What to Note Ahead of Children's Place's (PLCE) Q3 Earnings
The Children's Place, Inc. PLCE is likely to witness a top-line decline and bottom-line growth when it reports third-quarter fiscal 2023 numbers on Nov 16.
The Zacks Consensus Estimate for revenues is pegged at $471.8 million, suggesting a decline of 7.3% from the prior-year reported figure.
The Zacks Consensus Estimate for quarterly earnings per share has been unchanged at $3.56 over the past 30 days. It suggests an increase of 6.9% from $3.33 reported in the year-ago period.
In the last reported quarter, the specialty apparel retailer’s bottom line surpassed the Zacks Consensus Estimate by 1.85%. However, it delivered a negative earnings surprise of 5%, on average, in the trailing four quarters.
The Children's Place, Inc. Price and EPS Surprise
The Children's Place, Inc. price-eps-surprise | The Children's Place, Inc. Quote
Key Factors to Note
The Children's Place’s focus on a superior product strategy to resonate well with customers, along with its omni-channel capabilities and fulfillment initiatives, might have played a vital role in revenue generation. Increased brand awareness, higher price realization and its focus on promotional activity are likely to have favorably impacted its third-quarter performance.
The company’s fleet optimization strategy and cost management actions are likely to have driven results in the quarter to be reported. Any decrease in occupancy costs owing to the fleet optimization strategy and favorable lease negotiations might have contributed to margin expansion in the quarter under review. For the fiscal third quarter, we expect its adjusted SG&A expenses of about $100.7 million, suggesting a decline of 4.4% year over year. Our model predicts its adjusted gross margin to expand 240 basis points year-over-year to 37.2%.
PLCE has been benefiting from the kickoff of its First-to-Market and Back-to-School digital marketing strategies and its on-trend product assortments. The company has one of the highest digital penetrations in the industry. Investments to upgrade its omni-channel capabilities as part of its Digital Transformation strategy are expected to have boosted its performance in the fiscal third quarter.
While the aforementioned factors raise optimism, we cannot ignore the challenging macroeconomic environment it has been facing. For instance, it has been experiencing soft consumer demand stemming from a high inflationary environment, which might have affected its fiscal third-quarter results.
The impacts of permanent store closures related to its fleet optimization strategy are also likely to have weighed on its top line. For the third quarter of fiscal 2023, management projected net sales between $470 million and $475 million, indicating a decrease of 7-8% from that reported in the prior-year quarter.
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for The 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.
The Children's Place currently sports a Zacks Rank #1 and has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
3 Stocks With the Favorable Combination
Here are three companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat in the upcoming release:
American Eagle Outfitters AEO has an Earnings ESP of +5.50% and currently flaunts a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The company is likely to register growth in the top and bottom lines when it reports third-quarter fiscal 2023 numbers. The consensus mark for AEO’s quarterly earnings has moved up by a penny to 47 cents per share in the past 30 days. The consensus estimate suggests 11.9% growth from the year-ago quarter’s reported number.
The Zacks Consensus Estimate for American Eagle’s quarterly revenues is pegged at $1.28 billion, which suggests growth of 2.8% from the figure reported in the prior-year quarter.
Abercrombie & Fitch Co. ANF has an Earnings ESP of +7.17% and carries a Zacks Rank #2. ANF’s earnings for the to-be-reported quarter are expected to increase significantly on a year-over-year basis. The consensus mark for its quarterly earnings has moved up by 1.9% to $1.09 per share in the past 30 days.
The Zacks Consensus Estimate for Abercrombie & Fitch’s quarterly revenues is pegged at $976.7 million, which suggests growth of 11% from the figure reported in the prior-year quarter.
The Gap, Inc. GPS has an Earnings ESP of +12.87% and has a Zacks Rank #3. GPS’ earnings for the to-be-reported quarter are expected to decline by 71.8%. The consensus mark for its quarterly earnings has moved up by 11.1% to 20 cents per share in the past 30 days.
The Zacks Consensus Estimate for Gap’s quarterly revenues is pegged at $3.6 billion, which suggests a fall of 10.5% from the figure reported in the prior-year quarter.
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Abercrombie & Fitch Company (ANF) : Free Stock Analysis Report
American Eagle Outfitters, Inc. (AEO) : Free Stock Analysis Report
The Gap, Inc. (GPS) : Free Stock Analysis Report
The Children's Place, Inc. (PLCE) : Free Stock Analysis Report
