Sales (P/S)0.09
P/FCF Ratio-0.94
Enterprise Value/Market Cap6.31
Enterprise Value/Revenue0.49
Enterprise Value/Gross Profit1.68
Enterprise Value/Ebitda13.08
Forecast
1Y Price Target
$4.50Price Target Upside2.27% Upside
Rating ConsensusHold
Number of Analyst Covering1
EPS Forecast (FY)-1
Revenue Forecast (FY)$1.31B
Children's Place Business Overview & Revenue Model
Company DescriptionThe Children's Place, Inc. operates as a children's specialty apparel retailer. The company operates in two segments, The Children's Place U.S. and The Children's Place International. It sells apparel, footwear, accessories, and other items for children; and designs, contracts to manufacture, and sells merchandise under the proprietary The Children's Place, Place, Baby Place, Gymboree, and Sugar & Jade brand names. As of January 29, 2022, the company had 672 stores in the United States, Canada, and Puerto Rico; online stores at childrensplace.com, gymboree.com, and sugarandjade.com; and seven international franchise partners operated 211 international points of distribution in 16 countries. The company was formerly known as The Children's Place Retail Stores, Inc. and changed its name to The Children's Place, Inc. in June 2014. The Children's Place, Inc. was founded in 1969 and is headquartered in Secaucus, New Jersey.
How the Company Makes MoneyChildren's Place generates revenue primarily through the sale of its apparel and accessories in its retail stores and online. The company's revenue model is driven by direct sales to consumers, with key revenue streams including in-store transactions and e-commerce sales. Additionally, Children's Place benefits from a membership loyalty program, which encourages repeat purchases and enhances customer retention. The company also engages in promotional activities and seasonal sales to boost sales volume. Significant partnerships with manufacturers and suppliers ensure a steady flow of inventory, while collaborations with other brands for exclusive collections can also drive additional revenue. Overall, the company's strategic focus on value, quality, and customer experience plays a crucial role in its earnings.
Children's Place Earnings Call Summary
Earnings Call Date:Dec 03, 2024
(Q3-2024)
| % Change Since: |
Next Earnings Date:Mar 11, 2026
Earnings Call Sentiment Neutral
The earnings call highlighted strong digital growth and successful marketing strategies but was overshadowed by a decline in overall sales and increased distribution costs. Management expressed confidence in addressing these challenges, but the current financial pressures were evident.Q3-2024 Updates
Positive Updates
Digital Sales Growth
E-commerce sales grew in the low single digits, with e-commerce representing 57% of retail sales in Q3, up from 50% last year and 37% in 2019.
Inventory Reduction
Ending inventories were down 16%, exceeding expectations, contributing to a healthy inventory position entering the holiday season.
Successful Marketing Campaigns
Significant marketing campaigns including partnerships with Jonas Brothers and Mariah Carey delivered billions of impressions and high returns on ad spend.
Strong Wholesale Performance
The Amazon marketplace delivered an outstanding quarter with the largest week in history during Prime Day.
Negative Updates
Sales Decline
Net sales decreased by 5.7% to $480.2 million, with U.S. net retail sales down 8.9% and Canadian sales down 22.1%.
Increased Distribution Costs
Higher-than-planned distribution costs impacted the bottom line due to increased e-commerce volumes, higher labor costs, and delays in planned freight savings.
Gross Profit Margin Decrease
Gross profit margin decreased to 33.7% from 34.8% due to higher distribution and fulfillment expenses.
Interest Expense Increase
Interest expense increased to $7.9 million due to higher average borrowings and interest rates.
