The Children's Place, Inc. (NASDAQ:PLCE) Q3 2018 Earnings Conference Call Transcript

Dec 06, 2018 • 08:30 am ET

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The Children's Place, Inc. (NASDAQ:PLCE) Q3 2018 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good morning, and welcome to The Children's Place Third Quarter 2018 Earnings Conference Call. On the call today are Jane Elfers, President and CEO; Mike Scarpa, COO and CFO.

The Children's Place issued its third quarter 2018 earnings press release earlier this morning, and a copy of the release and presentation material for today's call have been posted on the Investor Relations section of the company's website. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions)

(Forward-Looking Cautionary Statements)

In addition, to find disclosures and reconciliations of non-GAAP measures that we use when discussing our financial results, you should refer to this morning's earnings release and to our SEC filings that can be found on our Investor Relations site. After the prepared remarks, we will open the call to questions. (Operator Instructions)

And now, I would like to turn the call over to Jane Elfers.

Executive
Jane Elfers

Thank you, Lorie, and good morning, everybody. After briefly reviewing Q3 highlights, I will focus my remarks on our progress with respect to our accelerated digital transformation initiative, with the goal of gaining additional market share. I will detail the significant upside that we expect customer personalization will deliver over both those short and long-term including an update on the value of acquiring, retaining and engaging customers.

I will also discuss the opportunity we have to continue to accelerate market share gains in both the short and long-term as we continue to see consolidation in the retail sector. I will then hand it over to Mike, who will discuss progress on our alternate channels of distributions and fleet optimization initiatives, as well as share our strategies with respect to some of the current headwinds facing the retail industry. Mike will also cover our Q3 results in detail and provide our forward outlook before passing it back for closing comments. Following our prepared remarks, we will open it up for your questions.

Q3 highlights. EPS was at the high end of our guided range for the quarter. Our top line momentum continued and we delivered an industry-leading positive 9.5% comp on top of a positive 5.1% comp last year. Our strong results were driven by 38% increase in our digital sales which represented 29% of our net sales in the quarter. Margin results were impacted by another quarter of record setting e-commerce growth and our strategic focus on additional market share gains.

As we reiterated in the beginning of the year, there are significant market share opportunities as the competitive landscape continues to shrink, and we intend to stay focused on aggressively pursuing them. Even with our focus on market share gains and our significant investment in our digital transformation strategy, ROIC increased 320 basis points in the quarter to 22.8% which we believe places us timely at or near the top of our retail peer group.

Product. Product is and has always been our number one strategic priority, and our product is clearly resonating with our customer. Our back-to-school sales were outstanding and