Children's Place sees margins expanding for full year

Thu Aug 16, 2012 10:12am EDT

(Reuters) - Children's Place Retail Stores Inc (PLCE.O) reported a smaller-than-expected quarterly loss as products aimed at older kids sold well in the back-to-school season, and the company raised the low end of its full-year profit forecast.

The company's shares rose as much as 9 percent to $55.96 -- their highest this year -- in Thursday morning trade.

Children's Place, which sells apparel and accessories for newborns to 10-year-olds, has been trying to cut expenses and keep a tight leash on inventory to shore up its margins as it discounts heavily to win budget-conscious shoppers.

The company sees gross margins expanding for the full year, driven by lower costs and improved products for the back-to-school and holiday seasons.

The kids clothes retailer now expects full-year adjusted earnings of $3.20 to $3.30 per share, compared with its previous forecast of $3.15 to $3.30.

Analysts on average were expecting earnings of $3.23 per share, according to Thomson Reuters I/B/E/S.

The company said it pulled back on baby inventory and floor space to focus on big kids merchandise, which drives sales in the back-to-school season.

Second-quarter loss widened to $18.0 million, or 74 cents per share, from $9.7 million, or 38 cents per share, a year earlier.

Excluding items, the company posted a loss of 62 cents per share.

Revenue rose 5 percent to $360.8 million, helped by better sales in the United States and Canada as well as in its e-commerce business.

Analysts on average had expected a loss of 66 cents per share on revenue of $353.3 million, according to Thomson Reuters I/B/E/S.

For the third quarter, the company expects adjusted earnings of $1.53 to $1.58 per share, with comparable-store sales rising in the low-single digit range.

Analysts were expecting a profit of $1.63 cents per share.

Children's Place shares, which have risen about 24 percent in the last 12 months, were up 6 percent at $54.73 on the Nasdaq.

(Reporting by Ranjita Ganesan; Editing by Don Sebastian)