Children's Place Pounded Again

Shares tumble after the retailer slashes guidance for the second time in two months.
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Children's Place (PLCE) - Get Report can't seem to find its way.

Shares plunged 15% early Tuesday after the kids' clothing retailer slashed its profit targets amid sales declines and heavy markdowns. The new outlook comes just over a month after Children's Place had

already cut its guidance for the year.

Children's Place said Tuesday that its September same-store sales, or sales at stores open at least a year, slid 3%. Same-store sales dropped 2% at its namesake chain, and they tumbled 6% at Disney Store, which Children's Place operates under a licensing agreement with

Walt Disney

(DIS) - Get Report

.

With the sales slide, and weaker margins tied to markdowns, the company now expects third-quarter earnings to be at least 60% below its prior forecast of 94 cents to $1.02 a share.

The projection includes a charge of 7 cents a share tied to severance payments to former CEO Ezra Dabah, who was ousted last month.

For the year, Children's Place expects earnings will be "significantly below" its prior forecast of $2.25 to $2.40 a share, which was given in August.

Analysts polled by Thomson Financial had forecast earnings of 97 cents a share for the third quarter and $2.29 a share for the year.

"Our results primarily reflect inventory levels at both brands that are higher than we would like given current sales trends, particularly at The Children's Place brand," said Interim CEO Chuck Crovitz. "As a result, we had to take a substantial amount of unplanned markdowns during September, resulting in merchandise margins well below our plans. At this time, we believe these trends are likely to continue through the remainder of the year.''

The company said it is re-evaluating its inventory strategy, and "steps are being taken" to reduce inventory levels when possible. It likely will take several quarters, though, to make adjustments to the extent they are necessary, Children's Place said.

Shares recently were down $3.75 to $20.57, falling well below the 52-week low of $23.86 hit on Sept. 26. At the current levels, the stock is down 67% since the beginning of the year.