Childrens Place Inc (NASDAQ: PLCE), in the fourth quarter of FY 17 has reported the adjusted earnings per share of $2.52, while adjusted revenue growth was 9.4 percent to $569.97 million in the fourth quarter of FY 17, missing the analysts’ estimates for revenue of $579.97 million. As a result, the stock lost over 7.9% on March 20th, 2018 (Source: Google finance).
The group has planned to enter into an Accelerated Share Repurchase (ASR) program with Goldman Sachs & Co. LLC to repurchase an aggregate of $125 million of the company’s common stock under its current authorization using cash repatriated from its foreign subsidiaries. PLCE has also approved a new $250 million share repurchase program and has increased the Company’s quarterly dividend to $0.50 per share from $0.40 per share.
On the other hand, PLCE has signed an exclusive license agreement for the Greater China market. The agreement will cover Mainland China, Taiwan, Hong Kong and Macau, with Zhejiang Semir Garment Co. Ltd (“Semir”), parent of Balabala, China’s largest specialty children’s apparel retailer. The company’s entry to the China market through this strategic partnership is a game-changer for the international business. The young children’s apparel market in China is currently estimated at $24 billion and, with China’s two child policy firmly in place, is projected to double by 2025. Semir, through their Balabala brand, currently operates and franchises approximately 4,400 children’s apparel stores as well as having the largest children’s apparel ecommerce business in China through their partnership with third party platforms, such as Tmall, JD and VIP.com. Further, over the first five years of this agreement, Semir will execute an omni-channel strategy by opening at least 300 Children’s Place locations in Greater China and operating The Children’s Place ecommerce business. This partnership is forecasted to generate $125 million to $150 million in retail sales in year five.
For the first quarter of FY 18, PLCE expects earnings in the range of $2.12 to $2.22 per diluted share while full-year 2018 earnings are expected between $7.95 and $8.20 per diluted share. The company also expects to achieve a 12% operating margin and earnings per share of $12.00 by the end of 2020