Company Overview

September 2015

Safe Harbor Statement

Forward Looking Statements
This presentation may contain certain forward-looking statements regarding future circumstances, including
statements relating to the Companys strategic initiatives and adjusted net income per diluted share. These
forward-looking statements are based upon the Company's current expectations and assumptions and are
subject to various risks and uncertainties that could cause actual results and performance to differ materially.
Some of these risks and uncertainties are described in the Company's filings with the Securities and Exchange
Commission, including in the Risk Factors section of its annual report on Form 10-K for the fiscal year ended
January 31, 2015. Included among the risks and uncertainties that could cause actual results and performance to
differ materially are the risk that the Company will be unsuccessful in gauging fashion trends and changing
consumer preferences, the risks resulting from the highly competitive nature of the Companys business and its
dependence on consumer spending patterns, which may be affected by the weakness in the economy that
continues to affect the Companys target customer, the risk that the Companys strategic initiatives to increase
sales and margin are delayed or do not result in anticipated improvements, the risk that the cost of raw
materials or energy prices will increase beyond current expectations or that the Company is unable to offset cost
increases through value engineering or price increases, and the uncertainty of weather patterns. Readers are
cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they
were made. The Company undertakes no obligation to release publicly any revisions to these forward-looking
statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence
of unanticipated events. The inclusion of any statement in this release (or on the above referenced call) does not
constitute an admission by the Company or any other person that the events or circumstances described in such
statement are material.

Agenda

Company Overview
Strategic Initiatives
Operational and Financial Performance

The Fundamentals

The largest childrens specialty apparel retailer in North America

Strong brand; well-positioned competitively
#1 awareness among childrens specialty retailers
Known for fashion, outfitting, value and convenience
Strong balance sheet and free cash flow

Market Trends In Childrens Specialty Apparel

Kids Apparel Has Become More Competitive

Over 2,400 Stores Added

20,145

Specialty
Retailers
17,734

Retailers /
Wholesalers

2009
2013
# of US Stores (Retailers with Children's Departments)

While Birth Rates Have Declined Significantly

Mass

Discounters

US Yearly Births ('000s)

4,300
4,200
4,100
4,000
3,900

3,932

3,800
3,700
2008

Source: NDC, NPD and Company filings

2009

2010

2011

2012

2013

Maintaining Leading U.S. Market Share In an

Increasingly Competitive Environment
Size of U.S. Childrens Apparel Market

Childrens Place Market Share

Dollars (000s)
30,000,000

5.1%

5.1%

5.1%

2011

2012

2013

25,000,000

4.9%

20,000,000

15,000,000

10,000,000

5,000,000

2011

2012

Source: NPD U.S. Childrens Apparel Data (0-10 years)

Market share data from NPD Group, Company filings

2013

2014

2014

Agenda

Company Overview
Strategic Initiatives
Operational and Financial Performance

We Are Making Significant Progress Towards Our Goal of

Becoming a Global Omni-Channel Children's Brand

Talent
1

Product
Focus

Transforming
Business
through
Technology

Channel
Expansion

Fleet
Optimization

Operational Excellence

Transforming Our Product Offering in Every Division and

Category
Sourcing Migration to Emerging Market Opportunities
2009
2.7%

Focus on consistent product execution

across all divisions

17.4%

Ensure in-stock positions on key item year

round basics

26.3%

11.7%
41.4%

More frequent deliveries of newer fashion

assortments to maintain currency of
inventory flows

2014
4.7%

Successfully developed a contemporary

sourcing strategy to address significant
changes that were occurring globally

9.4%
29.4%
19.8%

31.9%
SE Asia

India Sub-continent

Greater China

Greater Africa

Americas

Consistent #1 Market Share Among Childrens Specialty Retailers Since 2010 Shows
Product Is Strongly Resonating With Customers
8

Business Transformation Through Technology

We are in the third year of a five-year plan of a company-wide transformation of our

technology and systems

Our technology initiatives are strengthening our inventory management capabilities including
planning, allocation and replenishment. Global sourcing, logistics and distribution systems
have and are being upgraded. We are intensely focused on our expanding our omni-channel
capabilities through upgrades to our digital and mobile platforms

In 2014 we successfully:
Launched core merchandising and pricing modules within our ERP(enterprise resource
planning) system
Built a global sourcing portal
Upgraded our US and Canadian websites and our mobile site
Launched a state of the art assortment planning tool which impacted our BTS 2015
deliveries

In 2015 we:
Implemented state of the art inventory allocation and replenishment tools
Are building out technology to enable us to more rapidly expand our international and
wholesale businesses in 2016 and beyond

