Children’s Place, Inc. shares are soaring Wednesday after the company posted a second-quarter earnings beat before the opening bell.

The Details:

Children’s Place reported quarterly earnings of 30 cents per share which beat the analyst consensus estimate of losses of $1.10 per share.  

The company reported quarterly sales of $319.655 million, below the consensus estimate of $327.38 million. Children's Place said the decrease in net sales was primarily driven by an anticipated decrease in ecommerce revenue, as the company proactively rationalized its unprofitable promotional strategies, inflated marketing spend and “free shipping” offers to significantly improve profitability. 

The company said the cost-cutting measures improved the profitability of its ecommerce business and also benefited its brick-and-mortar channel.

Stores experienced a positive comparable store sales result for the first time since 2021, driven by stronger units per transaction and conversion metrics, and improving traffic trends. Wholesale business also rebounded with double-digit growth after a decline in the first quarter.

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“During the second quarter we proactively made certain strategic and operational changes to improve the profitability of the business and provide a foundation for future growth and we were pleased with the results. While we anticipated that these efforts would provide pressure to topline sales, we drove significant improvements in gross profit margin versus the prior year’s second quarter and sequential improvement in margin for two quarters, which is particularly important moving from the first quarter to the second quarter," said Muhammad Umair, President and Interim CEO. 

Children's Place shares are moving higher on heavy trading volume following the print. Trading was halted for volatility just after the opening bell, and more than 22 million shares have already changed hands in Wednesday's session, according to the latest data from Benzinga Pro.

PLCE Price Action: According to Benzinga Pro, Children's Place shares are up 88.6% at $9.24 at the time of publication Wednesday.

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Image: Michal Jarmoluk from Pixabay