The Children’s Place, Inc. PLCE recently issued another business update related to the coronovirus outbreak, including extension of its store closure plans. The company stated that it will prolong its store closure plan across the United States and Canada till further notice. Incidentally, Children’s Place had shut down all its stores across these regions effective Mar 18.
In the recent press release, management highlighted that store sales were expected to contribute nearly 65% to first-quarter fiscal 2020 revenues, with a major portion of sales coming in during the months of March and April. Nevertheless, Children’s Place informed shoppers that they can continue purchasing the company’s products online at www.childrensplace.com and www.gymboree.com. Quarter to date, the company’s digital demand was up by double digits when compared with the year-ago period’s levels.
We note that the coronavirus pandemic has infected more than 800,000 people worldwide and the death toll has crossed 40,000. Retailers have been facing the brunt of the alarming spread of the novel coronavirus. The retail sector is under major pressure with companies shutting stores, limiting store hours and withdrawing their guidance. In fact, companies are bound to keep stores shut for extended durations as the situation keeps getting worse with each day.
Well, other companies like Kohl's Corporation KSS, Nordstrom, Inc. JWN and Guess?, Inc. GES have taken similar steps to extend their store closure plans and contain the further spread of the deadly coronavirus.
Meanwhile, Children’s Place has temporarily furloughed all the United States and Canada field management and store associates effective April 5. Moreover, the company will undertake pay reduction for majority of its corporate staff. Nevertheless, management stated that they will continue to support furloughed associates by providing then with health benefits.
Further, the company is on track with reducing its expenses and capital expenditure during the coronavirus crisis. Also, Children’s Place is planning to draw down from its revolving credit facility in an attempt to provide added $50 million liquidity amid the current situation. Further, the company temporarily suspended its capital return program that includes share repurchases and dividends. Management in its last earnings call stated that it has deferred the guidance for fiscal 2020 in the wake of the prevailing uncertainty surrounding the coronavirus outbreak.
We note that shares of this Zacks Rank #5 (Strong Sell) company have slumped 72.6% in the past three months compared with the industry’s decline of 50.8%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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