Children's Place plunges 47% after missing guidance, company says it needs new funding
Children's Place (NASDAQ:PLCE) shares plunged more than 47% premarket Friday after the company's preliminary results for the fourth quarter disappointed investors.
The company said it expects net sales to be approximately $454 million to $456 million, below its own guidance range of $460 million to $465 million.
In addition, its adjusted operating loss for the quarter is expected to be in the range of -9%) to -8% of net sales, also lower than its guidance of adjusted operating income of approximately 2% to 3% of net sales.
PLCE said the adjusted operating loss reflects the impact of lower-than-expected merchandise margin resulting from more aggressive promotions, higher than anticipated split shipments to meet customer e-commerce demand and increased inventory valuation adjustments.
Furthermore, PLCE said it has been working to improve its liquidity position and strengthen its balance sheet and has been working with advisors, lenders, and potential lenders to obtain new financing necessary to support ongoing operations. PLCE is considering strategic alternatives in the event that it is unable to consummate new financing.
As of 08:17 am ET, PLCE shares are down 47.4% at $10.37 per share after closing Thursday's session at $19.75.
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