* Sees Q4 EPS from cont ops $0.85-$0.90 vs prior view
* Shares down as much as 13 percent, hit 7-week low
By Arpita Mukherjee
Jan 5 Children's Place Retail Stores Inc
slashed its fourth-quarter profit outlook as
warmer-than-expected weather forced the retailer to heavily
discount its winter apparel and accessories, sending its shares
down as much as 13 percent.
Secaucus, New Jersey-based Children's Place has made
merchandising mistakes in the past that forced it to discount
heavily, and its Chief Executive Jane Elfers has introduced
revamped styles to address those issues.
"The product designs are dramatically better so it really
became an issue of warm weather impacting sales of merchandise
like sweaters and outer wear, rather than a design issue,"
Wedbush Securities analyst Betty Chen said.
"We have certainly heard other retailers allude to weather
being a problem for them as well."
Department store operator Bon-Ton Stores Inc had
said its December sales and margins were hurt by unseasonably
J.C. Penney Co Inc, Gap Inc, Limited Brands
and American Eagle Outfitters also discounted
more than they wanted over the holidays.
Chen, who kept her "outperform" rating on the Children's
Place stock, expects the company's strategy to pay off, and said
the fall in the share price was a good buying opportunity for
"The long-term vision to improve product designs, streamline
their supply chain, focus on improving their outlet business,
especially gross margin (is intact)."
The kids clothing retailer said "record high" apparel costs
in the quarter also hurt its margins.
Children's Place, which competes with chains like Target
Corp and Gap Inc's Old Navy, now expects to earn
85 cents to 90 cents a share from continued operations for the
quarter, down from its previous view of $1.19 to $1.24 a share.
Analysts on average were expecting earnings of $1.23 a
share, according to Thomson Reuters I/B/E/S.
The company, however, expects quarterly sales to be in line
with its previous forecast and said comparable sales in the
period would remain flat.
Shares of the company were down 6 percent at $49.78 on
Thursday on the Nasdaq.