• Q1 net income reaches US$15.6m
  • Gross margin increases 150 bps
  • Sales drop to $404.9m

US apparel retailer The Children's Place said the execution of its transformation plan is yielding results as it revealed earnings growth in its first-quarter.

Net income reached US$15.6m in the three months ended 2 May from $13.6m a year earlier. This was despite recording charges of $3.5m in the period related to restructuring costs, and store disposition and distribution centre exit costs.

Gross margin increased 150 basis points to 37.7%, primarily as a result of merchandise margin leverage.

Net sales dropped to $404.9m from $410.1m, and included a negative impact of around $4.7m from currency exchange rate fluctuations. Comparable retail sales edged up 0.7% in the quarter.

CEO Jane Elfers, said: "We have been sharply focused on the execution of our transformation plan, and we are pleased that our efforts are yielding substantial financial and operational results. Our strategy is generating results across the entirety of our business, and we expect to continue to deliver enhanced value to shareholders throughout 2015 and beyond as we realise the full benefits of our transformation."

FBR&Co analyst Susan Anderson, noted: "We believe the company is in the beginning stages of a turnaround and that it has significant upside potential over the longer term, driven by catalysts such as supply chain efficiencies, omni-channel initiatives, international growth, wholesale expansion, systems implementation, and store rationalization, which we believe are currently underappreciated by the market."