Event Brief of Q4 2004 The Children's Place Retail Stores, Inc. Earnings Conference Call - Final.

Original Source: FD (FAIR DISCLOSURE) WIRE

CORPORATE PARTICIPANTS

. Heather Anthony, Children's Place Retail Stores Inc., Director,

IR . Ezra Dabah, Children's Place Retail Stores Inc., Chairman & CEO . Neal Goldberg, Children's Place Retail Stores Inc., President

. Mario Ciampi, Children's Place Retail Stores Inc., President,

Disney Store North America . Seth Udasin, Children's Place Retail Stores Inc., VP, CFO & Treasurer . Amy Hauk, Children's Place Retail Stores Inc., SVP, General Merchandise Manager . Richard Flaks, Children's Place Retail Stores Inc., SVP, Planning, Allocation and Information Technology

OVERVIEW

In 4Q04, net sales increased 97% to a record $462.1m from $234.6m last year. PLCE ended the year with a net cash position of $128m vs. $75m at the end of last year. PLCE currently anticipates consolidated FY05 earnings to be in the range of $2.10-2.20 per diluted share. Q&A Focus: Inventory, pricing, and margins.

FINANCIAL DATA

A. Key Data From Call 1. 4Q04 net sales = $462.1m. 2. 4Q04 adjusted net income = $26.8m. 3. 4Q04 adjusted EPS = $0.95. 4. 4Q04 adjusted gross profit dollars = $182.8m. 5. Year-end net cash position = $128m.

PRESENTATION SUMMARY

S1. Financial Comments (S.U.) 1. Highlights: 1. PLCE is reevaluating its lease related accounting practices in light of a recent SEC clarification. 2. While PLCE's evaluation has not been completed, it believes that a restatement of the Co.'s previously issued financial statement is likely. 3. PLCE believes any correction to lease related accounting practices will not have a material impact on net income for FY04 or FY05. 4. Financial results discussed in the call exclude any potential corrections to the Co.'s lease related accounting practices. 5. 4Q04 adjusted results exclude the effects of a non-cash item and a one-time extraordinary gain both associated with the Disney Store North America acquisition.

6. PLCE believes the adjusted results are a better indicator of

the core business and that the adjusted presentation is a

beneficial supplemental disclosure to investors in understanding its past and future performance. 2. Results: 1. In 4Q04 net sales increased 97% to a record $462.1m from $234.6m last year.

1. Included in these results were ten weeks of sales totaling $163.4m from PLCE's recent acquisition of the Disney Store. 2. PLCE's comparable store sales for 4Q04 increased 17% on top of

the 9% increase in the prior year. 3. For 4Q04 PLCE achieved double-digit comps across all regions, all merchandise departments, and all store types. 4. The Southwest and Southeast were the Co.'s strongest regions, while accessories and newborn were its strongest departments. 5. Higher traffic trends and increased customer conversion at PLCE drove about 13% increase in comparable store sales

transactions in 4Q04, while the avg. transaction size grew 3%.

6. Adjusted gross profit dollars increased 82% to $182.8m. 7. Consolidated gross profit margin was 39.6% in 4Q04 vs. 42.9%

last year. 1. As expected, this decrease was primarily the result of lower GM at the Disney Stores due to the product inherited through the acquisition, which carried a less favorable margin structure than PLCE. 8. Consolidated SG&A expenses as a percent of sales decreased approx. 20 BP vs. last year. 1. PLCE achieved this decrease even with the addition of the Disney Stores and introduction of external advertising at PLCE. 9. At PLCE the SG&A decrease as a percent of sales was driven by a leveraging of payroll and the favorable renegotiation of its private label credit card contract, partially offset by increased marketing expenses. 10. Disney Store expenses in 4Q04, which PLCE did not have last year, were lower than anticipated primarily due to the smooth integration and transition of the business. 11. D&A expense decreased 220 BP. 1. The primary driver of the leverage was the acquisition of the Disney Stores, which generated incremental sales but had no D&A. 2. This resulted in an 80% increase in adjusted operating income for 4Q04 to $42.9m vs. $23.9m last year.

12. Tax rate in 4Q04 was 37.4% vs. 36.8% last year. 13. Adjusted net income for 4Q04 increased 77% to $26.8m from $15.2m last year. 14. Adjusted EPS were a record $0.95 in 4Q04 vs. $0.55 last year. 1. Of the $0.95, $0.77 was generated from PLCE and $0.18 came from the Disney Store. 2. This compares to a previous adjusted guidance of $0.74 for PLCE and $0.12 for the Disney Store.

3. Balance Sheet: 1. PLCE ended the year with a net cash position of $128m vs. $75m at the end of last year. 2. Total inventory is up approx. 68%, the majority of which was due to the Disney Store acquisition. 3. For PLCE total inventory was up 27% while inventory per square foot is up approx. 15% vs. a year ago, in line with its previous expectations. 4. During 4Q04, the Co. opened 17 PLCE stores and closed one. 5. PLCE also closed seven Disney Stores, which was in line with its plans. 6. As of 01/29/05, PLCE operated 1,056 stores. 1. 750 PLCE, and 306 Disney stores. 4. 2005 Guidance: 1. PLCE is planning CapEx of approx. $100m net of construction allowances. 1. This primarily reflects store openings and remodels for PLCE and the Disney Store, expansion of the Co.'s headquarters in Secaucus, and a build-out of its new distribution center in New Jersey and Disney Store headquarters in Pasadena. 2. As previously announced, PLCE plans to open approx. 60 PLCE stores in 2005. 3. PLCE expects to open approx. four stores in 1Q05 and nine in 2Q05 with the remainder opening in 2H05. 4. PLCE plans to open approx. ten Disney stores, close three, and remodel approx. 35 this year. 5. Based on the performance of both businesses in 4Q04 and a strong Feb. comp, PLCE currently anticipates consolidated FY05 earnings to be in the range of $2.10-2.20 per diluted share. 1. Up from the Co.'s previous guidance of $2.05. 6. While PLCE continues to believe that the Disney Store acquisition should generate at least $0.30 of earnings accretion in 2005, going forward any earnings guidance given will be based on consolidated results for the combined PLCE and Disney stores. 1. PLCE recognizes that by introducing this annual guidance, it has an obligation to update if its performance throughout the …