Document and Entity Information
Document and Entity Information Document - shares | 3 Months Ended | |
May 04, 2019 | May 27, 2019 | |
Entity Information [Line Items] | ||
Entity Registrant Name | Childrens Place, Inc. | |
Entity Central Index Key | 0001041859 | |
Current Fiscal Year End Date | --02-01 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | May 4, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 15,847,270 | |
Entity Well-known Seasoned Issuer | No | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | May 04, 2019 | Feb. 02, 2019 | May 05, 2018 |
Current assets: | |||
Cash and cash equivalents | $ 66,111 | $ 69,136 | $ 90,121 |
Accounts receivable | 39,562 | 35,123 | 31,960 |
Inventories | 341,174 | 303,466 | 334,680 |
Prepaid expenses and other current assets | 27,156 | 27,670 | 69,569 |
Total current assets | 474,003 | 435,395 | 526,330 |
Long-term assets: | |||
Property and equipment, net | 249,836 | 260,357 | 260,762 |
Right-of-use assets | 458,702 | 0 | 0 |
Tradenames, net | 73,656 | 0 | 0 |
Deferred income taxes | 15,106 | 17,750 | 9,986 |
Other assets | 14,651 | 13,544 | 13,849 |
Total assets | 1,285,954 | 727,046 | 810,927 |
Current liabilities: | |||
Revolving loan | 153,072 | 48,861 | 46,800 |
Accounts payable | 205,643 | 194,786 | 219,488 |
Current lease liabilities | 133,783 | 0 | 0 |
Income taxes payable | 2,452 | 997 | 1,326 |
Accrued expenses and other current liabilities | 105,252 | 86,755 | 97,487 |
Total current liabilities | 600,202 | 331,399 | 365,101 |
Long-term liabilities: | |||
Deferred rent liabilities | 0 | 44,329 | 49,019 |
Long-term lease liabilities | 367,307 | 0 | 0 |
Other tax liabilities | 5,025 | 5,080 | 3,914 |
Other long-term liabilities | 14,107 | 12,862 | 15,158 |
Total liabilities | 1,005,580 | 412,609 | 467,790 |
STOCKHOLDERS' EQUITY: | |||
Preferred stock, $1.00 par value, 1,000 shares authorized, 0 shares issued and outstanding | 0 | 0 | 0 |
Common stock, $0.10 par value, 100,000 shares authorized; 15,915, 15,873 and 17,409 issued; 15,867, 15,827 and 16,605 outstanding | 1,592 | 1,588 | 1,741 |
Additional paid-in capital | 149,435 | 146,991 | 242,675 |
Treasury stock, at cost (48, 47, and 804 shares) | (2,747) | (2,685) | (102,498) |
Deferred compensation | 2,747 | 2,685 | 2,498 |
Accumulated other comprehensive income | (15,542) | (14,934) | (14,010) |
Retained earnings | 144,889 | 180,792 | 212,731 |
Total stockholders' equity | 280,374 | 314,437 | 343,137 |
Total liabilities and stockholders' equity | $ 1,285,954 | $ 727,046 | $ 810,927 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | 3 Months Ended | ||
May 04, 2019 | Feb. 02, 2019 | May 05, 2018 | |
Document Period End Date | May 4, 2019 | ||
Common Stock, Par or Stated Value Per Share | $ 0.10 | $ 0.10 | $ 0.10 |
Common Stock, Shares Authorized | 100,000,000 | 100,000,000 | 100,000,000 |
Common Stock, Shares, Issued | 15,915,000 | 15,873,000 | 17,409,000 |
Common Stock, Shares, Outstanding | 15,867,000 | 15,827,000 | 16,605,000 |
Preferred Stock, Par or Stated Value Per Share | $ 1 | $ 1 | $ 1 |
Preferred Stock, Shares Authorized | 1,000 | 1,000 | 1,000 |
Preferred Stock, Shares Issued | 0 | 0 | 0 |
Preferred Stock, Shares Outstanding | 0 | 0 | 0 |
Treasury Stock, Shares | 48,000 | 47,000 | 804,000 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
May 04, 2019 | May 05, 2018 | |
Net sales | $ 412,382 | $ 436,314 |
Cost of sales | 260,406 | 276,122 |
Gross profit | 151,976 | 160,192 |
Selling, general and administrative expenses | 128,006 | 118,471 |
Asset impairment charges | 348 | 1,257 |
Depreciation and amortization | 18,584 | 17,406 |
Operating income (loss) | 5,038 | 23,058 |
Interest (expense), net | (1,799) | (663) |
Interest income | 88 | 366 |
Income (loss) from continuing operations before income taxes | 3,327 | 22,761 |
Provision (benefit) for income taxes | (1,163) | (8,776) |
Net income (loss) | $ 4,490 | $ 31,537 |
Basic earnings (loss) per share amounts | ||
Net income (loss) (in dollars per share) | $ 0.28 | $ 1.85 |
Basic weighted average common shares outstanding (in shares) | 15,847 | 17,002 |
Diluted earnings (loss) per share amounts | ||
Net income (loss) (in dollars per share) | $ 0.28 | $ 1.78 |
Diluted weighted average common shares outstanding (in shares) | 16,107 | 17,734 |
Common Stock, Dividends, Per Share, Cash Paid | $ 0.56 | $ 0.50 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 3 Months Ended | |
May 04, 2019 | May 05, 2018 | |
Net income | $ (4,490) | $ (31,537) |
Foreign currency translation adjustment | (683) | (1,206) |
Change in fair value of cash flow hedges, net of income taxes | 75 | 27 |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent | $ 3,882 | $ 30,358 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Equity Statement - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock [Member] | Additional Paid-in Capital [Member] | Deferred Compensation, Share-based Payments [Member] | Retained Earnings [Member] | AOCI Attributable to Parent [Member] | Treasury Stock [Member] | Stockholders' Equity, Total [Member] |
Common Stock, Shares, Issued | 17,257 | |||||||
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest | $ 1,726 | $ 258,501 | $ 2,436 | $ 226,303 | $ (12,831) | $ (2,436) | $ 473,699 | |
Treasury Stock, Shares | (46) | |||||||
Stock Issued During Period, Value, Restricted Stock Award, Net of Forfeitures | (24) | |||||||
Adjustments to Additional Paid in Capital, Share-based Compensation, Requisite Service Period Recognition | capitalizedstock-basedcompensation [Member] | 85 | |||||||
Adjustments to Additional Paid in Capital, Share-based Compensation, Requisite Service Period Recognition | 8,801 | |||||||
Stock Repurchased and Retired During Period, Value | 37,200 | (162,248) | ||||||
Payments of Ordinary Dividends, Common Stock | $ 8,409 | (8,409) | ||||||
Dividendsunvestedshares | 400 | 0 | ||||||
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, Net of Tax | (1,206) | (1,206) | ||||||
Other Comprehensive Income (Loss), Derivatives Qualifying as Hedges, Net of Tax | 27 | |||||||
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | $ 31,537 | |||||||
Common Stock, Shares, Issued | 17,409 | |||||||
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest | $ 343,137 | 1,741 | 242,675 | 2,498 | 212,731 | (14,010) | $ (102,498) | 343,137 |
Cumulative Effect of New Accounting Principle in Period of Adoption | 875 | |||||||
Common Stock Issued, Employee Trust, Deferred | $ (2,498) | 0 | ||||||
Treasury Stock, Shares | 804 | (803) | ||||||
Common Stock, Shares, Issued | 15,873 | |||||||
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest | $ 314,437 | 1,588 | 146,991 | 2,685 | 180,792 | (14,934) | $ (2,685) | 314,437 |
Common Stock Issued, Employee Trust, Deferred | $ (2,685) | |||||||
Treasury Stock, Shares | 47 | (47) | ||||||
Stock Issued During Period, Value, Restricted Stock Award, Net of Forfeitures | 36 | |||||||
Adjustments to Additional Paid in Capital, Share-based Compensation, Requisite Service Period Recognition | 7,759 | |||||||
Stock Repurchased and Retired During Period, Value | 29,600 | (35,143) | ||||||
Payments of Ordinary Dividends, Common Stock | $ 8,930 | (8,930) | ||||||
Dividendsunvestedshares | 200 | 0 | ||||||
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, Net of Tax | (683) | (683) | ||||||
Other Comprehensive Income (Loss), Derivatives Qualifying as Hedges, Net of Tax | 75 | |||||||
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | $ 4,490 | |||||||
Common Stock, Shares, Issued | 15,915 | |||||||
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest | $ 280,374 | $ 1,592 | $ 149,435 | $ 2,747 | $ 144,889 | $ (15,542) | $ (2,747) | 280,374 |
Cumulative Effect of New Accounting Principle in Period of Adoption | (1,667) | |||||||
Common Stock Issued, Employee Trust, Deferred | $ (2,747) | $ 0 | ||||||
Treasury Stock, Shares | 48 | (48) |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
May 04, 2019 | May 05, 2018 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income (loss) | $ 4,490 | $ 31,537 |
Reconciliation of income from continuing operations to net cash provided by operating activities: | ||
Depreciation and amortization | 18,584 | 17,406 |
Stock-based compensation | 7,759 | 8,797 |
Deferred taxes | 3,159 | 2,573 |
Other | 69 | 91 |
Changes in operating assets and liabilities: | ||
Inventories | (38,323) | (11,070) |
Prepaid expenses and other assets | 3,394 | (980) |
Income taxes payable, net of prepayments | (2,955) | (16,436) |
Accounts payable and other current liabilities | 28,699 | (40,283) |
Deferred rent and other liabilities | (43,142) | 119 |
Net cash provided by operating activities | 21,185 | (12,745) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Property and equipment purchases, lease acquisition and software costs | (11,009) | (11,065) |
Proceeds from Sale of Short-term Investments | 0 | 15,000 |
Change in company-owned life insurance policies | 517 | (333) |
Net cash used in investing activities | (86,492) | 3,602 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Purchase and retirement of common stock, including transaction costs | (33,319) | (162,248) |
Payments of Ordinary Dividends, Common Stock | (8,930) | (8,409) |
Borrowings under revolving credit facilities | 306,279 | 301,340 |
Repayments under revolving credit facilities | (202,068) | (276,000) |
Net cash provided by (used in) financing activities | 61,962 | (145,317) |
Effect of exchange rate changes on cash | 320 | 62 |
Net increase (decrease) in cash and cash equivalents | (3,025) | (154,398) |
Cash and cash equivalents, beginning of period | 69,136 | 244,519 |
Cash and cash equivalents, end of period | 66,111 | 90,121 |
OTHER CASH FLOW INFORMATION: | ||
Net cash paid during the year for income taxes | (1,379) | 5,572 |
Cash paid during the year for interest | (1,537) | (595) |
Payments for (Proceeds from) Productive Assets | $ (2,019) | $ 1,042 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 3 Months Ended |
May 04, 2019 | |
Accounting Policies [Abstract] | |
BASIS OF PRESENTATION | BASIS OF PRESENTATION Description of Business The Children's Place, Inc. and subsidiaries (the “Company”) is the largest pure-play children's specialty apparel retailer in North America. The Company provides apparel, footwear, accessories, and other items for children. The Company designs, contracts to manufacture, sells at retail and wholesale, and licenses to sell, trend right, high-quality merchandise at value prices, the substantial majority of which is under its proprietary “The Children's Place”, "Place", and "Baby Place" brand names. The Company classifies its business into two segments: The Children’s Place U.S. and The Children’s Place International. Included in The Children’s Place U.S. segment are the Company's U.S. and Puerto Rico-based stores and revenue from its U.S.- based wholesale business. Included in The Children's Place International segment are its Canadian-based stores, revenue from the Company's Canada wholesale business, as well as revenue from international franchisees. Each segment includes an e-commerce business located at www.childrensplace.com. Interim Financial Statements The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, certain information and footnote disclosures normally included in the annual consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly the consolidated financial position of The Children’s Place, Inc. (the “Company”) as of May 4, 2019 and May 5, 2018 and the results of its consolidated operations for the thirteen weeks ended May 4, 2019 and May 5, 2018 and cash flows for the thirteen weeks ended May 4, 2019 and May 5, 2018 and stockholders' equity for the thirteen weeks ended May 4, 2019 and May 5, 2018 . The consolidated financial position as of February 2, 2019 was derived from audited financial statements. Due to the seasonal nature of the Company’s business, the results of operations for the thirteen weeks ended May 4, 2019 and May 5, 2018 are not necessarily indicative of operating results for a full fiscal year. These consolidated financial statements should be read in conjunction with the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended February 2, 2019 . Terms that are commonly used in the Company’s notes to consolidated financial statements are defined as follows: • First Quarter 2019 — The thirteen weeks ended May 4, 2019 • First Quarter 2018 — The thirteen weeks ended May 5, 2018 • FASB — Financial Accounting Standards Board • SEC — U.S. Securities and Exchange Commission • U.S. GAAP — Generally Accepted Accounting Principles in the United States • FASB ASC — FASB Accounting Standards Codification, which serves as the source for authoritative U.S. GAAP, except that rules and interpretive releases by the SEC are also sources of authoritative U.S. GAAP for SEC registrants Consolidation The consolidated financial statements include the accounts of the Company and its wholly‑owned subsidiaries. Intercompany balances and transactions have been eliminated. FASB ASC 810-- Consolidation is considered when determining whether an entity is subject to consolidation. Fiscal Year The Company's fiscal year is a 52-week or 53-week period ending on the Saturday on or nearest to January 31. