The Children's Place Expected To Bounce Back After Tough 3Q

Goldman Sachs has raised estimates on The Children's Place PLCE despite a tough 3Q for PLCE. PLCE's 3Q EPS were $1.14 which were slightly above estimates but comp retail sales were -5.7% vs. the pre-announced comps negative mid-single digits. Unseasonably warm weather and fashion misses were attributed to the miss. Goldman Sachs writes, "While we expect some merchandise issues to trickle into 4Q, we view 3Q as a low point for PLCE and expect a sequential improvement starting for Holiday. (1) Management's tone on recent business is more positive: PLCE commented that November sales trends had improved vs. October and that new Holiday merchandise was gaining traction with consumers in a broad range of categories. (2) New management was able to impact assortments for 4Q: 3Q was largely designed and bought before Ms. Elfers was hired as CEO. Starting mid-December (early spring deliveries). Ms. Elfers was able to impact design and merchandising and more aggressively reduce buys of items that typically do not sell well in 4Q." PLCE closed Thursday at $48.32.