November 15, 2012 / 2:52 PM / 6 years ago

UPDATE 1-Children's Place cuts profit view on post-Sandy promotions

* Third-quarter adjusted earnings/share $1.60 vs est $1.60

* Third-quarter revenue up 3 pct to $500.9 mln

* Shares down 15.5 pct (Adds conference call details, share movement)

Nov 15 (Reuters) - Children’s Place Retail Stores Inc cut its full-year profit forecast citing increased promotional activity in the fourth quarter after superstorm Sandy battered the U.S. northeast.

The company’s shares, which have gained 20 percent of their value over the past year, were down 15.5 percent at $48.15 on the Nasdaq on Thursday.

“The promotional environment has intensified as retailers are promoting deeper to clear inventory, post-Sandy,” Children’s Place vice president of finance John Taylor said on a conference call with analysts.

The kids’ clothing retailer saw its inventory rise in the aftermath of the storm, particularly in its outlet business, and expects to aggressively promote its products to clear through the inventory in the fourth quarter, Taylor added.

As a result, Children’s Place now expects fourth-quarter adjusted profit of between $1.01 and $1.06 per share, on low-single digit growth in comparable retail sales.

Analysts on average were expecting adjusted profit of $1.24, according to Thomson Reuters I/B/E/S.

Children’s Place said 280 of its stores in the northeast and its e-commerce business - which contributes about a third of its total sales - were affected by Sandy.

Of these, three stores continue to remain closed and one has been completely damaged. The company operated 1,102 stores, as of October.

Children’s Place, which competes with chains such as Target Corp and Gap Inc’s Old Navy, cut its full-year adjusted profit view to between $3.10 and $3.15 per share, from its previous forecast of between $3.20 and $3.30 per share.

Analysts on average were expecting adjusted profit of $1.24, according to Thomson Reuters I/B/E/S.

Third-quarter net income rose to $35.0 million, or $1.44 per share, from $33.7 million, or $1.33 per share, a year earlier.

The company said its baby offerings continued to face weak demand as customers avoided spending on its new baby dress line.

Children’s Place has tried to scale back its baby clothing offerings and focus more on big kids’ merchandise. The strategy paid off in the third quarter, Chief Executive Jane Elfers said. (Reporting by Maria Ajit Thomas in Bangalore)

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