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Children's Place (PLCE) Operational Strength Fuels Bull Run

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The Children's Place, Inc. (PLCE - Free Report) , one of the widely recognized names in the apparel and footwear industry, has exhibited an outstanding run on the bourses in the past three months. Thanks to its operational initiatives — strengthening of omni-channel solutions, expanding customer reach and focus on brand — the stock has outpaced the Zacks Retail - Apparel And Shoes industry and the Retail-Wholesale sector. In the said period, shares of this New Jersey-based company have soared about 140.1% compared with the industry’s rally of 56.6% and the sector’s gain of 0.7%.

Additionally, an uptrend in the Zacks Consensus Estimate echoes the same sentiment. The consensus estimate for the current financial year has narrowed from a loss of $3.05 to a loss of $2.49 in the past 60 days. The consensus estimate for the next financial year has increased about 20.6% to $3.04 in the said time frame. Notably, this Zacks Rank #1 (Strong Buy) stock’s long-term earnings growth rate of 8% reflects its inherent strength. You can see the complete list of today’s Zacks #1 Rank stocks here.

Let’s Introspect

Children's Place is leaving no stone unturned to expand customer base and improve top-line performance. The company is accelerating fleet optimization initiative, directing resources toward digital platforms in order to better engage with customers, augmenting supply chain and concentrating on improving financial flexibility. It has been focusing on curtailing non-essential expenses, managing inventory, extending vendor payment terms, and optimizing capital expenditures.

Markedly, the company has been making investments to upgrade its omni-channel capabilities as part of its digital transformation strategy. The company’s $50 million digital transformation investment to enhance omni-channel capabilities in order to meet online demand is reaping benefits. Markedly, the company has one of the highest digital penetrations in the industry. It has also launched a completely redesigned responsive site and mobile app for The Children's Place and Gymboree brands.

Management on its last earnings call on Nov 19, 2020, highlighted that since the onset of the pandemic in March 2020, the company has seen its new digital customer count double year over year. Further, it has converted more than 800,000 of its store-only customers to omni-channel ones. Moreover, the company’s app downloads have risen more than 60%. We also note that the company’s digital penetration rose to 44% in third-quarter fiscal 2020.

Children's Place has rolled out "BOPIS" (Buy Online, Pick Up in Store), Save the Sale and Ship from Store. Further, it launched SMS texting capabilities. It has also rolled out “BOSS” (Buy Online, Ship to Store), response to which has been encouraging. With changing consumer shopping pattern, the company has been making efforts to lower dependency on brick-and-mortar platform and shift toward digitization. The company is aiming mall-based brick-and-mortar portfolio to account for less than 25% of revenues entering fiscal 2022.

3 More Stocks Looking Red Hot

Hibbett Sports (HIBB - Free Report) has a long-term earnings growth rate of 17%. It currently flaunts a Zacks Rank #1.

DICK’S Sporting Goods (DKS - Free Report) has a long-term earnings growth rate of 5.6%. It presently sports a Zacks Rank #1.

Michaels Companies (MIK - Free Report) has a trailing four-quarter earnings surprise of 54.1%, on average. The stock carries a Zacks Rank #1.

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