Children's Place on the Razor's Edge in Scooter Patent Case

The popular item accounted for nearly all of recent same-store sales gains.
Author:
Publish date:

For

Children's Place

(PLCE) - Get Report

, holiday scooter sales have hit a speedbump.

Razor U.S.A.

, which distributes the namesake scooters, this week won a temporary restraining order barring 12 companies from making or selling what Razor claims are patent-infringing knockoffs. A hearing will be held Dec. 4.

No Kidding
Children's Place shares over a year

That may be tough on Children's Place, which sells kids' clothes but also has seen a big sales and earnings boost from its

Yaak

scooter -- one of the models Razor claims infringes on a patent covering its scooter's brake mechanism.

During the fiscal third quarter, Yaak boosted Children's Place sales by $8 million and accounted for nearly all of the company's 5% increase in same-store sales. It contributed 3 cents of the company's 63 cents in per-share earnings during the quarter. At the time of its third-quarter earnings, though, the company said the scooter's share of fourth-quarter sales would fall from the 5% it accounted for in the third quarter.

"We're very disappointed with the court's ruling," said Seth Udasin, CFO of Children's Place, in a voice mail message. "We believe the judge is legally and factually incorrect." He said the company would immediately appeal. As of late morning, Children's Place hadn't removed the item from its Web site.

Udasin said it was premature to comment on the sales and earnings impact for the fourth quarter until the legal issues were resolved.