Investments in Systems are Enhancing Our Capabilities and Operating Performance

9

Business Transformation Through Technology (Continued)

10

Digital Initiatives

Acquisition
Organic search enhancements (2015)
Email capture/ereceipt (2015)

Retention
New email service provider (2015)
Personalized content, products, offers & promotions (2015)

Engagement
Loyalty program enhancements (2015)
Online account creation and access to points and rewards

Implement Distributed Order Management system to enable cross-channel capabilities

(2015)

Global Growth Through Alternate Channels of Distribution

E-Commerce has grown at an 18.5%
CAGR since 2009
16% of total sales in fiscal 2014
Launched a Canadian e-commerce site in
2012
60% CAGR since the launch
Launched an international franchise
business with one partner in 2012
Ended FY2014 with five
international partners and 72
franchise stores
Launched a wholesale business in 2012
with one account
Ended FY2014 with eight wholesale
accounts
Completely revamped our outlet
strategy
Shifted from an outdated
clearance center model to a
significantly more profitable made
for outlet model
11

E-Commerce Revenue Growth

$280
$246
$215
$176
$151
$119

16%

14%

12%

10%

9%

7%

FY09

FY10

FY11

E-Commerce Revenue ($mm)

FY12

FY13

FY14

% of Total Revenue

Store Fleet Optimization in North America

Fleet Facts

Developed a new store prototype in 2010

with significantly better economics

1,086 Stores in North America

Strategic decision to open off mall

Canada
12%

locations based on favorable economics,

declining mall traffic and changing

United States
88%

consumer shopping patterns

Fleet optimization initiative targets 200
store closures through 2017, including 41
stores closed in 2013 and 35 closed in

Brand Performs Well Across Variety of

Formats

2014

Street/Strip/Other
8%

Seeing a transfer rate in excess of 20%

Outlets
12%

to nearby stores or to e-commerce

Results in improved comp sales and
profitability in e-commerce and the
neighboring stores

12

Value Centers &

Small Markets

24%

Premium
Malls
56%

Operational Excellence
Optimize global supply chain
Strategic sourcing; vendor consolidation; country migration
Logistics and distribution
Company-wide expense management
Improving store operations and customer experience
Professional, strategic staff support
Finance, Legal, Human Resources, Compliance/Regulatory

Strong
supportother
other
Strongbase
base to
to support
strategic initiatives
initiatives
strategic
13

Agenda

Company Overview
Strategic Initiatives
Operational and Financial Performance

14

Long Term Operating Margin Expansion

Key Focus: Generate steady increases in operating margin

Revenue Growth
Drivers

Margin
Expansion
Opportunity
SG&A Flat-toSlightly Leverage
As % of Sales
15

Slightly positive comp sales driven by merchandise

improvements, fleet optimization, rapid e-commerce
growth and new system capabilities, partially offset by
reduced clearance sales due to improved inventory
management
Incremental revenue from international and wholesale
Merch margin: New inventory management systems,
supply chain optimization and outlet strategy
Gross margin: Fleet optimization and improved inventory
management
Operating margin: International and wholesale businesses
and outsized growth in e-commerce
Stringent focus on cost control
Leverage fixed expense

Q2 Financial Results
Q2 2015/14
Income Statement Summary
Q2 15

Q214

Adj EPS

($0.33)

($0.37)

Net Sales

$366.5

$384.6

Adj Gross Margin

31.4%
+40 bps

31.0%

-200 bps

Adj SG&A % of Sales

29.6%
+60 bps

30.2 %

+190 bps

Adj Operating Margin

-2.4%

-3.2%

% Chg
% Chg

Leverage/Deleverage
Leverage
Leverage

+11%

-4.7%

+80 bps

+12%

+0.6%

+10 bps

Source: Company filings and press releases. Figures in millions of USD (except EPS). For the quarter ended August 1, 2015 and August 2, 2014.
Note: Adj measures are non-GAAP and exclude transactions that are not indicative of the performance of the core business. A reconciliation of GAAP and
non-GAAP measures is provided in the Companys second quarter 2015 earnings release which is available at http://investor.childrensplace.com

16

Company Outlook Full Year 2015

Company Guidance as of 8/25/15
Adj EPS
Comp Sales
Adj Gross Margin
Adj SG&A % of Sales
Adj Op Inc
Capital Expenditures
Ending Inventory

17

FY 2015 Guidance

FY 2014 Actual

$3.35 to $3.45

$3.05

Approximately flat

0.4%

Leverage 60 to 80 bps

35.3%

Leverage approx. 30 bps

26.3%

Leverage 60 to 70 bps

5.6%

$65 to $70 million

$72 million

N/A

Decreased 8%

Strong Balance Sheet and Cash Flow

Generated $188 million in operating cash flow over LTM
Returned excess cash to shareholders through share repurchase
program and quarterly dividend over LTM.