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and amounts of revenues and expenses reported during the period. Actual results could differ from the assumptions used and estimates made by management, which could have a material impact on the Company's financial position or results of operations. Significant estimates inherent in the preparation of the consolidated financial statements include: reserves for the realizability of inventory; reserves for litigation and other contingencies; useful lives and impairments of long-lived assets; fair value measurements; accounting for income taxes and related uncertain tax positions; insurance reserves; valuation of stock-based compensation awards and related estimated forfeiture rates, among others. Reclassifications Certain reclassifications have been made to prior period financial statements to conform to the current period presentation. Leases The Company adopted Accounting Standards Update No. 2016-02 "Leases" ("Topic 842") as of the beginning of fiscal 2019 using the modified retrospective transition method. Topic 842 requires that all leases greater than 12 months be recorded on the balance sheet as a right-of-use asset with a corresponding liability. See Note 3 " Leases " for further details on the Company's adoption of Topic 842. Inventories Inventories, which consist primarily of finished goods, are stated at the lower of cost or net realizable value, with cost determined on an average cost basis. The Company capitalizes certain supply chain costs in inventory, and these costs are reflected within cost of sales as the inventories are sold. Inventory shrinkage is estimated in interim periods based upon the historical results of physical inventory counts in the context of current year facts and circumstances. Impairment of Long-Lived Assets The Company periodically reviews its long-lived assets when events indicate that their carrying value may not be recoverable. Such events include historical trends or projected trend of cash flow losses or a future expectation that the Company will sell or dispose of an asset significantly before the end of its previously estimated useful life. In reviewing for impairment, the Company groups its long-lived assets at the lowest possible level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. The Company reviews all stores that have reached comparable sales status, or sooner if circumstances should dictate, on at least an annual basis. The Company believes waiting this period of time allows a store to reach a maturity level where a more comprehensive analysis of financial performance can be performed. For each store that shows indications of operating losses, the Company projects future cash flows over the remaining life of the lease and compares the total undiscounted cash flows to the net book value of the related long-lived assets. If the undiscounted cash flows are less than the related net book value of the long-lived assets, they are written down to their fair market value. The Company primarily determines fair market value to be the discounted future cash flows directly associated with those assets. In evaluating future cash flows, the Company considers external and internal factors. External factors comprise the local environment in which the store resides, including mall traffic, competition and their effect on sales trends. Internal factors include the Company's ability to gauge the fashion taste of its customers, control variable costs such as cost of sales and payroll and, in certain cases, its ability to renegotiate lease costs. Stock-based Compensation The Company generally grants time vesting stock awards ("Deferred Awards") and performance-based stock awards ("Performance Awards") to employees at management levels. The Company also grants Deferred Awards to its non-employee directors. Deferred Awards are granted in the form of a defined number of restricted stock units that require each recipient to complete a service period. Deferred Awards generally vest ratably over three years, except for those granted to non-employee directors, which generally vest after one year. Performance Awards are granted in the form of restricted stock units which have performance criteria that must be achieved for the awards to vest (the "Target Shares") in addition to a service period requirement. For Performance Awards issued during fiscal 2016 and 2017 (the “2016 and 2017 Performance Awards”), an employee may earn from 0% to 200% of their Target Shares based on the achievement of cumulative adjusted earnings per share achieved for the three-year performance period, adjusted operating margin expansion achieved for the three-year performance period and adjusted return on invested capital ("adjusted ROIC") achieved as of the end of the performance period. The 2016 and 2017 Performance Awards cliff vest, if earned, after completion of the three-year performance period. The fair value of the 2016 and 2017 Performance Awards granted is based on the closing price of our common stock on the grant date. For Performance Awards issued during fiscal 2018 (the “2018 Performance Awards”), an employee may earn from 0% to 250% of their Target Shares based on cumulative adjusted earnings per share achieved for the three-year performance period, adjusted operating margin expansion achieved for the three-year performance period, adjusted ROIC achieved as of the end of the performance period and our adjusted ROIC relative to that of companies in our peer group as of the end of the performance period. The 2018 Performance Awards cliff vest, if earned, after completion of the three-year performance period. The fair value of the 2018 Performance Awards granted is based on the closing price of our common stock on the grant date. Stock-based compensation expense is recognized ratably over the related service period reduced for estimated forfeitures of those awards not expected to vest due to employee turnover. Stock-based compensation expense, as it relates to Performance Awards, is also adjusted based on the Company's estimate of adjusted earnings per share and adjusted operating margin expansion and adjusted return on invested capital and ranking of our adjusted return on investment capital relative to that of companies in our peer group as they occur. Deferred Compensation Plan The Company has a deferred compensation plan (the “Deferred Compensation Plan”), which is a nonqualified plan, for eligible senior level employees. Under the plan, participants may elect to defer up to 80% of his or her base salary and/or up to 100% of his or her bonus to be earned for the year following the year in which the deferral election is made. The Deferred Compensation Plan also permits members of the Board of Directors to elect to defer payment of all or a portion of their retainer and other fees to be earned for the year following the year in which a deferral election is made. In addition, eligible employees and directors of the Company may also elect to defer payment of any shares of Company stock that is earned with respect to stock-based awards. Directors may elect to have all or a certain portion of their fees earned for their service on the Board invested in shares of the Company’s common stock. Such elections are irrevocable. The Company is not required to contribute to the Deferred Compensation Plan, but at its sole discretion, can make additional contributions on behalf of the participants. Deferred amounts are not subject to forfeiture and are deemed invested among investment funds offered under the Deferred Compensation Plan, as directed by each participant. Payments of deferred amounts (as adjusted for earnings and losses) are payable following separation from service or at a date or dates elected by the participant at the time the deferral is elected. Payments of deferred amounts are generally made in either a lump sum or in annual installments over a period not exceeding 15 years. All deferred amounts are payable in the form in which they were made, except for board fees invested in shares of the Company's common stock, which will be settled in shares of Company common stock. Earlier distributions are not permitted except in the case of an unforeseen hardship. The Company has established a rabbi trust that serves as an investment to shadow the Deferred Compensation Plan liability. The assets of the rabbi trust are general assets of the Company and as such, would be subject to the claims of creditors in the event of bankruptcy or insolvency. Investments of the rabbi trust consist of mutual funds and Company common stock. The Deferred Compensation Plan liability, excluding Company common stock, is included within other long-term liabilities and changes in the balance, except those relating to payments, are recognized as compensation expense within selling, general, and administrative expenses. The value of the mutual funds is included in other assets and related earnings and losses are recognized as investment income or loss, which is included within selling, general, and administrative expenses. Company stock deferrals are included within the equity section of the Company’s consolidated balance sheet as treasury stock and as a deferred compensation liability. Deferred stock is recorded at fair market value at the time of deferral and any subsequent changes in fair market value are not recognized. Fair Value Measurement and Financial Instruments FASB ASC 820-- Fair Value Measurements and Disclosure provides a single definition of fair value, together with a framework for measuring it, and requires additional disclosure about the use of fair value to measure assets and liabilities. This topic defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and establishes a three-level hierarchy, which encourages an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of the hierarchy are defined as follows: • Level 1 - inputs to the valuation techniques that are quoted prices in active markets for identical assets or liabilities • Level 2 - inputs to the valuation techniques that are other than quoted prices but are observable for the assets or liabilities, either directly or indirectly • Level 3 - inputs to the valuation techniques that are unobservable for the assets or liabilities The Company’s cash and cash equivalents, assets of the Company’s Deferred Compensation Plan, accounts receivable, accounts payable, current lease liabilities, and revolving loan are all short-term in nature. As such, their carrying amounts approximate fair value and fall within Level 1 of the fair value hierarchy. The Company stock that is included in the Deferred Compensation Plan is not subject to fair value measurement. The Company's assets and liabilities include foreign exchange forward contracts that are measured at fair value using observable market inputs such as forward rates, the Company's credit risk, and our counterparties’ credit risks. Based on these inputs, the Company's derivative assets and liabilities are classified within Level 2 of the valuation hierarchy. The Company’s assets measured at fair value on a nonrecurring basis include long-lived assets, such as intangible assets, fixed assets, and right-of-use assets. The Company reviews the carrying amounts of such assets when events indicate that their carrying amounts may not be recoverable. Any resulting asset impairment would require that the asset be recorded at its fair value. The resulting fair value measurements of the assets are considered to fall within Level 3 of the fair value hierarchy. Recently Issued Accounting Standards Adopted in Fiscal 2019 In August 2017, the FASB issued guidance relating to the accounting for hedging activities. This guidance aims to better align an entity’s risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. The amendments in the guidance expand and refine hedge accounting for both non-financial and financial risk components and align the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. We adopted this guidance in the First Quarter 2019 . This adoption did not have a material impact on the Company’s consolidated financial statements. In February 2016, the FASB issued guidance relating to the accounting for leases. This guidance applies a right-of-use model that requires a lessee to record, for all leases with a lease term of more than 12 months, an asset representing its right to use the underlying asset for the lease term and a liability to make lease payments. The lease term is the noncancellable period of the lease, and includes both periods covered by an option to extend the lease, if the lessee is reasonably certain to exercise that option, and periods covered by an option to terminate the lease, if the lessee is reasonably certain not to exercise that termination option. We adopted this guidance in the First Quarter 2019 using the modified-retrospective method. Refer to Note 3, "Leases”, for additional information. To Be Adopted After Fiscal 2019 In August 2018, the FASB issued guidance related to the accounting for implementation costs incurred in a cloud computing arrangement that is a service contract. The guidance aims to align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software and hosting arrangements that include an internal-use software license. The guidance is effective for annual reporting periods, and interim periods within those years, beginning after December 15, 2019. We do not expect the guidance to have a material impact on our consolidated financial statements. In August 2018, the FASB issued guidance related to disclosure requirements for fair value measurement. The amendments modify current fair value measurement disclosure requirements by removing, adding, or modifying certain fair value measurement disclosures. The guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, and early adoption is permitted. We plan to adopt the new disclosure requirements on a prospective basis beginning in the year of adoption. We do not expect the guidance to have a material impact on our consolidated financial statements. |
