Children's Place to shutter 300 stores as it shifts focus to digital sales
Children’s Place Inc. plans to reduce its store network by a third.
The children’s apparel retailer is accelerating its “fleet optimization” initiative and is now targeting to close an additional 300 stores by the end of 2021, with 200 closures planned for this year and another 100 planned for 2021. As of May 2, Children’s Place had 920 stores in the U.S. and Canada.
“This initiative will greatly reduce our reliance on our brick-and-mortar channel and we are targeting our mall-based, brick-and-mortar portfolio to represent less than 25% of our revenue entering fiscal 2022,” said Jane Elfers, president and CEO. “Our fleet optimization initiative has been a decade-long strategic focus that has resulted in optimum flexibility in our lease terms, enabling us to significantly accelerate store closures without financial penalty.” (The retailer has closed 275 locations since it announced the initiative in 2013.)
Children’s Place swung to a loss of $114.8 million, or $7.86 per share, for the quarter ended May 2, from net income of $4.5 million, or $0.28 per share, in the year-ago period. Adjusted losses of $1.96 per share less than analysts expected.
Net sales fell 38.1% to $225.2 million, below estimates, which the company attributed to closed stores due to the pandemic.
With the majority of its stores still closed due to the virus, Children's Place said its online demand is up 300%. It expects that most of its locations will have reopened by July 1.
“Our digital transformation has been supported by accelerated investments over the past three years enabling us to achieve one of the highest digital penetrations in the industry at 31% of revenue for fiscal 2019,” said Eifers. “These digital investments have allowed us to operate at a high level during the current crisis, with the ability to fulfill our outsized online demand through our advanced omnichannel capabilities. We believe that our strong digital foundation, coupled with the rapidly changing shopping patterns of our consumer, partly due to the COVID-19 pandemic, our strong value proposition and our core, digital-savvy, millennial customer, will result in the continued acceleration of our digital revenue.”