• Q1 earnings drop to US$13.6m
  • Adjusted earnings down 20.7%
  • Sales fall 3.1%

US apparel retailer The Children's Place Retail Stores saw earnings tumble in the first quarter but upped its guidance on results that exceeded its expectations.

Net income in the three months ended 3 May was US$13.6m compared to $19.3m in the previous year. During the quarter, the company recorded charges of $2.6m comprising severance associated with a corporate restructuring a fleet optimization initiative.

Adjusted net income dropped 20.7% to $15.3m. Total sales in the period were down 3.1% to $410.1m, and comparable sales down 3.6%.

"We delivered first quarter results which exceeded our expectations despite weather challenges that continued into early April," said CEO Jane Elfers.

The company updated its outlook for fiscal 2014, and now expects adjusted earnings per diluted share of between $2.90 and $3.05, assuming comparable retail sales for the year will be flat to negative 1%. This compares to initial guidance of $2.85 to $3.05.

Stifel analyst Richard Jaffe noted: "We believe that expense reduction and real estate rationalization will help profitability going forward. Additionally, the new channels for merchandise distribution (international and wholesale) and a focus on omni-channel should contribute to sales growth.

"However, we believe that at the current share price the reward is limited and risk, as always, remains significant, given the volatility of fashion apparel retailers, the vagaries of fashion, apparel trends, competitive challenges (particularly the low-cost apparel providers), and consumer preference."