The Gap Inc. (GPS), Carter’s, Inc. (CRI): Children’s Place Retail Stores, Inc. (PLCE) Earnings: An Early Look

The holiday quarter is nearly always the most important time of the year for retailers, which get a disproportionately large amount of their annual sales then. That’s somewhat less true for Children’s Place because of the year-round need for different kinds and sizes of clothes, but it’s still vulnerable to the same challenges that other retailers face. According to one analyst, early channel checks of Children’s Place suggested that high inventory levels and heavy discounting during the post-Christmas shopping rush might hold back the retailer.

One big problem facing Children’s Place is that higher payroll taxes and weak wage growth are leaving its core customers cash-strapped, with less discretionary income to spend. That has left rival Carter’s, Inc. (NYSE:CRI) , Children’s Place Retail Stores, Inc. (NASDAQ:PLCE) Place, and their peers fighting over a smaller piece of consumers’ wallets, as lower-priced options like thrift stores force new-clothing retailers to offer more attractive discounts to boost sales. At the same time, greater competition from broader-line retailers has posed an additional challenge for Children’s Place, especially given The Gap Inc. (NYSE:GPS)‘s resurgence over the past year as it has reorganized its various brands and targeted profitable niches.

In its quarterly report, watch Children’s Place Retail Stores, Inc. (NASDAQ:PLCE) Place closely to see how much of its results came from discounting. Any disparity between revenue growth and margin contraction could indicate trouble ahead for the retailer.

The article Children’s Place Earnings: An Early Look originally appeared on Fool.com and is written by Dan Caplinger.

Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter: @DanCaplinger. The Motley Fool has no position in any of the stocks mentioned.

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