LTM
Beginning Cash and Short-term Investments (Q2 2014)

$200

LTM Cash Flow from Operations

188

LTM Capital Expenditures

(62)

Capital Return (Share Repurchase Program/Dividends)

Revolving Loan
Other
Ending Cash and Short Term Investments (Q2 2015)
Source: Company filings and press releases.

18

$ millions

(109)
3
(15)
$205

Successful Execution of Our Strategy Has Enabled Significant

Return of Capital to Shareholders
Prudent cash flow management has
allowed us to consistently reward
shareholders over the last 5 years

Cumulative Capital Returned to Shareholders ($mm)

$561
$493

We have purchased over $543 million

of our common stock since 2009
Our share repurchases over the last three
years as a percentage of market
capitalization is 19%, well above the peer
group median of 14%
In fiscal 2014, we instituted a dividend for
the first time in our history
In the first fiscal quarter of 2015, we
increased the dividend by over 13%

$405
$339

$250

$543
$481

$159
$250

$ 68

$159

$68

$12

2009

2010

2011

2012

Cumulative Dividends

2013

$18

2014 YTD Q2
2015

Cumulative Share Repurchase

Shares Outstanding (mm)

Strong balance sheet provides flexibility

2009

2010

2011

2012

2013

2014

27.6

26.1

24.5

23.1

22.0

20.8

Consistent Return of Capital to Shareholders

19

$405

$339

Historical Income Statement Data (As Adjusted)

FY14
Net Sales

FY13

FY12

$1,761.3

$1,765.8

$1,809.5

Gross Profit
% of net sales

622.2
35.3%

658.4
37.3%

691.4
38.2%

SG&A
% of net sales

462.6
26.3%

483.2
27.4%

507.0
28.0%

Deprec & Amort

% of net sales

60.5
3.4%

64.8
3.7%

68.1
3.8%

Operating Income
% of net sales

99.1
5.6%

110.4
6.3%

115.3
6.4%

Income before Taxes

% of net sales

98.9
5.6%

110.7
6.3%

115.3
6.4%

Tax Provision
% of net sales

32.1
1.8%

36.3
2.1%

36.5
2.0%

Net Income
% of net sales

$66.9
3.8%

$74.4
4.2%

$78.8
4.4%

EPS

$3.05

$3.26

$3.25

Source: Company filings and press releases. Figures in millions of USD (except EPS). For the years ended January 31, 2015, February 1, 2014 and
February 2, 2013 (53 Week Year). Note: Adj measures are non-GAAP and exclude transactions that are not indicative of the performance of the core
business. A reconciliation of GAAP and non-GAAP measures is provided in the Companys earnings releases which are available at
http://investor.childrensplace.com

20

Historical Balance Sheet Data (in millions of USD)

FY14

FY12

Cash & Cash Equivalents

$173.3

$174.0

$194.1

Short-term Investments

52.0

62.5

15.0

Accounts Receivable

31.9

26.0

18.5

297.6

322.4

267.0

Other Current Assets

54.4

44.4

50.6

Total Current Assets

609.3

629.3

545.2

Property & Equipment,

Net

310.3

312.1

330.1

39.0

49.2

48.1

Total Assets

$958.6

$990.6

$923.4

Total Current Liabilities

$274.5

$271.3

$191.5

Other Liabilities

95.0

102.5

111.0

Total Liabilities

369.5

373.9

302.5

Stockholders Equity

589.1

616.8

620.9

Total Liabilities &

Stockholders Equity

$958.6

$990.6

$923.4

Inventories

Other Assets, Net

21

FY13

Historical Cash Flow Data

FY14
Beginning Cash and Short-term
Investments

FY12

$236

$209

$177

Cash Flow from Operations

161

173

205

Capital Expenditures

(72)

(73)

(90)

Capital Return (Share Repurchase

Program/Dividends)

(88)

(66)

(89)

Other

(12)

(7)

$225

$236

$209

Ending Cash and Short Term

Investments
Source: Company filings and press releases. Dollars in millions of USD.

22

FY13

Wrap-Up
Strategic initiatives underway to drive growth
Strong balance sheet and cash flow
Committed to delivering sustainable, profitable growth

23

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