With the exception of the high-end, specialty apparel retailing has been a difficult game for most of its corporate players. The Children's Place (NASDAQ:PLCE), though, has had slightly better luck. The company sells a variety of clothing, footwear, and accessories for newborn babies all the way up through ten year olds. Selling young children's clothes has some favorable economics, considering that an outfit for a newborn lasts a very short amount of time and children grow (and outgrow) relentlessly well past that 10-year mark. In The Children's Place's fourth quarter, sales were lower than the year-ago quarter due to extreme weather and continued economic tepidity. Investors should not focus on these elements, though; instead, look at the attractive international growth and online business that will keep long-term earnings on the up.

Results may vary
For the full year 2013, a very, very difficult one for retailers of all shapes and sizes, The Children's Place actually came in at the top end of its previously issued guidance. The company didn't grow sales compared to 2012 ($1.77 billion versus $1.78 billion on a constant currency, 52 week basis), and same-store sales declined 2.8%, but it wasn't anything that management or investors didn't expect.

On an adjusted basis, the bottom line came in a penny ahead of the prior year's $3.25 per share. Investors should note that the gain was due entirely to share reductions, as actual adjusted net income was about $4 million lower this year.

The fourth quarter showed similar downward trends in sales and earnings. One of the factors affecting the final quarter of the year was store closures. The Children's Place opened 8 new stores in the quarter, but closed 24. For the full year, the company opened 53 and closed 41 locations. The domestic market, while projected to grow a bit, is not the interesting part of the company. In the coming year, management expects to open a net of just 5 stores in North America.

The potential
Same-store sales weren't too appealing in the prior year, but it does appear to be largely a matter of macro-level events and not company-specific ones. Management is taking an interesting approach by putting very little into domestic expansion while simultaneously expanding its international locations at a rapid rate. The company plans to double its International locations to as many as 70.

Outside of that, management continues to push the ever-popular omni-channel strategy that puts a large emphasis on web-based sales and inventory management.

With more than 1,000 locations, the non-domestic business' tiny footprint allows for huge expansion potential.

The company is very well capitalized, with current assets handily covering total liabilities and allowing the company to pursue its strategy of returning cash to shareholders via buybacks (a debatable tactic) and a newly instated dividend.

At 12.8 times earnings, The Children's Place is appealingly valued. Clearly, the market wasn't much impressed with 2013 or the company's short-term prospects, but again these are heavily influenced by factors beyond the company's control. The fundamentals appear intact on this specialty apparel play.

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