What happened
Shares of The Children's Place (PLCE -4.88%) popped as much as 11% Thursday morning after the company reported fiscal third-quarter earnings. The results topped analyst expectations, but management warned of challenges ahead. As of 12:45 p.m. EST, the stock was up 6%.
So what
Revenue in the third quarter came in at $425.6 million, topping the consensus estimate of $392.1 million. That resulted in adjusted net income of $21.1 million, or $1.44 per share, which was also well ahead of the $0.46 per share in adjusted profits that Wall Street analysts were modeling for.
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The specialty childrens apparel retailer said that 99% of its stores were open as of the end of October. Digital sales have increased and now represent 55% of total sales as consumers shift purchasing patterns to online channels.
Now what
The Children's Place did not provide specific financial guidance for the fourth quarter due to ongoing uncertainties related to the COVID-19 pandemic, but the company offered some qualitative commentary around market conditions.
"We are approaching the fourth quarter with heightened caution and expect both sales and profitability to be under pressure due to the numerous headwinds created by the pandemic, specifically: the reduced demand for dress-up product, significantly reduced store traffic, recent nationwide spikes in COVID-19 cases resulting in additional temporary store closures, social distancing requirements, and reduced mall operating hours," CEO Jane Elfers said in a statement. "In addition, the capacity constraints across the domestic transportation network resulting from the unprecedented level of expected online demand and the related freight surcharges imposed by our major carriers will put additional pressure on sales and margins during Q4."
