The Children's Place Announces Preliminary Unaudited Results for the Fourth Quarter 2022

SECAUCUS, N.J., Feb. 06, 2023 (GLOBE NEWSWIRE) -- The Children’s Place, Inc. (Nasdaq: PLCE), the largest pure-play children’s specialty apparel retailer in North America, today announced preliminary unaudited results for the fourth quarter of 2022.

Jane Elfers, President and Chief Executive Officer, said “We now expect to report a net loss in the range of ($52) million to ($57) million for the fourth quarter. This net loss was primarily due to a deterioration in gross margin for reasons not expected when we provided prior guidance, particularly a macro-economic environment in the fourth quarter that proved to be far more challenging for our core customers than we originally anticipated. As a result of this challenging environment and significantly higher input costs, including decade-high cotton costs and other supply chain costs, the Company made several forward-looking strategic decisions regarding the level and composition of its inventory, which negatively impacted short-term margins but significantly reduced higher cost, end-of-season merchandise, putting us in a much healthier inventory position as we enter 2023.” 

Ms. Elfers continued, “Our 2022 operating results were negatively impacted by approximately $125 million versus 2021 due to three input costs: first, an approximate $65 million incremental impact to our 2022 operating results due to the spike in cotton prices, our largest product input cost; second, an approximate $30 million incremental impact to our 2022 operating results due to having to utilize airfreight amidst the worldwide supply chain delays caused by the COVID-19 pandemic; and third, an approximate $30 million incremental impact to our 2022 operating results from the spike in  container costs, also due to the COVID-19 pandemic. As we enter 2023, cotton prices are down approximately 40% from their 2022 highs and are expected to continue to decline in 2023, container costs are now approaching pre-pandemic rates, and we have effectively eliminated the use of air freight in 2023 as the worldwide supply chain moves back in line with historical norms. While we still need to work through inventory in the front half of 2023 that has these higher input costs embedded in it, beginning in the back half of 2023, the combined impact of these three input cost reductions is expected to result in an annualized benefit to our operating results of more than $100 million.”