REVENUES (Notes)
REVENUES (Notes) | 3 Months Ended |
May 04, 2019 | |
Revenues [Abstract] | |
Revenue from Contract with Customer [Text Block] | 2. REVENUES Revenues are recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. The following table presents our revenues disaggregated by geography: Thirteen Weeks Ended May 4, May 5, Net sales: (In thousands) South $ 147,064 $ 153,764 Northeast 97,903 105,878 West 61,994 66,605 Midwest 54,648 57,501 International and other 50,773 52,566 Total net sales $ 412,382 $ 436,314 The Company recognizes revenue, including shipping and handling fees billed to customers, upon purchase at the Company's retail stores or when received by the customer if the product was purchased via e-commerce, net of coupon redemptions and anticipated sales returns. The Company deferred approximately $5.1 million and $2.6 million as of May 4, 2019 and May 5, 2018 , respectively, based upon estimated time of delivery, at which point control passes to the customer, and is recorded in accrued expenses and other current liabilities. Sales tax collected from customers is excluded from revenue. For the sale of goods with a right of return, the Company recognizes revenue for the consideration it expects to be entitled to and calculates an allowance for estimated sales returns based upon the Company's sales return experience. Adjustments to the allowance for estimated sales returns in subsequent periods are generally not material based on historical data, thereby reducing the uncertainty inherent in such estimates. The allowance for estimated sales returns, which is recorded in accrued expenses and other current liabilities, was approximately $1.6 million and $1.3 million as of May 4, 2019 and May 5, 2018 , respectively. Our private label credit card is issued to our customers for use exclusively at The Children's Place stores and online at www.childrensplace.com , and credit is extended to such customers by a third-party financial institution on a non-recourse basis to us. The private label credit card includes multiple performance obligations, including marketing and promoting the program on behalf of the bank and the operation of the loyalty rewards program. Included in the agreement with the third-party financial institution was an upfront bonus paid to the Company. The upfront bonus is recognized as revenue and allocated between brand and reward obligations. As the license of the Company’s brand is the predominant item in the performance obligation, the amount allocated to the brand obligation is recognized on a straight-line basis over the initial term. The amount allocated to the reward obligation is recognized on a point-in-time basis as redemptions under the loyalty program occur. In measuring revenue and determining the consideration the Company is entitled to as part of a contract with a customer, the Company takes into account the related elements of variable consideration, such as additional bonuses, including profit-sharing, over the life of the program. Similar to the upfront bonus, the usage-based royalties and bonuses are recognized as revenue and allocated between the brand and reward obligations. The amount allocated to the brand obligation is recognized on a straight-line basis over the initial term. The amount allocated to the reward obligation is recognized on a point-in-time basis as redemptions under the loyalty program occur. In addition, the annual profit-sharing amount is estimated and recognized quarterly within an annual period when earned. The additional bonuses are amortized over the contract term based on anticipated progress against future targets and level of risk associated with achieving the targets. The Company deferred approximately $0.5 million as of May 4, 2019 in relation to its private label credit card performance obligations. The Company has a points-based customer loyalty program, in which customers earn points based on purchases and other promotional activities. These points can be redeemed for coupons to discount future purchases. A contract liability is estimated based on the standalone selling price of benefits earned by customers through the program and the related redemption experience under the program. The value of each point earned is recorded as deferred revenue and is included within accrued expenses and other current liabilities. The total contract liability related to this program was $3.8 million and $4.8 million as of May 4, 2019 and May 5, 2018 , respectively. The Company's policy with respect to gift cards is to record revenue as and when the gift cards are redeemed for merchandise. The Company recognizes gift card breakage income in proportion to the pattern of rights exercised by the customer when the Company expects to be entitled to breakage and the Company determines that it does not have a legal obligation to remit the value of the unredeemed gift card to the relevant jurisdiction as unclaimed or abandoned property and is recorded within net sales. Prior to their redemption, gift cards are recorded as a liability, included within accrued expenses and other current liabilities. The total contract liability related to gift cards issued was $17.0 million and $15.9 million as of May 4, 2019 and May 5, 2018 , respectively. The liability is estimated based on expected breakage that considers historical patterns of redemption. The following table provides the reconciliation of the contract liability related to gift cards: Contract Liability (In thousands) Balance at February 2, 2019 $ 17,867 Gift cards sold 7,139 Gift cards redeemed (7,142 ) Gift card breakage (831 ) Balance at May 4, 2019 $ 17,033 The Company has an international expansion program through territorial agreements with franchisees. The Company generates revenues from the franchisees from the sale of product and, in certain cases, sales royalties. The Company records net sales and cost of goods sold on the sale of product to franchisees when the franchisee takes ownership of the product. The Company records net sales for royalties when the applicable franchisee sells the product to their customers. Under certain agreements, the Company receives a fee from each franchisee for exclusive territorial rights. The Company records this territorial fee as deferred revenue and amortizes the fee into gross sales over the life of the territorial agreement. |
LEASES (Notes)
LEASES (Notes) | 3 Months Ended |
May 04, 2019 | |
Leases [Abstract] | |
Lessee, Operating Leases [Text Block] | 3. LEASES Adoption of ASC Topic 842, "Leases" On February 3, 2019, the Company adopted ASC Topic 842 "Leases" ("Topic 842") using the modified retrospective method. Results for reporting periods beginning in fiscal 2019 are presented under Topic 842, while prior period amounts are not adjusted and continue to be reported in accordance with ASC Topic 840" Leases" ("Topic 840"). On February 3, 2019, the Company recognized a cumulative-effect charge of $1.7 million, net of tax, to the opening balance of retained earnings, which represents the initial impairment of right-of-use assets related to retail locations. For operating leases, the lease liability is initially and subsequently measured at the present value of the unpaid lease payments at the lease commencement date. The right-of-use asset is initially and subsequently measured throughout the lease term at the carrying amount of the lease liability, plus initial direct costs, less any accrued lease payments and unamortized lease incentives. For finance leases, the right-of-use asset is initially measured at cost and subsequently amortized using the straight-line method generally from the lease commencement date to the earlier of the end of its useful life or the end of the lease term. The Company has elected the package of practical expedients permitted under the transition guidance within the new standard. Accordingly, we have adopted these practical expedients and did not reassess: (1) whether an expired or existing contract is a lease or contains an embedded lease; (2) lease classification of an expired or existing lease; (3) capitalization of initial direct costs for an expired or existing lease. The Company has made an accounting policy election by class of underlying asset to not apply the recognition requirements of Topic 842 to leases with an initial term of 12 months or less. Leases with an initial lease term of 12 months or less are not recorded on the balance sheet. The Company recognizes lease expense for these leases on a straight-line basis over the lease term. In certain leases, the Company has the right to exercise lease renewal options. Renewal option periods are included in the measurement of lease right-of-use assets and lease liabilities where the exercise is reasonably certain to occur. The Company has lease agreements with lease and non-lease components. The Company elected a policy to account for lease and non-lease components as a single component for all asset classes. The discount rate is the rate implicit in the lease unless that rate cannot be readily determined. In that case, the Company is required to use its incremental borrowing rate. The discount rate for a lease is determined based on the information available at the later of adoption of Topic 842 or at lease commencement. In general, the Company accounts for the underlying leased asset and applies a discount rate at the lease level. However, there are certain non-real estate leases for which the Company utilizes the portfolio method by aggregating similar leased assets based on the underlying lease term. As of May 4, 2019, the Company's finance leases were not material to the consolidated balance sheets, consolidated statements of operations, or consolidated statement of cash flows. We have certain lease agreements structured with both a fixed base rent and a contingent rent based on a percentage of sales over contractual levels, others with only contingent rent based on a percentage of sales and some with a fixed base rent adjusted periodically for inflation or changes in fair market value of the underlying real estate. Contingent rent is recognized as sales occur. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. We have operating leases for retail stores, corporate offices, distribution facilities, and certain equipment. Our leases have remaining lease terms of less than 1 year up to 10 years, some of which may include options to extend the leases for up to five years, and some of which may include options to early terminate the lease. The following components of lease expense are included in the Company's consolidated statement of operations: May 4, 2019 (in thousands) Operating lease cost $ 38,731 Variable lease cost 1 $ 15,937 Total lease cost $ 54,668 1 Includes short term leases with lease periods of less than 12 months. As of May 4, 2019, the weighted-average remaining operating lease term was 4.8 years and the weighted-average discount rate for operating leases was 5.0%. Cash paid for amounts included in the measurement of operating lease liabilities in the First Quarter 2019 was approximately $39.8 million. Right-of-use assets obtained in exchange for new operating lease liabilities was approximately $33.2 million. As of May 4, 2019, the maturities of lease liabilities were as follows: May 4, 2019 Operating Leases (in thousands) Remainder of 2019 $ 117,624 2020 133,783 2021 102,066 2022 70,062 2023 44,854 Thereafter 80,814 Total lease payments $ 549,203 Less: imputed interest $ (48,113 ) Present value of lease liabilities $ 501,090 Future minimum annual lease payments under the Company's operating leases at February 2, 2019 were as follows: Minimum Operating Lease Payments (In thousands) 2019 $ 143,601 2020 117,037 2021 86,788 2022 57,734 2023 32,218 Thereafter 50,263 Total minimum lease payments $ 487,641 |
