Source: childrensplace.com
Children’s Place last week announced plans to close 300 stores, about a third of its store base, over the next two years as the children’s apparel chain saw shoppers migrate to more online shopping.
“Due to the pandemic, consumers all across America have been forced to shop online, many for the first time, with positive results,” said Jane Elfers, president and CEO, on its first-quarter conference call. “We anticipate that the lingering impact of COVID-19 will continue to accelerate the shift to digital, putting enormous pressure on the already-stressed brick and mortar channel, resulting in accelerated store closures.”
Children's Place’s launch of its digital transformation three years ago helped its online sales reach 31 percent of total revenue for 2019, one of the highest digital penetrations in the apparel space.
Online growth has taken another leap during the pandemic. In the second quarter through the first week of June, Children’s Place’s online sales are up 300 percent, driving consolidated sales up to positive low double-digits despite 95 percent of stores remaining closed.
The retailer’s online growth is being driven by the migration of store-only shoppers to omnichannel shopping at four times the pre-pandemic rate. Omnichannel customers spend nearly three times that of retail-only customers.
At the same time, the chain’s new online customers increased 250 percent since locations were closed in March, “which we believe will allow us to emerge from this crisis with greater online share, due to increased customer awareness of our e-commerce channel,” said Ms. Elfers.
Children’s Place expects to close approximately 200 locations in 2020 and about 100 in 2021, resulting in approximately 625 locations at year-end 2021. As the quarter ended, the chain had 920 locations, including 62 percent in malls and 38 percent in non-malls. By 2021, its mall-based stores are expected to represent less than 25 percent of total revenue.
The closure of stores will limit ship-from-store capacity, now available from over 85 percent of locations. Mike Scarpa, CFO and COO, said ship-from-store “is not the most economical situation for us,” estimating that stores only offer 40 percent productivity rates versus robotics-enabled DCs. Units per transaction are also increasing and stores face hurdles completing full orders.