Children's Place Pummeled

Shares of Children's Place (PLCE Quote) were tumbling early Thursday after the kids' clothing retailer cut its profit outlook and warned of troubles with its licensing pact with Disney(DIS Quote).

For the second quarter ended Aug. 4, Children's Place recorded a loss of $27.1 million. The company didn't give per-share results, saying that because its results are preliminary and yet to be filed with the Securities and Exchange Commission, it won't provide the full figures.

Sales rose 7% to $424.3 million. Same-store sales, or sales at stores open at least a year, slipped 1%.

Children's Place had warned during the quarter that it had to take more markdowns than expected, weighing on margins, amid merchandise missteps and declining mall traffic. The company had projected a loss of 94 cents to 98 cents a share for the period.

For the year, Children's Place forecast earnings of $2.25 to $2.40 a share, well below its May projection of $3.45 to $3.55. Analysts surveyed by Thomson Financial had an average estimate for earnings of $2.83 a share.

"We remain cautiously optimistic regarding the second half and are pleased with month-to-date sales trends," said CEO Ezra Dabah in a press release. "However, in view of the sales and margin trends we have experienced through the first half, we believe it's best to take a conservative view for the remainder of the year.''