INTANGIBLE ASSETS (Notes)
INTANGIBLE ASSETS (Notes) | 3 Months Ended |
May 04, 2019 | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Intangible Assets Disclosure [Text Block] | 4. INTANGIBLE ASSETS During the First Quarter 2019 , the Company acquired certain intellectual property and related assets (the “Gymboree Assets”) of Gymboree Group, Inc. and related entities, which included the worldwide rights to the names “Gymboree” and “Crazy 8” and other intellectual property, including trademarks, domain names, copyrights, and customer databases. These intangible assets, inclusive of acquisition costs, are recorded in the long-term assets section of the consolidated balance sheets. The Company's intangible assets were as follows: May 4, 2019 Useful life Gross amount Accumulated amortization Net amount (in thousands) Gymboree tradename (1) Indefinite $ 69,725 $ — $ 69,725 Crazy 8 tradename (1) 5 years 4,000 69 3,931 Customer databases (2) 3 years 3,000 83 2,917 Total intangibles, net $ 76,725 $ 152 $ 76,573 (1) Included within Tradenames, net in the consolidated balance sheets. (2) Included within Other assets in the consolidated balance sheets. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 3 Months Ended |
May 04, 2019 | |
Stockholders' Equity Note [Abstract] | |
STOCKHOLDERS' EQUITY | STOCKHOLDERS’ EQUITY Share Repurchase Programs The Company's Board of Directors has authorized the following share repurchase programs which were active during the First Quarter 2019 and First Quarter 2018 : (1) $250 million in March 2017 (the "2017 Share Repurchase Program") and (2) $250 million in March 2018 (the "2018 Share Repurchase Program"). The 2017 Share Repurchase Programs has been completed. At May 4, 2019 , there was approximately $206 million remaining on the 2018 Share Repurchase Program. Under these programs, the Company may repurchase shares in the open market at current market prices at the time of purchase or in privately negotiated transactions. The timing and actual number of shares repurchased under a program will depend on a variety of factors including price, corporate and regulatory requirements, and other market and business conditions. The Company may suspend or discontinue a program at any time, and may thereafter reinstitute purchases, all without prior announcement. Pursuant to the Company's practice, including due to restrictions imposed by the Company's insider trading policy during black-out periods, the Company withholds and surrenders shares of vesting stock awards and makes payments to taxing authorities as required by law to satisfy the withholding tax requirements of all equity award recipients. The Company's payment of the withholding taxes in exchange for the surrendered shares constitutes a purchase of its common stock. The Company also acquires shares of its common stock in conjunction with liabilities owed under the Company's Deferred Compensation Plan, which are held in treasury. The following table summarizes the Company's share repurchases: Thirteen Weeks Ended May 4, 2019 May 5, 2018 Shares Value Shares Value (In thousands) Shares repurchases related to: 2017 Share Repurchase Program (1) — $ — 1,034 $ 137,248 2018 Share Repurchase Program (2)(3) 344.3 $ 33,319 — $ — Shares acquired and held in treasury under Deferred Compensation Plan 0.7 $ 62 0.4 $ 62 (1) Inclusive of 0.3 million shares and $37.2 million in the First Quarter 2018 withheld to cover taxes in conjunction with the vesting of stock awards. (2) Inclusive of 0.2 million shares for approximately $15.3 million in the First Quarter 2019 withheld to cover taxes in conjunction with the vesting of stock awards. (3) Subsequent to May 4, 2019 and through May 27, 2019, the Company repurchased approximately 0.1 million shares for approximately $10.4 million, inclusive of 40 thousand shares for approximately $4.5 million withheld to cover taxes in conjunction with the vesting of stock awards. In accordance with the FASB ASC 505-- Equity , the par value of the shares retired is charged against common stock and the remaining purchase price is allocated between additional paid-in capital and retained earnings. The portion charged against additional paid-in capital is done using a pro-rata allocation based on total shares outstanding. Related to all shares retired during the First Quarter 2019 and the First Quarter 2018 , approximately $29.6 million and $37.2 million , respectively, were charged to retained earnings. Dividends The First Quarter 2019 dividend of $0.56 per share was paid on April 26, 2019 to shareholders of record on the close of business on April 15, 2019. During the First Quarter 2019 , $9.1 million was charged to retained earnings, of which $8.9 million related to cash dividends paid and $0.2 million related to dividend share equivalents on unvested Deferred Awards and Performance Awards. During the First Quarter 2018 , $8.8 million was charged to retained earnings, of which $8.4 million related to cash dividends paid and $0.4 million related to dividend share equivalents on unvested Deferred Awards and Performance Awards. The Company's Board of Directors declared a quarterly cash dividend of $0.56 per share to be paid June 28, 2019 to shareholders of record on the close of business on June 18, 2019. Future declarations of quarterly dividends and the establishment of future record and payment dates are subject to approval by the Company’s Board of Directors based on a number of factors, including business and market conditions, the Company’s future financial performance, and other investment priorities. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 3 Months Ended |
May 04, 2019 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION The following table summarizes the Company’s stock-based compensation expense: Thirteen Weeks Ended May 4, May 5, (In thousands) Deferred Awards $ 4,150 $ 3,813 Performance Awards 3,609 4,984 Total stock-based compensation expense (1) $ 7,759 $ 8,797 ____________________________________________ (1) During the First Quarter 2019 and the First Quarter 2018 , approximately $1.0 million and $1.0 million , respectively, were included within cost of sales. All other stock-based compensation is included in selling, general, and administrative expenses. The Company recognized a tax benefit related to stock-based compensation expense of approximately $2.1 million and $2.3 million during the First Quarter 2019 and the First Quarter 2018 , respectively. Changes in the Company’s Unvested Stock Awards during the First Quarter 2019 Deferred Awards Number of Shares Weighted Average Grant Date Fair Value (In thousands) Unvested Deferred Awards, beginning of period 299 $ 99.98 Granted 97 98.89 Vested (54 ) 117.34 Forfeited (6 ) 112.34 Unvested Deferred Awards, end of period 336 $ 96.66 Total unrecognized stock-based compensation expense related to unvested Deferred Awards approximated $22.2 million as of May 4, 2019 , which will be recognized over a weighted average period of approximately 1.5 years. Performance Awards Number of Shares (1) Weighted Average Grant Date Fair Value (In thousands) Unvested Performance Awards, beginning of period 352 $ 90.66 Shares earned in excess of target 181 75.83 Vested shares, including shares vested in excess of target (349 ) 75.83 Forfeited (1 ) 126.47 Unvested Performance Awards, end of period 183 $ 104.17 ____________________________________________ (1) For those awards in which the performance period is complete, the number of unvested shares is based on actual shares that will vest upon completion of the service period. For those awards in which the performance period is not yet complete, the number of unvested shares in the table above is based on the participants earning their Target Shares at 100% . However, the cumulative expense recognized reflects changes in estimated adjusted earnings per share, adjusted operating margin expansion, and adjusted return on invested capital as they occur. Total unrecognized stock-based compensation expense related to unvested Performance Awards approximated $6.1 million as of May 4, 2019 , which will be recognized over a weighted average period of approximately 1.2 years. |
NET INCOME (LOSS) PER COMMON SH
NET INCOME (LOSS) PER COMMON SHARE | 3 Months Ended |
May 04, 2019 | |
Earnings Per Share [Abstract] | |
NET INCOME (LOSS) PER COMMON SHARE | PER COMMON SHARE The following table reconciles net income and share amounts utilized to calculate basic and diluted earnings per common share: Thirteen Weeks Ended May 4, 2019 May 5, 2018 (In thousands) Net income $ 4,490 $ 31,537 Basic weighted average common shares 15,847 17,002 Dilutive effect of stock awards 260 732 Diluted weighted average common shares 16,107 17,734 |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 3 Months Ended |
May 04, 2019 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | PROPERTY AND EQUIPMENT Property and equipment, net consist of the following: May 4, 2019 February 2, 2019 May 5, 2018 (In thousands) Property and equipment: Land and land improvements $ 3,403 $ 3,403 $ 3,403 Building and improvements 35,568 35,568 35,548 Material handling equipment 51,934 51,934 50,102 Leasehold improvements 299,735 301,233 309,365 Store fixtures and equipment 270,755 273,430 265,770 Capitalized software 256,343 254,064 239,770 Construction in progress 20,568 14,823 20,980 938,306 934,455 924,938 Accumulated depreciation and amortization (688,470 ) (674,098 ) (664,176 ) Property and equipment, net $ 249,836 $ 260,357 $ 260,762 At May 4, 2019 , the Company performed impairment testing on 971 stores with a total net book value of approximately $72.0 million . During the First Quarter 2019 , the Company recorded asset impairment charges of $0.3 million primarily for five stores, all of which were fully impaired. At May 5, 2018 , the Company performed impairment testing on 1,002 stores with a total net book value of approximately $79.4 million . During the First Quarter 2018 , the Company recorded asset impairment charges of $0.3 million for two stores, both of which were fully impaired. |
CREDIT FACILITY
CREDIT FACILITY | 3 Months Ended |
May 04, 2019 | |
Debt Disclosure [Abstract] | |
CREDIT FACILITY | CREDIT FACILITY The Company and certain of its domestic subsidiaries maintain a credit agreement (the “Credit Agreement”) with Wells Fargo Bank, National Association (“Wells Fargo”), Bank of America, N.A., HSBC Business Credit (USA) Inc., and JPMorgan Chase Bank, N.A., as lenders (collectively, the “Lenders”) and Wells Fargo, as Administrative Agent, Collateral Agent and Swing Line Lender. The following discussion of the Company's Credit Agreement is as of May 4, 2019. See Note 14 " Subsequent Events " for information concerning an amendment to the Credit Agreement. The Credit Agreement consists of a $250 million asset based revolving credit facility, with a $50 million sublimit for standby and documentary letters of credit and an uncommitted accordion feature that could provide up to $50 million of additional availability. Revolving credit loans outstanding under the Credit Agreement bear interest, at the Company’s option, at: (i) the prime rate, plus a margin of 0.50% to 0.75% based on the amount of the Company’s average excess availability under the facility; or (ii) the London InterBank Offered Rate, or “LIBOR”, for an interest period of one, two, three, or six months, as selected by the Company, plus a margin of 1.25% to 1.50% based on the amount of the Company’s average excess availability under the facility. The Company is charged a fee of 0.25% on the unused portion of the commitments. Letter of credit fees range from 0.625% to 0.75% for commercial letters of credit and from 0.75% to 1.00% for standby letters of credit. Letter of credit fees are determined based on the amount of the Company's average excess availability under the facility. The amount available for loans and letters of credit under the Credit Agreement is determined by a borrowing base consisting of certain credit card receivables, certain trade and franchise receivables, certain inventory, and the fair market value of certain real estate, subject to certain reserves. The outstanding obligations under the Credit Agreement may be accelerated upon the occurrence of certain events, including, among others, non-payment, breach of covenants, the institution of insolvency proceedings, defaults under other material indebtedness and a change of control, subject, in the case of certain defaults, to the expiration of applicable grace periods. The Company is not subject to any early termination fees. The Credit Agreement contains covenants which include conditions on stock buybacks and the payment of cash dividends or similar payments. Credit extended under the Credit Agreement is secured by a first priority security interest in substantially all of the Company’s U.S. assets excluding intellectual property, software, equipment, and fixtures. The Company has capitalized an aggregate of approximately $4.3 million in deferred financing costs related to the Credit Agreement. The unamortized balance of deferred financing costs at May 4, 2019 was approximately $0.4 million . Unamortized deferred financing costs are amortized over the remaining term of the Credit Agreement. The table below presents the components of the Company’s credit facility: May 4, February 2, May 5, (In millions) Credit facility maximum $ 250.0 $ 250.0 $ 250.0 Borrowing base 250.0 250.0 250.0 Outstanding borrowings 153.1 48.9 46.8 Letters of credit outstanding—standby 6.3 7.0 7.0 Utilization of credit facility at end of period 159.4 55.9 53.8 Availability (1) $ 90.6 $ 194.1 $ 196.2 Interest rate at end of period 3.8 % 6.0 % 3.5 % First Quarter 2019 Fiscal 2018 First Quarter 2018 Average end of day loan balance during the period $ 141.8 $ 64.4 $ 38.8 Highest end of day loan balance during the period 196.8 156.4 151.6 Average interest rate 4.6 % 4.3 % 4.6 % ____________________________________________ (1) The sublimit availability for the letters of credit was $43.7 million , $43.0 million , and $43.0 million at May 4, 2019 , February 2, 2019 , and May 5, 2018 , respectively. |
