The Children's Place closing 300 stores

The Children's Place national chain of clothing and footwear stores, which is located locally at Joplin's Northpark Mall is closing 300 stores by the end of the fiscal year 2021, including 200 by the end of this year, according to a company news release.

As with many closings that have been announced over the past couple of months, a primary factor is COVID-19.

The company has not announced which stores it will close, but says it will concentrate more on online sales.

The press release is printed below with the announcement of the closures buried deep within the release:

The Children’s Place, Inc. (Nasdaq: PLCE), the largest pure-play children’s specialty apparel retailer in North America, today announced financial results for the first quarter ended May 2, 2020.

Jane Elfers, President and Chief Executive Officer, said, “Although we are facing a period of uncertainty regarding the future impact of the COVID-19 pandemic, The Children’s Place is moving swiftly and decisively to proactively address these challenges. 

"In an effort to structurally position the company for continued success, we are significantly accelerating our fleet optimization initiative, and focusing our resources on accelerating our digital sales, both key elements of our long-standing transformation strategy. At the same time, we are addressing the near-term priorities necessary to preserve our financial flexibility.

Elfers continued, “We believe that our long-standing transformation strategy has prepared us well for these uncertain times. As demand for our essential children’s clothing continues to surge, our omni-channel advantages are clear; quarter-to-date, our consolidated sales are up positive low double-digits, with on-line demand up 300%, while approximately 95% of our stores remain closed. We are planning to have the majority of our stores open by July 1st.”

Elfers continued, “We have spent the past several years focused on three key strategic pillars within our transformation strategy: Superior Product, Digital Transformation and Fleet Optimization. Our Superior Product consistently resonates with our core millennial customer and provides a strong value proposition that thrives in any type of economic environment. 

"Our Digital Transformation has been supported by accelerated investments over the past three years enabling us to achieve one of the highest digital penetrations in the industry at 31% of revenue for fiscal 2019. 

"These digital investments have allowed us to operate at a high level during the current crisis, with the ability to fulfill our outsized online demand through our advanced omni-channel capabilities. We believe that our strong digital foundation, coupled with the rapidly changing shopping patterns of our consumer, partly due to the COVID-19 pandemic, our strong value proposition and our core, digital-savvy, millennial customer, will result in the continued acceleration of our digital revenue. 

"Our Fleet Optimization initiative has been a decade-long strategic focus that has resulted in optimum flexibility in our lease terms, enabling us to significantly accelerate store closures without financial penalty. 

"We are now targeting to close an additional 300 stores by the end of fiscal 2021, with 200 closures planned for this year, and 100 closures planned for 2021. This initiative will greatly reduce our reliance on our brick-and-mortar channel and we are targeting our mall-based, brick-and-mortar portfolio to represent less than 25% of our revenue entering fiscal 2022.”

Elfers concluded, “The challenges that lie ahead are many, and visibility is limited, but we are moving forward with urgency and focus, guided by the strategic pillars of our long-standing transformation strategy. We believe that our superior product, coupled with our unique ability, at this critical juncture, to significantly grow digital revenue, while meaningfully reducing our reliance on our store portfolio, will result in consolidated market share gains for years to come.”

First Quarter 2020 Results
Net sales decreased 38.1% to $255.2 million in the three months ended May 2, 2020 from $412.4 million in the three months ended May 4, 2019, primarily as a result of temporary store closures related to the COVID-19 pandemic.

Net loss was ($114.8) million, or ($7.86) per diluted share, in the three months ended May 2, 2020, compared to net income of $4.5 million, or $0.28 per diluted share, in the three months ended May 4, 2019. Adjusted net loss was ($28.6) million, or ($1.96) per diluted share, compared to adjusted net income of $5.8 million, or $0.36 per diluted share, in the comparable period last year.

Gross profit was a loss of ($19.7) million in the three months ended May 2, 2020, compared to $152.0 million in the three months ended May 4, 2019. Adjusted gross profit was $68.4 million in the three months ended May 2, 2020, compared to $151.4 million in the comparable period last year, and deleveraged 990 basis points to 26.8% of net sales, primarily as a result of increased penetration of our ecommerce business and its higher fulfillment costs, along with the deleverage of fixed expenses resulting from the decline in sales as a result of store closures related to the COVID-19 pandemic.

Selling, general, and administrative expenses were $98.5 million in the three months ended May 2, 2020, compared to $128.0 million in the three months ended May 4, 2019. Adjusted SG&A was $88.2 million in the three months ended May 2, 2020, compared to $127.2 million in the comparable period last year, and deleveraged 380 basis points to 34.6% of net sales, primarily as a result of the deleverage of fixed expenses resulting from the decline in sales as a result of temporary store closures, partly offset by a reduction in operating expenses associated with actions taken in response to the COVID-19 pandemic.

Operating loss was ($173.1) million in the three months ended May 2, 2020, compared to operating income of $5.0 million in the three months ended May 4, 2019. Adjusted operating loss was ($37.5) million in the three months ended May 2, 2020, compared to adjusted operating income of $6.6 million in the comparable period last year, and deleveraged 1,630 basis points to (14.7%) of net sales.