After booking a net loss of US$114.8m compared with a profit last year and a 38.1% plunge in first-quarter net sales, The Children’s Place has marked 300 stores for closure over the next 20 months.
Speaking on the firm’s post-earnings analyst call, president and CEO Jane Elfers said the group, which has stores in the US, Canada and Puerto Rico, is looking to optimise its fleet, a focus for the better part of the last decade, lowering its reliance on the brick and mortar channel.
Elfers said the group is targeting a 300-store closure, which will “dramatically reduce” its reliance on brick and mortar.
“We anticipate that entering 2022, following the 300 closures, our mall-based portfolio will represent less than 25% of our total revenue.
“While the challenges that lie ahead are many and visibility is limited, we’re moving forward with urgency and focus, guided by the pillars of our long-standing transformation strategy. We believe that we were ahead of the digital shift due to our accelerated digital investments and will work to stay ahead, due to our increased focus on personalisation. We were ahead of the brick and mortar shift due to our fleet optimisation strategy, and we will work to stay ahead of it, through a significant downsizing of our fleet, while remaining in the best, most productive locations, with a significantly reduced reliance on malls, and continued flexibility in our lease terms.
“We have a strong brand that thrives in good times as well as bad. Our business is supported by superior product with great value, that strongly resonates with our digitally savvy, millennial core customer, who is buying our product for her Gen-Z children, who are growing up wearing the TCP brand. We believe we are well-positioned to capitalise on the significant market share shifts that have already begun and will continue to accelerate for the next several years.”
Elaborating, CFO Mike Scarpa said approximately 200 stores would be closed in fiscal 2020 and the remaining 100 store locations closed in fiscal 2021.
The group will subsequently operate out of 625 store locations at year-end 2021. It also owns the Gymboree brand.
“Historically, we’ve realised an approximate 20% transfer rate in sales from closed stores. By the end of fiscal 2021, we expect to greatly reduce our reliance on our brick and mortar channel, resulting in a smaller more profitable store footprint and leaving our mall-based portfolio, accounting for less than 25% of revenue entering fiscal year 2022.”
Last week, Guess, Inc said it would be closing more than 100 stores globally over the next 18 months amid news the group’s first-quarter sales fell 50%, owing to temporary shutdowns during the coronavirus outbreak.