LEGAL AND REGULATORY MATTERS
LEGAL AND REGULATORY MATTERS | 3 Months Ended |
May 04, 2019 | |
LEGAL AND REGULATORY MATTERS [Abstract] | |
Legal Matters and Contingencies [Text Block] | LEGAL AND REGULATORY MATTERS |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
May 04, 2019 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The Company computes income taxes using the liability method. This method requires recognition of deferred tax assets and liabilities, measured by enacted rates, attributable to temporary differences between the financial statement and income tax basis of assets and liabilities. The Company's deferred tax assets and liabilities are comprised largely of differences relating to depreciation and amortization, rent expense, inventory, stock-based compensation, and various accruals and reserves. The Company’s effective tax rate for the First Quarter 2019 was (35.0)% compared to (38.6)% during the First Quarter 2018 . The effective tax rate was higher during the First Quarter 2019 primarily as a result of a decrease in excess tax benefits related to the vesting of equity shares. The excess tax benefits decreased from approximately $14.2 million in the First Quarter 2018 to $2.1 million in the First Quarter 2019 . On December 22, 2017, the U.S. government passed the Tax Cuts and Jobs Act (“the Tax Act”), which required U.S. companies to pay a mandatory one-time transition tax on historical offshore earnings that have not been repatriated to the U.S. While the Company is no longer permanently reinvested to the extent earnings were subject to the transition tax under the Tax Act, no additional income taxes have been provided on any earnings subsequent to the transition or for any additional outside basis differences inherent in these entities, as these amounts continue to be permanently reinvested in foreign operations. Determining the amount of unrecognized deferred tax liability related to any additional outside basis differences in these entities (i.e., basis differences in excess of that subject to the one-time transition tax) is not practicable. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in provision for income taxes. The total amount of unrecognized tax benefits as of May 4, 2019 , February 2, 2019, and May 5, 2018 were $5.0 million , $5.0 million and $3.9 million , respectively, and is included within non-current liabilities. The Company recognized less than $0.1 million in each of the First Quarter 2019 and the First Quarter 2018 , respectively, of additional interest expense related to its unrecognized tax benefits. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in provision for income taxes. |
DERIVATIVE INSTRUMENTS (Notes)
DERIVATIVE INSTRUMENTS (Notes) | 3 Months Ended |
May 04, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments and Hedging Activities Disclosure [Text Block] | DERIVATIVE INSTRUMENTS The Company is exposed to gains and losses resulting from fluctuations in foreign currency exchange rates attributable to inventory purchases denominated in a foreign currency. Specifically, our Canadian subsidiary’s functional currency is the Canadian dollar, but purchases inventory from suppliers in U.S. dollars. In order to mitigate the variability of cash flows associated with certain of these forecasted inventory purchases, we enter into foreign exchange forward contracts. These contracts typically mature within 12 months. We do not use forward contracts to engage in currency speculation and we do not enter into derivative financial instruments for trading purposes. The Company accounts for all of its derivatives and hedging activity under FASB ASC 815-- Derivatives and Hedging . Under the Company’s risk management policy and in accordance with guidance under the topic, in order to qualify for hedge accounting treatment, a derivative must be considered highly effective at offsetting changes in either the hedged item’s cash flows or fair value. Additionally, the hedge relationship must be documented to include the risk management objective and strategy, the hedging instrument, the hedged item, the risk exposure, and how hedge effectiveness will be assessed prospectively and retrospectively. The Company formally measures effectiveness of its hedging relationships both at the hedge inception and on an ongoing basis. The Company would discontinue hedge accounting under a foreign exchange forward contract prospectively (i) if management determines that the derivative is no longer highly effective in offsetting changes in the cash flows of a hedged item, (ii) when the derivative expires or is terminated, (iii) if the forecasted transaction being hedged by the derivative is no longer probable of occurring, or (iv) if management determines that designation of the derivative as a hedge instrument is no longer appropriate. All derivative instruments are presented at gross fair value on the consolidated balance sheets within either prepaid expenses and other current assets or accrued expenses and other current liabilities. As of May 4, 2019 , the Company had foreign exchange forward contracts with an aggregate notional amount of $8.7 million and the fair value of the derivative instruments was an asset of $1.6 million . As these foreign exchange forward contracts are measured at fair value using observable market inputs such as forward rates, the Company's credit risk and our counterparties’ credit risks, they are classified within Level 2 of the valuation hierarchy. Cash settlements related to these forward contracts are recorded within cash flows from operating activities within the consolidated statements of cash flows. For derivative instruments that are designated and qualify as cash flow hedges, the effective portion of the gain or loss on the derivative is reported as a component of other comprehensive income (“OCI”) and reclassified into earnings within cost of sales (exclusive of depreciation and amortization) in the same period or periods during which the hedged transaction affects earnings. Gains and losses on the derivative representing hedge ineffectiveness are recognized in earnings within selling, general, and administrative expenses, consistent with where the Company records realized and unrealized foreign currency gains and losses on transactions in foreign denominated currencies. There were no losses related to hedge ineffectiveness during the First Quarter 2019 . Assuming May 4, 2019 exchange rates remain constant, $0.7 million of gains, net of tax, related to hedges of these transactions are expected to be reclassified from OCI into earnings over the next 12 months. Changes in fair value associated with derivatives that are not designated and qualified as cash flow hedges are recognized as earnings within selling, general, and administrative expenses. The Company enters into foreign exchange forward contracts with major banks and has risk exposure in the event of nonperformance by either party. However, based on our assessment, the Company believes that obligations under the contracts will be fully satisfied. Accordingly, there was no requirement to post collateral or other security to support the contracts as of May 4, 2019 . |
SEGMENT INFORMATION
SEGMENT INFORMATION | 3 Months Ended |
May 04, 2019 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | SEGMENT INFORMATION In accordance with FASB ASC 280--- Segment Reporting , the Company reports segment data based on geography: The Children’s Place U.S. and The Children’s Place International. Each segment includes an e-commerce business located at www.childrensplace.com . Included in The Children’s Place U.S. segment are the Company’s U.S. and Puerto Rico-based stores and revenue from the Company's U.S.-based wholesale business. Included in The Children's Place International segment are the Company's Canadian-based stores, revenue from the Company's Canadian wholesale business and revenue from international franchisees. The Company measures its segment profitability based on operating income, defined as income before interest and taxes. Net sales and direct costs are recorded by each segment. Certain inventory procurement functions such as production and design as well as corporate overhead, including executive management, finance, real estate, human resources, legal, and information technology services are managed by The Children’s Place U.S. segment. Expenses related to these functions, including depreciation and amortization, are allocated to The Children’s Place International segment based primarily on net sales. The assets related to these functions are not allocated. The Company periodically reviews these allocations and adjusts them based upon changes in business circumstances. Net sales to external customers are derived from merchandise sales and the Company has no major customers that account for more than 10% of its net sales. As of May 4, 2019 , The Children’s Place U.S. owned and operated 849 stores and The Children’s Place International owned and operated 122 stores. As of May 5, 2018 , The Children’s Place U.S. owned and operated 876 stores and The Children’s Place International owned and operated 126 stores. The following tables provide segment level financial information: Thirteen Weeks Ended May 4, May 5, (In thousands) Net sales: The Children’s Place U.S. $ 374,657 $ 395,779 The Children’s Place International (1) 37,725 40,535 Total net sales $ 412,382 $ 436,314 Operating income: The Children’s Place U.S. $ 4,161 $ 21,356 The Children’s Place International 877 1,702 Total operating income $ 5,038 $ 23,058 Operating income as a percent of net sales: The Children’s Place U.S. 1.1 % 5.4 % The Children’s Place International 2.3 % 4.2 % Total operating income 1.2 % 5.3 % Depreciation and amortization: The Children’s Place U.S. $ 16,709 $ 15,541 The Children’s Place International 1,875 1,865 Total depreciation and amortization $ 18,584 $ 17,406 Capital expenditures: The Children’s Place U.S. $ 10,800 $ 10,846 The Children’s Place International 209 219 Total capital expenditures $ 11,009 $ 11,065 ____________________________________________ (1) Net sales from The Children's Place International are primarily derived from revenues from Canadian operations. May 4, 2019 February 2, 2019 May 5, 2018 Total assets: (In thousands) The Children’s Place U.S. $ 1,183,611 $ 651,728 $ 732,815 The Children’s Place International 102,343 75,318 78,112 Total assets $ 1,285,954 $ 727,046 $ 810,927 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
