The Children's Place: The Right Place For A Retail Turnaround

Summary

• The Children's Place is undervalued, and we expect improved quarterly results beginning in Q3-F23, with significant catalysts set to jumpstart earnings growth and re-rate the shares higher.
• Despite a challenging F2022 with bloated inventories and higher costs, an increased credit facility, streamlined operations, and insider buying suggest PLCE is on the cusp of a turnaround.
• Lower freight and cotton costs will generate earnings growth in 2H:F23, while right-sizing inventory will unlock working capital for free cash flow.
• At 8x our F2024 adjusted EPS estimate, PLCE would trade at $48, representing 80% upside.

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Investment Thesis

The Children's Place (NASDAQ:PLCE) is undervalued and will continue to re-rate higher, as quarterly results materially improve beginning in Q3-F23. Shares sold off over the past year, as F2022 and early F2023 (Q1-F23 and expected Q2-F23) results were

Analyst’s Disclosure:I/we have a beneficial long position in the shares of PLCE either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.