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Factors to Know Ahead of Children's Place (PLCE) Q3 Earnings

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The Children's Place, Inc. (PLCE - Free Report) is likely to register a decline in the top line when it reports third-quarter fiscal 2020 numbers on Nov 19, before the market opens. The Zacks Consensus Estimate for revenues is pegged at $405.9 million, suggesting a decline of 22.7% from the prior-year reported figure.

The Zacks Consensus Estimate for earnings for the quarter under review has increased by a couple of cents to 59 cents over the past 30 days. The current Zacks Consensus Estimate indicates that the company is likely to swing back to profit following a loss in the last-reported quarter. However, the consensus estimate indicates a sharp decline from earnings of $3.03 reported in the year-ago quarter.

Notably, this pure-play children’s specialty apparel retailer has a trailing four-quarter earnings surprise of 2.2%, on average. In the last reported quarter, the company posted wider-than-expected loss.

Key Factors to Note

On its last earnings call, management highlighted that the company’s back-to-school season sales have been impacted as majority of schools adopted remote or hybrid learning models due to the COVID-19 outbreak. The company informed that approximately 70% of third-quarter sales are normally generated in the months of August and September, with the majority of those sales coming from back-to-school apparel and accessories. This is likely to get reflected in the company’s third-quarter top line.

Management had further added that permanent closures of 147 stores, temporary closure of more than 50 stores in California and New York due to state and local mandates, and restrictions in operating hours for mall-based stores have been weighing on sales. Also, the impact of soft store traffic and a highly promotional backdrop cannot be ignored.

As a result of aforementioned factors, Children's Place guided net sales decline of 25-30% for the third quarter.

Nonetheless, the company remains committed to address the challenges related to the pandemic. In this respect, the company has been directing resources toward digital platforms in order to better engage with customers, augmenting supply chain, accelerating fleet optimization initiative and concentrating on improving financial flexibility. It has also been focusing on “Superior Product” strategy to resonate well with millennial customers and advancing omni-channel capabilities.

The Childrens Place, Inc. Price, Consensus and EPS Surprise

The Childrens Place, Inc. Price, Consensus and EPS Surprise

The Childrens Place, Inc. price-consensus-eps-surprise-chart | The Childrens Place, Inc. Quote

What the Zacks Model Unveils

Our proven model does not conclusively predict a beat for Children's Place this earnings season. 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. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Children's Place has a Zacks Rank #3 but an Earnings ESP of -25.42%.

Stocks With a Favorable Combination

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

Dollar General (DG - Free Report) has an Earnings ESP of +16.53% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Lowe's Companies (LOW - Free Report) has an Earnings ESP of +7.78% and a Zacks Rank #3.

Costco (COST - Free Report) has an Earnings ESP of +1.00% and a Zacks Rank #3.

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