May 04, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events [Text Block] | SUBSEQUENT EVENTS On May 9, 2019, the Company and certain of its domestic subsidiaries amended and restated its credit agreement with Wells Fargo Bank, National Association (“Wells Fargo”), Bank of America, N.A., HSBC Business Credit (USA) Inc., and JPMorgan Chase Bank, N.A., as lenders and Wells Fargo, as Administrative Agent, Collateral Agent and Swing Line Lender. The Credit Agreement, which now expires in May 2024, consists of a $325 million asset based revolving credit facility, with a $50 million sublimit for standby and documentary letters of credit. Subsequent to May 4, 2019 and through May 27, 2019, the Company repurchased approximately 0.1 million shares for approximately $10.4 million, inclusive of 40 thousand shares for approximately $4.5 million withheld to cover taxes in conjunction with the vesting of stock awards. The Company announced that its Board of Directors has declared a quarterly cash dividend of $0.56 per share to be paid on June 28, 2019 to shareholders of record on the close of business on June 18, 2019. |
BASIS OF PRESENTATION (Policies
BASIS OF PRESENTATION (Policies) | 3 Months Ended |
May 04, 2019 | |
Accounting Policies [Abstract] | |
Consolidation, Policy [Policy Text Block] | Consolidation The consolidated financial statements include the accounts of the Company and its wholly‑owned subsidiaries. Intercompany balances and transactions have been eliminated. FASB ASC 810-- Consolidation is considered when determining whether an entity is subject to consolidation. |
Fiscal Period, Policy [Policy Text Block] | Fiscal Year The Company's fiscal year is a 52-week or 53-week period ending on the Saturday on or nearest to January 31. |
Use of Estimates, Policy [Policy Text Block] | Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and amounts of revenues and expenses reported during the period. Actual results could differ from the assumptions used and estimates made by management, which could have a material impact on the Company's financial position or results of operations. Significant estimates inherent in the preparation of the consolidated financial statements include: reserves for the realizability of inventory; reserves for litigation and other contingencies; useful lives and impairments of long-lived assets; fair value measurements; accounting for income taxes and related uncertain tax positions; insurance reserves; valuation of stock-based compensation awards and related estimated forfeiture rates, among others. |
Inventory, Policy [Policy Text Block] | Inventories Inventories, which consist primarily of finished goods, are stated at the lower of cost or net realizable value, with cost determined on an average cost basis. The Company capitalizes certain supply chain costs in inventory, and these costs are reflected within cost of sales as the inventories are sold. Inventory shrinkage is estimated in interim periods based upon the historical results of physical inventory counts in the context of current year facts and circumstances. |
Impairment or Disposal of Long-Lived Assets, Policy [Policy Text Block] | Impairment of Long-Lived Assets The Company periodically reviews its long-lived assets when events indicate that their carrying value may not be recoverable. Such events include historical trends or projected trend of cash flow losses or a future expectation that the Company will sell or dispose of an asset significantly before the end of its previously estimated useful life. In reviewing for impairment, the Company groups its long-lived assets at the lowest possible level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. The Company reviews all stores that have reached comparable sales status, or sooner if circumstances should dictate, on at least an annual basis. The Company believes waiting this period of time allows a store to reach a maturity level where a more comprehensive analysis of financial performance can be performed. For each store that shows indications of operating losses, the Company projects future cash flows over the remaining life of the lease and compares the total undiscounted cash flows to the net book value of the related long-lived assets. If the undiscounted cash flows are less than the related net book value of the long-lived assets, they are written down to their fair market value. The Company primarily determines fair market value to be the discounted future cash flows directly associated with those assets. In evaluating future cash flows, the Company considers external and internal factors. External factors comprise the local environment in which the store resides, including mall traffic, competition and their effect on sales trends. Internal factors include the Company's ability to gauge the fashion taste of its customers, control variable costs such as cost of sales and payroll and, in certain cases, its ability to renegotiate lease costs. |
Stock-based Compensation | Stock-based Compensation The Company generally grants time vesting stock awards ("Deferred Awards") and performance-based stock awards ("Performance Awards") to employees at management levels. The Company also grants Deferred Awards to its non-employee directors. Deferred Awards are granted in the form of a defined number of restricted stock units that require each recipient to complete a service period. Deferred Awards generally vest ratably over three years, except for those granted to non-employee directors, which generally vest after one year. Performance Awards are granted in the form of restricted stock units which have performance criteria that must be achieved for the awards to vest (the "Target Shares") in addition to a service period requirement. For Performance Awards issued during fiscal 2016 and 2017 (the “2016 and 2017 Performance Awards”), an employee may earn from 0% to 200% of their Target Shares based on the achievement of cumulative adjusted earnings per share achieved for the three-year performance period, adjusted operating margin expansion achieved for the three-year performance period and adjusted return on invested capital ("adjusted ROIC") achieved as of the end of the performance period. The 2016 and 2017 Performance Awards cliff vest, if earned, after completion of the three-year performance period. The fair value of the 2016 and 2017 Performance Awards granted is based on the closing price of our common stock on the grant date. For Performance Awards issued during fiscal 2018 (the “2018 Performance Awards”), an employee may earn from 0% to 250% of their Target Shares based on cumulative adjusted earnings per share achieved for the three-year performance period, adjusted operating margin expansion achieved for the three-year performance period, adjusted ROIC achieved as of the end of the performance period and our adjusted ROIC relative to that of companies in our peer group as of the end of the performance period. The 2018 Performance Awards cliff vest, if earned, after completion of the three-year performance period. The fair value of the 2018 Performance Awards granted is based on the closing price of our common stock on the grant date. Stock-based compensation expense is recognized ratably over the related service period reduced for estimated forfeitures of those awards not expected to vest due to employee turnover. Stock-based compensation expense, as it relates to Performance Awards, is also adjusted based on the Company's estimate of adjusted earnings per share and adjusted operating margin expansion and adjusted return on invested capital and ranking of our adjusted return on investment capital relative to that of companies in our peer group as they occur. |
Deferred Compensation Plan | Deferred Compensation Plan The Company has a deferred compensation plan (the “Deferred Compensation Plan”), which is a nonqualified plan, for eligible senior level employees. Under the plan, participants may elect to defer up to 80% of his or her base salary and/or up to 100% of his or her bonus to be earned for the year following the year in which the deferral election is made. The Deferred Compensation Plan also permits members of the Board of Directors to elect to defer payment of all or a portion of their retainer and other fees to be earned for the year following the year in which a deferral election is made. In addition, eligible employees and directors of the Company may also elect to defer payment of any shares of Company stock that is earned with respect to stock-based awards. Directors may elect to have all or a certain portion of their fees earned for their service on the Board invested in shares of the Company’s common stock. Such elections are irrevocable. The Company is not required to contribute to the Deferred Compensation Plan, but at its sole discretion, can make additional contributions on behalf of the participants. Deferred amounts are not subject to forfeiture and are deemed invested among investment funds offered under the Deferred Compensation Plan, as directed by each participant. Payments of deferred amounts (as adjusted for earnings and losses) are payable following separation from service or at a date or dates elected by the participant at the time the deferral is elected. Payments of deferred amounts are generally made in either a lump sum or in annual installments over a period not exceeding 15 years. All deferred amounts are payable in the form in which they were made, except for board fees invested in shares of the Company's common stock, which will be settled in shares of Company common stock. Earlier distributions are not permitted except in the case of an unforeseen hardship. The Company has established a rabbi trust that serves as an investment to shadow the Deferred Compensation Plan liability. The assets of the rabbi trust are general assets of the Company and as such, would be subject to the claims of creditors in the event of bankruptcy or insolvency. Investments of the rabbi trust consist of mutual funds and Company common stock. The Deferred Compensation Plan liability, excluding Company common stock, is included within other long-term liabilities and changes in the balance, except those relating to payments, are recognized as compensation expense within selling, general, and administrative expenses. The value of the mutual funds is included in other assets and related earnings and losses are recognized as investment income or loss, which is included within selling, general, and administrative expenses. Company stock deferrals are included within the equity section of the Company’s consolidated balance sheet as treasury stock and as a deferred compensation liability. Deferred stock is recorded at fair market value at the time of deferral and any subsequent changes in fair market value are not recognized. |
Fair Value Measurement and Financial Instruments | Fair Value Measurement and Financial Instruments FASB ASC 820-- Fair Value Measurements and Disclosure provides a single definition of fair value, together with a framework for measuring it, and requires additional disclosure about the use of fair value to measure assets and liabilities. This topic defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and establishes a three-level hierarchy, which encourages an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of the hierarchy are defined as follows: • Level 1 - inputs to the valuation techniques that are quoted prices in active markets for identical assets or liabilities • Level 2 - inputs to the valuation techniques that are other than quoted prices but are observable for the assets or liabilities, either directly or indirectly • Level 3 - inputs to the valuation techniques that are unobservable for the assets or liabilities The Company’s cash and cash equivalents, assets of the Company’s Deferred Compensation Plan, accounts receivable, accounts payable, current lease liabilities, and revolving loan are all short-term in nature. As such, their carrying amounts approximate fair value and fall within Level 1 of the fair value hierarchy. The Company stock that is included in the Deferred Compensation Plan is not subject to fair value measurement. The Company's assets and liabilities include foreign exchange forward contracts that are measured at fair value using observable market inputs such as forward rates, the Company's credit risk, and our counterparties’ credit risks. Based on these inputs, the Company's derivative assets and liabilities are classified within Level 2 of the valuation hierarchy. The Company’s assets measured at fair value on a nonrecurring basis include long-lived assets, such as intangible assets, fixed assets, and right-of-use assets. The Company reviews the carrying amounts of such assets when events indicate that their carrying amounts may not be recoverable. Any resulting asset impairment would require that the asset be recorded at its fair value. The resulting fair value measurements of the assets are considered to fall within Level 3 of the fair value hierarchy. |
REVENUES (Tables)
REVENUES (Tables) | 3 Months Ended |
May 04, 2019 | |
