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Likely Coronavirus Impact on Children's Place (PLCE) Q1 Earnings

Zacks Equity Research

We expect The Children's Place, Inc. PLCE to see a year-over-year decline in its top and bottom lines when it reports first-quarter fiscal 2020 numbers. The Zacks Consensus Estimate for first-quarter loss is pegged at 81 cents, suggesting deterioration from earnings of 36 cents reported in the same quarter a year ago. For revenues, the consensus mark stands at $314.2 million, indicating a decline of 23.8% from the year-ago quarter’s tally.

However, the company has a trailing four-quarter positive earnings surprise of 50.9%, on average.

The Childrens Place Inc Price and EPS Surprise

The Childrens Place Inc Price and EPS Surprise

The Childrens Place Inc price-eps-surprise | The Childrens Place Inc Quote

Key Factors

We expect the company’s fiscal first-quarter performance to have borne the brunt of COVID-19. Management had earlier predicted that store sales will likely contribute nearly 65% of first-quarter fiscal 2020 revenues, with a major portion of sales coming in the months of March and April. During its last earnings call, management cited that the company saw low single-digit growth in comparable sales for the first five weeks of first-quarter fiscal 2020.

However, post that, the impact of the pandemic increased. Consequently, Children’s Place shut down all stores across the United States and Canada effective Mar 18. The extended store closures are likely to have marred the contribution from store sales. Moreover, stiff competition remains a concern.

Nevertheless, Children’s Place’s e-commerce business has been robust and is likely to offset the downside to a certain extent. Management informed shoppers that they can continue making online purchases at www.childrensplace.com and www.gymboree.com. Initiatives like alternate channels of distribution and digital transformation also appear encouraging.

What the Zacks Model Says

Our proven model doesn’t conclusively predict an earnings beat for Children's Place this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Children's Place carries a Zacks Rank #4 (Sell) and Earnings ESP of 0.00%.

Stocks with Favorable Combinations

Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat.

Kroger KR has an Earnings ESP of +8.48% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Dollar General DG has an Earnings ESP of +1.25% and a Zacks Rank #2.

Lowe's Companies LOW has an Earnings ESP of +4.06% and a Zacks Rank #3.

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