Company Guidance
During the third quarter earnings call for The Children's Place, the company exceeded expectations with net sales reaching $480.2 million, largely driven by a low single-digit increase in e-commerce sales and a significant rise in digital traffic. E-commerce represented an impressive 57% of retail sales, up from 50% the previous year. Despite a challenging macroeconomic environment, the company maintained strong merchandise margins. However, increased distribution costs due to higher fulfillment and labor expenses impacted the bottom line, with gross profit margins slightly declining to 33.7% from 34.8% the previous year. Inventory levels ended 16% lower, setting a strong foundation for Q4. For Q4, the company anticipates net sales between $460 million and $465 million and an adjusted operating profit margin of 2% to 3%. Full-year 2023 expectations include net sales of $1.605 billion to $1.61 billion, with adjusted net loss per share projected between negative $0.59 and negative $0.39. Looking forward, the company plans further inventory reductions and capital expenditures of $25 million to $30 million, focusing on digital initiatives and fulfillment enhancements.Children's Place Financial Statement Overview
Summary
Children's Place faces significant financial challenges across all verticals. The income statement reflects declining revenues and persistent losses. The balance sheet shows high leverage and negative equity, raising concerns about financial stability. Cash flow issues are evident with negative growth and weak cash generation. The company needs to address these challenges to improve its financial health.Income Statement
The income statement shows a declining trend in revenue with a negative growth rate of -1.59% TTM. Gross profit margin has decreased from 41.49% in 2022 to 31.89% TTM, indicating reduced profitability. The net profit margin is negative at -2.04% TTM, reflecting ongoing losses. Despite a slight improvement in EBIT and EBITDA margins TTM, they remain low, highlighting operational challenges.Balance Sheet
The balance sheet reveals significant financial instability with a negative stockholders' equity of -$4.87 million TTM, leading to an extremely high and negative debt-to-equity ratio. The return on equity is also negative, indicating poor returns for shareholders. The equity ratio is concerning, showing high leverage and potential solvency risks.Cash Flow
Cash flow analysis indicates a challenging situation with negative free cash flow growth of -92.95% TTM. The operating cash flow to net income ratio is very low at 0.63% TTM, suggesting weak cash generation relative to net income. The free cash flow to net income ratio is negative, further emphasizing cash flow difficulties.| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 1.34B | 1.39B | 1.60B | 1.71B | 1.92B | 1.52B |
| Gross Profit | 392.71M | 419.85M | 398.09M | 462.70M | 737.72M | 266.85M |
| EBITDA | 50.37M | 25.96M | -36.52M | 138.96M | 434.64M | -20.30M |
| Net Income | -27.30M | -57.82M | -154.54M | -1.14M | 187.17M | -140.37M |
Balance Sheet | ||||||
| Total Assets | 805.10M | 747.55M | 800.31M | 986.28M | 1.04B | 1.14B |
| Cash, Cash Equivalents and Short-Term Investments | 7.80M | 5.35M | 13.64M | 16.69M | 54.79M | 63.55M |
| Total Debt | 566.14M | 586.33M | 463.84M | 511.80M | 450.86M | 633.88M |
| Total Liabilities | 809.96M | 806.96M | 809.33M | 827.80M | 811.99M | 1.04B |
| Stockholders Equity | -4.87M | -59.41M | -9.02M | 158.48M | 225.47M | 93.38M |
Cash Flow | ||||||
| Free Cash Flow | -4.54M | -133.42M | 65.24M | -53.80M | 103.97M | -66.30M |
| Operating Cash Flow | 3.66M | -117.59M | 92.80M | -8.22M | 133.28M | -35.72M |
| Investing Cash Flow | -8.20M | -15.83M | -27.79M | -45.95M | -29.29M | -30.37M |
| Financing Cash Flow | 2.50M | 128.40M | -68.27M | 17.06M | -112.74M | 60.93M |
Children's Place Technical Analysis
Negative
4.40
Price Trends
6.54
Negative
6.65
Negative
6.05
Negative
Market Momentum
-0.57
Negative
36.67
Neutral
52.16
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PLCE, the sentiment is Negative. The current price of 4.4 is below the 20-day moving average (MA) of 4.67, below the 50-day MA of 6.54, and below the 200-day MA of 6.05, indicating a bearish trend. The MACD of -0.57 indicates Negative momentum. The RSI at 36.67 is Neutral, neither overbought nor oversold. The STOCH value of 52.16 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for PLCE.
Children's Place Risk Analysis
Children's Place disclosed 35 risk factors in its most recent earnings report. Children's Place reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Children's Place Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
68 Neutral | $1.30B | 14.74 | 10.27% | 4.89% | -0.34% | -61.00% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
53 Neutral | $393.12M | -13.50 | -8.61% | 2.68% | -5.16% | -3394.48% | |
48 Neutral | $53.02M | -1.48 | -34.77% | ― | -8.31% | 36.10% | |
45 Neutral | $68.73M | -7.52 | -5.58% | ― | -1.01% | 65.04% | |
45 Neutral | $111.10M | -56.31 | ― | ― | -7.33% | -114.80% | |
38 Underperform | $104.41M | -1.67 | ― | ― | -10.09% | 81.44% |
* Consumer Cyclical Sector Average
PLCE
Children's Place
4.40
-6.13
-58.21%
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36.34
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-29.31%
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DBI
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TLYS
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Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.