PLCE - Children's Place Takes a Step Back After Latest Earnings Create Uncertainty
About a year ago, The Children's Place (NASDAQ: PLCE) looked like one of the best retailers in the industry. In the company's third-quarter 2018 earnings report, it revealed that its comparable sales had jumped by 9.5%; its stock price had tripled in the prior three years; and its chief rival, Gymboree, was on its way to bankruptcy.
Since then, however, the niche apparel retailer's story has unraveled. The liquidation of Gymboree put pressure on Children's Place's sales in the first half of 2019, and the company's most recent report makes it clear that it faces further challenges, including declining mall traffic and a sales environment conducive to price promotions.
The stock is now worth just a third of what it was at its peak last fall and is trading at its lowest point in four years. Children's Place is still solidly profitable, but the company is at a crossroads as it prepares to relaunch the Gymboree brand, which it bought out of bankruptcy. With shares down so sharply, investors may wonder if this is a buying opportunity or if there are further declines to come. Let's take a look at where the retailer stands today, and where it appears to be going following its Q3 earnings report.