Revenue from Contract with Customer [Text Block] | 2. REVENUES Revenues are recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. The following table presents our revenues disaggregated by geography: Thirteen Weeks Ended May 4, May 5, Net sales: (In thousands) South $ 147,064 $ 153,764 Northeast 97,903 105,878 West 61,994 66,605 Midwest 54,648 57,501 International and other 50,773 52,566 Total net sales $ 412,382 $ 436,314 The Company recognizes revenue, including shipping and handling fees billed to customers, upon purchase at the Company's retail stores or when received by the customer if the product was purchased via e-commerce, net of coupon redemptions and anticipated sales returns. The Company deferred approximately $5.1 million and $2.6 million as of May 4, 2019 and May 5, 2018 , respectively, based upon estimated time of delivery, at which point control passes to the customer, and is recorded in accrued expenses and other current liabilities. Sales tax collected from customers is excluded from revenue. For the sale of goods with a right of return, the Company recognizes revenue for the consideration it expects to be entitled to and calculates an allowance for estimated sales returns based upon the Company's sales return experience. Adjustments to the allowance for estimated sales returns in subsequent periods are generally not material based on historical data, thereby reducing the uncertainty inherent in such estimates. The allowance for estimated sales returns, which is recorded in accrued expenses and other current liabilities, was approximately $1.6 million and $1.3 million as of May 4, 2019 and May 5, 2018 , respectively. Our private label credit card is issued to our customers for use exclusively at The Children's Place stores and online at www.childrensplace.com , and credit is extended to such customers by a third-party financial institution on a non-recourse basis to us. The private label credit card includes multiple performance obligations, including marketing and promoting the program on behalf of the bank and the operation of the loyalty rewards program. Included in the agreement with the third-party financial institution was an upfront bonus paid to the Company. The upfront bonus is recognized as revenue and allocated between brand and reward obligations. As the license of the Company’s brand is the predominant item in the performance obligation, the amount allocated to the brand obligation is recognized on a straight-line basis over the initial term. The amount allocated to the reward obligation is recognized on a point-in-time basis as redemptions under the loyalty program occur. In measuring revenue and determining the consideration the Company is entitled to as part of a contract with a customer, the Company takes into account the related elements of variable consideration, such as additional bonuses, including profit-sharing, over the life of the program. Similar to the upfront bonus, the usage-based royalties and bonuses are recognized as revenue and allocated between the brand and reward obligations. The amount allocated to the brand obligation is recognized on a straight-line basis over the initial term. The amount allocated to the reward obligation is recognized on a point-in-time basis as redemptions under the loyalty program occur. In addition, the annual profit-sharing amount is estimated and recognized quarterly within an annual period when earned. The additional bonuses are amortized over the contract term based on anticipated progress against future targets and level of risk associated with achieving the targets. The Company deferred approximately $0.5 million as of May 4, 2019 in relation to its private label credit card performance obligations. The Company has a points-based customer loyalty program, in which customers earn points based on purchases and other promotional activities. These points can be redeemed for coupons to discount future purchases. A contract liability is estimated based on the standalone selling price of benefits earned by customers through the program and the related redemption experience under the program. The value of each point earned is recorded as deferred revenue and is included within accrued expenses and other current liabilities. The total contract liability related to this program was $3.8 million and $4.8 million as of May 4, 2019 and May 5, 2018 , respectively. The Company's policy with respect to gift cards is to record revenue as and when the gift cards are redeemed for merchandise. The Company recognizes gift card breakage income in proportion to the pattern of rights exercised by the customer when the Company expects to be entitled to breakage and the Company determines that it does not have a legal obligation to remit the value of the unredeemed gift card to the relevant jurisdiction as unclaimed or abandoned property and is recorded within net sales. Prior to their redemption, gift cards are recorded as a liability, included within accrued expenses and other current liabilities. The total contract liability related to gift cards issued was $17.0 million and $15.9 million as of May 4, 2019 and May 5, 2018 , respectively. The liability is estimated based on expected breakage that considers historical patterns of redemption. The following table provides the reconciliation of the contract liability related to gift cards: Contract Liability (In thousands) Balance at February 2, 2019 $ 17,867 Gift cards sold 7,139 Gift cards redeemed (7,142 ) Gift card breakage (831 ) Balance at May 4, 2019 $ 17,033 The Company has an international expansion program through territorial agreements with franchisees. The Company generates revenues from the franchisees from the sale of product and, in certain cases, sales royalties. The Company records net sales and cost of goods sold on the sale of product to franchisees when the franchisee takes ownership of the product. The Company records net sales for royalties when the applicable franchisee sells the product to their customers. Under certain agreements, the Company receives a fee from each franchisee for exclusive territorial rights. The Company records this territorial fee as deferred revenue and amortizes the fee into gross sales over the life of the territorial agreement. |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Table Text Block] | The following table provides the reconciliation of the contract liability related to gift cards: Contract Liability (In thousands) Balance at February 2, 2019 $ 17,867 Gift cards sold 7,139 Gift cards redeemed (7,142 ) Gift card breakage (831 ) Balance at May 4, 2019 $ 17,033 |
Disaggregation of Revenue [Table Text Block] | The following table presents our revenues disaggregated by geography: Thirteen Weeks Ended May 4, May 5, Net sales: (In thousands) South $ 147,064 $ 153,764 Northeast 97,903 105,878 West 61,994 66,605 Midwest 54,648 57,501 International and other 50,773 52,566 Total net sales $ 412,382 $ 436,314 |
STOCKHOLDERS' EQUITY Share Repu
STOCKHOLDERS' EQUITY Share Repurchase (Tables) | 3 Months Ended |
May 04, 2019 | |
Stockholders' Equity Attributable to Parent [Abstract] | |
Schedule of Repurchase Agreements [Table Text Block] | The following table summarizes the Company's share repurchases: Thirteen Weeks Ended May 4, 2019 May 5, 2018 Shares Value Shares Value (In thousands) Shares repurchases related to: 2017 Share Repurchase Program (1) — $ — 1,034 $ 137,248 2018 Share Repurchase Program (2)(3) 344.3 $ 33,319 — $ — Shares acquired and held in treasury under Deferred Compensation Plan 0.7 $ 62 0.4 $ 62 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 3 Months Ended |
May 04, 2019 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of stock-based compensation expense | Thirteen Weeks Ended May 4, May 5, (In thousands) Deferred Awards $ 4,150 $ 3,813 Performance Awards 3,609 4,984 Total stock-based compensation expense (1) $ 7,759 $ 8,797 |
Schedule of changes in unvested deferred awards | Number of Shares Weighted Average Grant Date Fair Value (In thousands) Unvested Deferred Awards, beginning of period 299 $ 99.98 Granted 97 98.89 Vested (54 ) 117.34 Forfeited (6 ) 112.34 Unvested Deferred Awards, end of period 336 $ 96.66 |
Schedule of unvested performance awards | Number of Shares (1) Weighted Average Grant Date Fair Value (In thousands) Unvested Performance Awards, beginning of period 352 $ 90.66 Shares earned in excess of target 181 75.83 Vested shares, including shares vested in excess of target (349 ) 75.83 Forfeited (1 ) 126.47 Unvested Performance Awards, end of period 183 $ 104.17 |
NET INCOME (LOSS) PER COMMON _2
NET INCOME (LOSS) PER COMMON SHARE (Tables) | 3 Months Ended |
May 04, 2019 | |
Earnings Per Share [Abstract] | |
Reconciles net income (loss) and share amounts utilized to calculate basic and diluted net income (loss) per common share | Thirteen Weeks Ended May 4, 2019 May 5, 2018 (In thousands) Net income $ 4,490 $ 31,537 Basic weighted average common shares 15,847 17,002 Dilutive effect of stock awards 260 732 Diluted weighted average common shares 16,107 17,734 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 3 Months Ended |
May 04, 2019 | |
Property, Plant and Equipment [Abstract] | |
Property and equipment | May 4, 2019 February 2, 2019 May 5, 2018 (In thousands) Property and equipment: Land and land improvements $ 3,403 $ 3,403 $ 3,403 Building and improvements 35,568 35,568 35,548 Material handling equipment 51,934 51,934 50,102 Leasehold improvements 299,735 301,233 309,365 Store fixtures and equipment 270,755 273,430 265,770 Capitalized software 256,343 254,064 239,770 Construction in progress 20,568 14,823 20,980 938,306 934,455 924,938 Accumulated depreciation and amortization (688,470 ) (674,098 ) (664,176 ) Property and equipment, net $ 249,836 $ 260,357 $ 260,762 |
CREDIT FACILITY (Tables)
CREDIT FACILITY (Tables) | 3 Months Ended |
May 04, 2019 | |
Debt Disclosure [Abstract] | |
Components of credit facility | May 4, February 2, May 5, (In millions) Credit facility maximum $ 250.0 $ 250.0 $ 250.0 Borrowing base 250.0 250.0 250.0 Outstanding borrowings 153.1 48.9 46.8 Letters of credit outstanding—standby 6.3 7.0 7.0 Utilization of credit facility at end of period 159.4 55.9 53.8 Availability (1) $ 90.6 $ 194.1 $ 196.2 Interest rate at end of period 3.8 % 6.0 % 3.5 % First Quarter 2019 Fiscal 2018 First Quarter 2018 Average end of day loan balance during the period $ 141.8 $ 64.4 $ 38.8 Highest end of day loan balance during the period 196.8 156.4 151.6 Average interest rate 4.6 % 4.3 % 4.6 % ____________________________________________ (1) The sublimit availability for the letters of credit was $43.7 million , $43.0 million , and $43.0 million at May 4, 2019 , February 2, 2019 , and May 5, 2018 , respectively. |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 3 Months Ended |
May 04, 2019 | |
Segment Reporting [Abstract] | |
Schedule of segment level financial information | Thirteen Weeks Ended May 4, May 5, (In thousands) Net sales: The Children’s Place U.S. $ 374,657 $ 395,779 The Children’s Place International (1) 37,725 40,535 Total net sales $ 412,382 $ 436,314 Operating income: The Children’s Place U.S. $ 4,161 $ 21,356 The Children’s Place International 877 1,702 Total operating income $ 5,038 $ 23,058 Operating income as a percent of net sales: The Children’s Place U.S. 1.1 % 5.4 % The Children’s Place International 2.3 % 4.2 % Total operating income 1.2 % 5.3 % Depreciation and amortization: The Children’s Place U.S. $ 16,709 $ 15,541 The Children’s Place International 1,875 1,865 Total depreciation and amortization $ 18,584 $ 17,406 Capital expenditures: The Children’s Place U.S. $ 10,800 $ 10,846 The Children’s Place International 209 219 Total capital expenditures $ 11,009 $ 11,065 ____________________________________________ (1) Net sales from The Children's Place International are primarily derived from revenues from Canadian operations. May 4, 2019 February 2, 2019 May 5, 2018 Total assets: (In thousands) The Children’s Place U.S. $ 1,183,611 $ 651,728 $ 732,815 The Children’s Place International 102,343 75,318 78,112 Total assets $ 1,285,954 $ 727,046 $ 810,927 |
BASIS OF PRESENTATION (Details)
BASIS OF PRESENTATION (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
May 04, 2019 | May 05, 2018 | Feb. 02, 2019 | |
Accounting Policies [Abstract] | |||
Vesting period (in years) | 1 year | 3 years | |
Deferred Compensation Plan | |||
Maximum percentage of base salary elected to be deferred (as a percent) | 80.00% | ||
Maximum percentage of bonus elected to be deferred (as a percent) | 100.00% | ||
Deferred compensation - Company stock | $ (2,747) | $ (2,498) | $ (2,685) |
REVENUES (Details)
REVENUES (Details) - USD ($) $ in Millions | May 04, 2019 | May 05, 2018 |
Deferred Revenue, Current | $ 5.1 | $ 2.6 |
Deferred Revenue | 1.6 | 1.3 |
Deferred Revenue and Credits, Current | 0.5 | |
Contract with Customer, Liability | 3.8 | 4.8 |
Gift Card Liability, Current | $ 17 | $ 15.9 |
STOCKHOLDERS' EQUITY (Details)
