Children’s Place Inc.’s stock (PLCE) experienced a significant decline of 12.6% in premarket trading on Thursday following the retailer’s announcement that it will fall short of Wall Street’s fourth-quarter earnings estimate. The company reported third-quarter net income of $38.5 million, or $3.05 a share, marking a decrease from the year-ago quarter’s $42.9 million, or $3.26 a share.
Adjusted Profit Falls Below Expectations
Children’s Place fell short of the FactSet consensus estimate of $3.49 a share with an adjusted profit of $3.22 a share for the third quarter. Third-quarter sales also experienced a decline of 5.7%, reaching $480.2 million, which was slightly above the analyst’s estimation of $465.7 million.
Factors Contributing to Decline
Children’s Place attributed the decrease in sales to higher distribution and labor costs, as well as pressure on consumers. Despite reporting strong Back to School business, the company’s bottom line was adversely affected by increased expenses as well as their core customer segment, which “remains under significant pressure.”
Bleak Future Outlook
Looking ahead, Children’s Place expects fourth-quarter sales to range between $460 million and $465 million, surpassing the analyst estimate of $436.5 million. However, adjusted profit projections are far below expectations, with estimates ranging from 25 cents to 45 cents a share, compared to the anticipated $1.39 a share.
Children’s Place Inc. faces an array of challenges as it grapples with rising costs and an ongoing struggle to meet its earnings targets.