Earnings Turnaround Likely in Place for This Retailer

Children’s Place (PLCE) had its conference call today, following the company’s release yesterday of disappointing fourth-quarter sales and guidance for the January 2020 fiscal year.

I was reassured from the comments of CEO Jane Elfers on the call, and I believe the company will benefit from Gymboree closing down, as it eliminates a large competitor with 70% store overlap, while benefiting from the acquisition of Gymboree’s intellectual property. While yesterday we saw a 10% decline in the stock, PLCE hung in okay considering estimates for 2020 were lowered by close to 40%, which makes me believe investors will look past the tough first half of the year for PLCE and look forward to very likely improvement. With normal earnings per share (EPS) power of $8.50, I recommend purchase of PLCE below $85. My new target is $100.