NEW YORK (
(PLCE - Get Report)
spiked more than 9% early Thursday after the children's apparel retailer raised its fiscal-year guidance despite disappointing earnings.
Children's Place said net income fell 22% in the 13-week quarter to $19.3 million, or 83 cents a share. Net sales dropped 3.5% to $423.2 million. Comparable-retail sales declined 5.5%, the company said.
Analysts expected Children's Place to earn 61 cents a share on revenue of $416.6 million.
Gross profit fell 8.6% to $163.3 million, due to the "deleveraging of fixed expenses on negative comparable retail sales and higher supply chain costs as the company invested in its sourcing capabilities."
Still the company, which closed the quarter with 1,111 stores, was able to pull off the earnings beat as a result of its expense management. Selling, general and administrative expenses declined 2.7% to $119 million during the quarter. Adjusted SG&A declined 0.9% to $118.5 million, the retailer said.
Shares of the Secaucus, N.J.-based company were up as much as 9.4% shortly after the markets opened. The stock retreated somewhat but was still rising 4% to $53.52 at last check.
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"After a difficult start to the quarter, April sales improved significantly with the return of more seasonable weather. Our expenses throughout the quarter were well-controlled. We exceeded our earnings forecast for the first quarter and we are raising guidance for the year to reflect these improved results," President and CEO Jane Elfers said. "Customer response to our summer line has been positive, and we are well-positioned in key categories for back-to-school and holiday selling."
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Children's Place raised its full-year earnings guidance and now projects fiscal 2013 adjusted earnings per share between $3.05 and $3.20, with flat to slightly negative comparable-store sales. The company had previously expected full-year earnings between $2.90 and $3.10 a share, with "negative low-single digit comparable retail sales."