Shares of children's apparel retailer Children's Place (NASDAQ:PLCE) were down in morning trading because, it seems, its 7% December same-store sales increase was below Street estimates. The underlying trends behind that "disappointment" nevertheless are the icing on a pretty good 2003 cake for the comeback retailer.

The biggest story at Children's Place is its ability to stock the right merchandise -- stuff that doesn't require markdowns when the season's over in order to clear out inventory. This trend has helped gross margins and is expected to lead to solid earnings gains. This is the same dynamic that's helped the company all year. (We examined it a bit more closely in an October article.)

What's more, it doesn't appear that this has been done in a slam-dunk environment for kids' apparel. We covered Toys "R" Us (NYSE:TOY) and its decision to shutter the Kids "R" Us chain in November, while Gymboree (NASDAQ:GYMB) has had some trouble lately -- though December was better.

(Sales figures for Gap (NYSE:GPS) Kids weren't broken out in today's announcement. Neither were figures for Abercrombie & Fitch's (NYSE:ANF) abercrombie chain, which saw a mid-single digit same-store sales decline for the nine months ended Nov. 1.)

Children's Place is now looking to grow aggressively and is testing new markets -- the company's currently targeting Puerto Rico. With its products selling well and a return to earnings growth promising solid cash flows, it seems like a good move with the competition vulnerable.

Where do you shop for your kids' clothing? Talk it over on our Children's Place discussion board.

Dave Marino-Nachison can be reached at