STOCKHOLDERS' EQUITY (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | ||
May 04, 2019 | May 05, 2018 | Feb. 02, 2019 | |
STOCKHOLDERS' EQUITY | |||
Allocated Share-based Compensation Expense | $ 7,759 | $ 8,797 | |
Treasury Stock, Shares, Acquired | 700 | 400 | |
Treasury Stock, Value, Acquired, Cost Method | $ 62 | $ 62 | |
Treasury Stock, Shares | 48,000 | 804,000 | 47,000 |
Treasury Stock, Value | $ 2,747 | $ 102,498 | $ 2,685 |
Common Stock, Dividends, Per Share, Cash Paid | $ 0.56 | $ 0.50 | |
2015 $250M Share Repurchase Program [Member] [Domain] [Domain] [Domain] | |||
STOCKHOLDERS' EQUITY | |||
Stock Repurchase Program, Remaining Authorized Repurchase Amount | $ 206,000 | ||
2015 $250M Share Repurchase Program [Member] [Domain] [Domain] [Member] | |||
STOCKHOLDERS' EQUITY | |||
Stock Repurchased and Retired During Period, Shares | 0 | 1,034,000 | |
Stock Repurchased and Retired During Period, Value | $ 0 | $ 137,248 | |
Retained Earnings [Member] | |||
STOCKHOLDERS' EQUITY | |||
Stock Repurchased and Retired During Period, Value | 29,600 | 37,200 | |
Dividends | 9,100 | 8,800 | |
Dividends, Common Stock, Cash | 8,900 | 8,400 | |
Dividendsunvestedshares | $ 200 | 400 | |
Dividends [Domain] | |||
STOCKHOLDERS' EQUITY | |||
Common Stock, Dividends, Per Share, Cash Paid | $ 0.56 | ||
Restricted Stock Units (RSUs) [Member] | |||
STOCKHOLDERS' EQUITY | |||
Allocated Share-based Compensation Expense | $ 4,150 | 3,813 | |
Performance Awards Member | |||
STOCKHOLDERS' EQUITY | |||
Allocated Share-based Compensation Expense | $ 3,609 | $ 4,984 |
STOCK-BASED COMPENSATION (Detai
STOCK-BASED COMPENSATION (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | ||
May 04, 2019 | May 05, 2018 | Feb. 02, 2019 | |
Stock-based compensation expense | |||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 1 year | 3 years | |
Total stock- based compensation expense | $ 7,759 | $ 8,797 | |
Tax benefit related to stock-based compensation | 2,100 | 2,300 | |
Cost of goods sold | |||
Stock-based compensation expense | |||
Total stock- based compensation expense | $ 1,000 | 1,000 | |
Performance Awards Member | |||
Stock-based compensation expense | |||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeited in Period | 1 | ||
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized | $ 6,100 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number | 183 | 352 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value | $ 104.17 | $ 90.66 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeitures, Weighted Average Grant Date Fair Value | $ 126.47 | ||
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized, Period for Recognition | 1 year 2 months 12 days | ||
Total stock- based compensation expense | $ 3,609 | $ 4,984 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period | 349 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period, Weighted Average Grant Date Fair Value | $ 75.83 | ||
Deferred and Restricted Stock (Deferred Awards) Member | |||
Stock-based compensation expense | |||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeited in Period | 6 | ||
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized | $ 22,200 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number | 336 | 299 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value | $ 96.66 | $ 99.98 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeitures, Weighted Average Grant Date Fair Value | $ 112.34 | ||
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized, Period for Recognition | 1 year 6 months 12 days | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 97 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value | $ 98.89 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period | 54 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period, Weighted Average Grant Date Fair Value | $ 117.34 |
STOCK-BASED COMPENSATION (Det_2
STOCK-BASED COMPENSATION (Details 2) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
May 04, 2019 | May 05, 2018 | |
Stock-based compensation | ||
Allocated Share-based Compensation Expense | $ 7,759 | $ 8,797 |
Vesting period (in years) | 1 year | 3 years |
Cost of Sales [Member] | ||
Stock-based compensation | ||
Allocated Share-based Compensation Expense | $ 1,000 | $ 1,000 |
Restricted Stock Units (RSUs) [Member] | ||
Stock-based compensation | ||
Allocated Share-based Compensation Expense | 4,150 | 3,813 |
Performance Awards Member | ||
Stock-based compensation | ||
Allocated Share-based Compensation Expense | $ 3,609 | $ 4,984 |
Percentage of Target Shares paid out if final operating income below threshold (as a percent) | 100.00% | |
Unvested awards at the beginning of the period (in shares) | 352 | |
Vested (in shares) | (349) | |
Forfeited (in shares) | (1) | |
Unvested awards at the end of the period (in shares) | 183 | |
Weighted Average Grant Date Fair Value | ||
Unvested awards at the beginning of the period (in dollars per share) | $ 90.66 | |
Vested (in dollars per share) | 75.83 | |
Forfeited (in dollars per share) | 126.47 | |
Unvested awards at the end of the period (in dollars per share) | $ 104.17 | |
Unrecognized costs and period of recognition | ||
Unrecognized stock-based compensation expense (in dollars) | $ 6,100 | |
Weighted average period for recognition of unrecognized stock-based compensation expense (in years) | 1 year 2 months 12 days |
NET INCOME (LOSS) PER COMMON _3
NET INCOME (LOSS) PER COMMON SHARE (Details) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
May 04, 2019 | May 05, 2018 | |
Basic and diluted net income per common share | ||
Net income | $ 4,490 | $ 31,537 |
Basic weighted average common shares (in shares) | 15,847 | 17,002 |
Dilutive effect of stock awards (in shares) | 260 | 732 |
Diluted weighted average common shares (in shares) | 16,107 | 17,734 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) | 3 Months Ended | ||
May 04, 2019USD ($) | May 05, 2018USD ($) | Feb. 02, 2019USD ($) | |
Property, Plant and Equipment [Line Items] | |||
netbookvalue | $ 72,000,000 | $ 79,400,000 | |
Impairment of Long-Lived Assets Held-for-use | $ 348,000 | 1,257,000 | |
Number of Underperforming Stores | 5 | ||
Property and equipment, gross | $ 938,306,000 | 924,938,000 | $ 934,455,000 |
Less accumulated depreciation and amortization | (688,470,000) | (664,176,000) | (674,098,000) |
Property and equipment, net | 249,836,000 | 260,762,000 | 260,357,000 |
Land and land improvements | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 3,403,000 | 3,403,000 | 3,403,000 |
Building and improvements | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 35,568,000 | 35,548,000 | 35,568,000 |
Material handling equipment | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 51,934,000 | 50,102,000 | 51,934,000 |
Leasehold improvements | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 299,735,000 | 309,365,000 | 301,233,000 |
Store fixtures and equipment | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 270,755,000 | 265,770,000 | 273,430,000 |
Capitalized software | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 256,343,000 | 239,770,000 | 254,064,000 |
Construction in progress | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | $ 20,568,000 | $ 20,980,000 | $ 14,823,000 |
Number of stores tested for impairment [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Number of Stores | 971 | 1,002 |
CREDIT FACILITY (Details)
CREDIT FACILITY (Details) - USD ($) | 3 Months Ended | |||
May 04, 2019 | May 05, 2018 | Apr. 29, 2017 | Feb. 02, 2019 | |
Credit facilities | ||||
Sublimit Availability | $ 43,700,000 | $ 43,000,000 | $ 43,000,000 | |
Line of credit facility, maximum borrowing capacity | 250,000,000 | 250,000,000 | 250,000,000 | |
Line of credit facility, current borrowing capacity | 250,000,000 | 250,000,000 | 250,000,000 | |
Outstanding borrowings | 153,100,000 | 46,800,000 | 48,900,000 | |
Utilization of credit facility at end of period | 159,400,000 | 53,800,000 | 55,900,000 | |
Availability | $ 90,600,000 | $ 196,200,000 | $ 194,100,000 | |
Interest rate at end of period (as a percent) | 3.80% | 3.50% | 6.00% | |
Average loan balance during the period | $ 141,800 | $ 0 | $ 64,400 | |
Highest end of day loan balance during the period | $ 196,800 | $ 151,600 | $ 156,400 | |
Average interest rate (as a percent) | 4.60% | 4.60% | 4.30% | |
Standby Letters of Credit | ||||
Credit facilities | ||||
Letters of credit outstanding | $ 6,300,000 | $ 7,000,000 | $ 7,000,000 | |
Credit Agreement | ||||
Credit facilities | ||||
Letters of Credit sublimit | 50,000,000 | |||
Borrowing capacity, accordion feature | $ 50,000,000 | |||
Line of credit facility, unused line fee percentage (as a percent) | 0.25% | |||
Deferred financing costs gross | $ 4,300,000 | |||
Deferred financing costs, remaining unamortized balance | 400,000 | |||
Line of credit facility, maximum borrowing capacity | $ 250,000,000 | |||
Credit Agreement | Prime rate | ||||
Credit facilities | ||||
Basis spread on variable rate, low end of range (as a percent) | 0.50% | |||
Basis spread on variable rate, high end of range (as a percent) | 0.75% | |||
Credit Agreement | LIBOR | ||||
Credit facilities | ||||
Basis spread on variable rate, low end of range (as a percent) | 1.25% | |||
Basis spread on variable rate, high end of range (as a percent) | 1.50% | |||
Debt Instrument, Description of Variable Rate Basis | one, two, three, or six | |||
Credit Agreement | Merchandise Letters of Credit | ||||
Credit facilities | ||||
Letters of credit facility fee, low end of range (as a percent) | 0.625% | |||
Letters of credit facility fee, high end of range (as a percent) | 0.75% | |||
Credit Agreement | Standby Letters of Credit | ||||
Credit facilities | ||||
Letters of credit facility fee, low end of range (as a percent) | 0.75% | |||
Letters of credit facility fee, high end of range (as a percent) | 1.00% |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
May 04, 2019 | May 05, 2018 | Feb. 02, 2019 | |
Income Tax Disclosure [Abstract] | |||
Effective tax rate from continuing operations (as a percent) | (38.60%) | ||
Liability for Uncertainty in Income Taxes, Noncurrent | $ 5,025 | $ 3,914 | $ 5,080 |
Unrecognized Tax Benefits, Income Tax Penalties and Interest Accrued | $ 100 |
DERIVATIVE INSTRUMENTS (Details
DERIVATIVE INSTRUMENTS (Details) $ in Millions | 3 Months Ended |
May 04, 2019USD ($) | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Asset, Notional Amount | $ 8.7 |
Derivative Asset, Fair Value, Gross Asset | 1.6 |
Other Comprehensive Income (Loss), Derivatives Qualifying as Hedges, Net of Tax | $ 0.7 |
SEGMENT INFORMATION (Details)
SEGMENT INFORMATION (Details) $ in Thousands | 3 Months Ended | ||
May 04, 2019USD ($) | May 05, 2018USD ($) | Feb. 02, 2019USD ($) | |
Segment Reporting [Abstract] | |||
Percentage of entity-wide sales qualifying purchaser as major customer (as a percent) | 10.00% | ||
Net sales: | |||
Total net sales | $ 412,382 | $ 436,314 | |
Gross Profit: | |||
Total gross profit | 151,976 | 160,192 | |
Operating income (loss): | |||
Total operating income (loss) | $ 5,038 | $ 23,058 | |
Operating income (loss) as a percent of net sales: | |||
Total operating income (loss) (as a percent) | 1.20% | 5.30% | |
Depreciation and amortization: | |||
Total depreciation and amortization | $ 18,584 | $ 17,406 | |
Capital expenditures: | |||
Total capital expenditures | 11,009 | 11,065 | |
Total assets: | |||
Total assets | 1,285,954 | 810,927 | $ 727,046 |
The Childrens Place US [Member] | |||
Net sales: | |||
Total net sales | 374,657 | 395,779 | |
Operating income (loss): | |||
Total operating income (loss) | $ 4,161 | $ 21,356 | |
Operating income (loss) as a percent of net sales: | |||
Total operating income (loss) (as a percent) | 1.10% | 5.40% | |
Depreciation and amortization: | |||
Total depreciation and amortization | $ 16,709 | $ 15,541 | |
Capital expenditures: | |||
Total capital expenditures | 10,800 | 10,846 | |
Total assets: | |||
Total assets | $ 1,183,611 | $ 732,815 | 651,728 |
Number of Stores | 849 | 876 | |
The Children's Place Canada [Member] | |||
Net sales: | |||
Total net sales | $ 37,725 | $ 40,535 | |
Operating income (loss): | |||
Total operating income (loss) | $ 877 | $ 1,702 | |
Operating income (loss) as a percent of net sales: | |||
Total operating income (loss) (as a percent) | 2.30% | 4.20% | |
Depreciation and amortization: | |||
Total depreciation and amortization | $ 1,875 | $ 1,865 | |
Capital expenditures: | |||
Total capital expenditures | 209 | 219 | |
Total assets: | |||
Total assets | $ 102,343 | $ 78,112 | $ 75,318 |
Number of Stores | 122 | 126 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - $ / shares | 3 Months Ended | |
May 04, 2019 | May 05, 2018 | |
Subsequent Events | ||
Common Stock, Dividends, Per Share, Cash Paid | $ 0.56 | $ 0.50 |