Flexibility And Digital Strengths Propel Children's Place In A Rationalizing Childrenswear Space, Analyst Highlights

Telsey Advisory Group analyst Dana Telsey reiterated a Market Perform rating on the shares of Children’s Place Inc PLCE with a price target of $22.

While discounters are seeing stronger growth than some retail peers currently, PLCE finds that Millennial moms ultimately seek the convenience of omni-channel capabilities for childrenswear as compared to the brick-and-mortar only, treasure hunt experience of discounters, the analyst noted.

The analyst believes that from a sales perspective, the third and fourth quarter trends are expected to accelerate from the first half of the year.

As the company’s most profitable business management continues to invest in its digital channel and capabilities, added the analyst.

Near-term, macro and inflationary pressures are expected to continue to weigh on performances, said the analyst, while the back half of the year can benefit from more normalized supply chain costs and cotton prices.

The analyst thinks PLCE should continue to benefit from the flexibility built into its operating model, with a leaner, more productive store footprint and improved digital capabilities within a rationalizing childrenswear space and a growing business.

Meanwhile, the impact of near-term macro headwinds clouds the visibility to overall improvement in the business.

Price Action: PLCE shares are trading higher by 6.68% at $19.49 on the last check Tuesday.