The Children's Place, Inc. (NASDAQ:PLCE) Q1 2015 Earnings Conference Call - Final Transcript
May 14, 2015 • 08:00 am ET
Good morning and welcome to The Children's Place First Quarter 2015 Conference Call. Thank you for joining us this morning. With us here today are Jane Elfers, President and Chief Executive Officer; Mike Scarpa, Chief Operating Officer; and Anurup Pruthi, Chief Financial Officer. A copy of the press release can be found on the company's website.
Before we begin I would like to remind participants that any forward-looking statements made today are subject to the Safe Harbor statements found in this morning's press release as well as in the company's SEC filings.
These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially. The company undertakes no obligation to publicly release any revision to these forward-looking statements to reflect events or circumstances after the date hereof.
After the prepared remarks we will open the call to questions. We ask that each of you limit yourself to one question so that everyone will have an opportunity.
I will now turn the call over to Jane Elfers.
Thank you, Paula, and good morning, everyone. A very strong first quarter result reflects the significant progress we are making across our multiple strategic growth initiatives. Some highlights for the quarter includes, comp sales increased 0.7%, our fourth quarter consecutive quarter of positive comps. US comp sales increased 0.5% in the quarter. Canada comp sales were up 2.3%.
Adjusted gross margin increased by 150 basis points in the quarter compared to last year, significantly above our guidance. These results reflect merchandise margin leverage and a higher AUR compared to last year driven by strong product acceptance and well-managed inventory, which were down 8% at the end of Q1.
Adjusted EPS was $0.83 versus our guidance range of $0.60 to $0.65. This compares to adjusted EPS of $0.68 in the first quarter of 2014. As a result of our strong performance, we increased our fiscal 2015 adjusted EPS guidance range to $3.30 to $3.45, reflecting our confidence in our outlook for the balance of the year.
Starting with product, our customer response to our spring product was extremely positive with our investments in fashion and seasonally appropriate product generating a higher AUR and significantly higher margin. On our March 12th earnings call, we discussed that Q1 sales to-date were significantly impacted by the record cold and storms across most of the country.
However once the weather improved, we saw our comp trend improve from the negative mid single digit at the time of our call to a positive 0.7 for the quarter. Unlike most of specialty retailing, we successfully navigated the recent year-long labor disruption at the West Coast port, without incurring any additional costs, while ensuring 100% on-time delivery of our merchandise. We experienced zero disruption to our inventory flow due to the foresight and experience of our logistics team. And importantly, our inventories are in excellent shape.
We ended the first quarter with total inventory down 8% and carryover inventory down 14%. We increased the pace of our share repurchase program