If The Children's Place Retail Stores had a grandma, she'd proclaim, "My, how fast you've grown!" The rapidly-growing chain is the largest pure-play children's specialty apparel retail in North America (ahead of Gymboree). It operates about 925 Children's Place stores, primarily in malls and outlet centers throughout the US and more than 120 stores in Canada. It also sells apparel online. The Children's Place outfits children from newborn to 12 years old in its own brand of value-priced apparel, shoes, and accessories, most of which is produced by manufacturers in China (39%), followed by Vietnam, Cambodia, and Africa. The Children's Place Retail Stores was founded in 1988.
Since entering Canada in 2003, The Children's Place has grown to more than 120 stores in nine provinces. Canada accounted for 13% of the retailer's total sales in fiscal 2012 (ends January), or about $226 million.
Sales & Marketing
The children's retailer spent approximately $37.4 million on advertising in fiscal 2012, compared with $36.6 million and $46 million in 2011 and 2010, respectively. The company targets its best customers with direct mail to build its brand and loyalty.
While the retailer's stores count is growing quickly, sales and profit growth have failed to keep pace. Sales at The Children's Place stores increased 2.5% in fiscal 2012 (ends January) vs. the prior year, while net income declined for the second year in a row. The modest sales gain was driven by the addition of new stores, as same-store sales declined by 2.5%. The newborn apparel category turned in the weakest performance, while accessories fared better. E-commerce sales rose more than 20%. The US outperformed Canada with sales up nearly 3% and 1%, respectively.
Under the leadership of CEO Jane Elfers, who joined The Children's Place in 2010, the company has accelerated new store openings, which had slowed as the economy foundered and the company was distracted by a proxy battle with its former chairman and the disposal of its Disney Stores business. Indeed, The Children's Place plans to add about 60 stores in fiscal 2013. About half the news shops will be situated in Value Oriented Centers (VOCs), which are shopping centers anchored by a discount retailer. (VOCs are attractive due to lower lease costs.)
The company will also continue to invest in its fast-growing its online business (about 10% of fiscal 2012 sales, up from 7% in 2010), and sharpen its marketing message. The company's new tagline -- "Big Fashion, Little Prices" -- stresses its value-priced, high-quality, high-fashion offering. In late 2010 the company began shipping to international destinations from its US-based e-commerce site.
In the first half of fiscal 2013, same-store sales increased by about 1%, gaining momentum in the second quarter. While it's premature to declare a turnaround, the company appears to be making progress on key initiatives, including improving its merchandise to spur sales, and more tightly controlling inventory to reduce mark-downs. Still, rapid store growth and higher product costs and increasing the company's expenses.
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