CHILDRENS PLACE, INC. MANAGEMENT REPORT AND ANALYSIS OF FINANCIAL POSITION AND OPERATING RESULTS. (Form 10-Q)
This Quarterly Report on Form 10-Q contains or may contain forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to statements relating to the Company's strategic initiatives and adjusted net income per diluted share. Forward-looking statements typically are identified by use of terms such as "may," "will," "should," "plan," "project," "expect," "anticipate," "estimate" and similar words, although some forward-looking statements are expressed differently. 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 theSecurities and Exchange Commission , including in the "Risk Factors" section of its annual report on Form 10-K for the fiscal year endedJanuary 29, 2022 . 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 Company's business and its dependence on consumer spending patterns, which may be affected by changes in economic conditions, the risks related to the COVID-19 pandemic, including the impact of the COVID-19 pandemic on our business or the economy in general (including decreased customer traffic, schools adopting remote and hybrid learning models, closures of businesses and other activities causing decreased demand for our products and negative impacts on our customers' spending patterns due to decreased income or actual or perceived wealth, and the impact of legislation related to the COVID-19 pandemic, including any changes to such legislation), the risk that the Company's strategic initiatives to increase sales and margin are delayed or do not result in anticipated improvements, the risk of delays, interruptions and disruptions in the Company's global supply chain, including resulting from the COVID-19 pandemic or other disease outbreaks, foreign sources of supply in less developed countries, more politically unstable countries, or countries where vendors fail to comply with industry standards or ethical business practices, including the use of forced, indentured or child labor, 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, various types of litigation, including class action litigations brought under consumer protection, employment, and privacy and information security laws and regulations, the imposition of regulations affecting the importation of foreign-produced merchandise, including duties and tariffs, 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 following discussion should be read in conjunction with the Company's unaudited financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q and the annual audited financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year endedJanuary 29, 2022 .
Terms commonly used in our MD&A on financial condition and results of operations are defined as follows:
• First quarter 2022 – Thirteen weeks ended
• First quarter 2021 – Thirteen weeks ended
• Fiscal Year 2022 – 52 weeks end
• Fiscal 2021 – 52 weeks ended
• DRY –
• US GAAP – Generally accepted accounting principles in
• FASB –
•FASB ASC - FASB Accounting Standards Codification, which serves as the source for authoritativeU.S. GAAP, except that rules and interpretive releases by theSEC are also sources of authoritativeU.S. GAAP forSEC registrants
• AUR – Average Unit Selling Price
•Comparable Retail Sales - Net sales, in constant currency, from stores that
have been open for at least 14 consecutive months and from our e-commerce store,
excluding postage and handling fees. Store closures in the current fiscal year
will be excluded from Comparable Retail Sales beginning in the fiscal quarter in
which the store closes. A store that is closed for a substantial remodel,
relocation, or material change in size will be excluded from Comparable Retail
Sales for at least 14 months beginning in the fiscal quarter in which the
closure occurred. However, stores that temporarily close will be excluded from
Comparable Retail Sales until the store is
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reopened for a full fiscal month. Comparable retail sales do not exclude temporarily closed stores impacted by the COVID-19 pandemic.
• Gross Margin – Gross profit expressed as a percentage of net sales
• SG&A – Selling, general and administrative expenses
OVERVIEW Our Business We are the largest pure-play children's specialty apparel retailer inNorth America . We design, contract to manufacture, sell at retail and wholesale, and license to sell, trend right, high quality merchandise predominantly at value prices, primarily under our proprietary "The Children's Place ", "Place", "Baby Place ", "Gymboree", and "Sugar & Jade" brand names. As ofApril 30, 2022 , we had 665 stores acrossNorth America , our e-commerce business at www.childrensplace.com, www.gymboree.com, and www.sugarandjade.com, and had 212 international points of distribution with our six franchise partners in 16 countries.
Sector reports
In accordance with FASB ASC 280-Segment Reporting, we report segment data based on geography:The Children's Place U.S. and The Children's Place International . Each segment includes an e-commerce business located at www.childrensplace.com, www.gymboree.com, and www.sugarandjade.com. Included inThe Children's Place U.S. segment are ourU.S. andPuerto Rico -based stores and revenue from ourU.S. -based wholesale business. Included inThe Children's Place International segment are our Canadian-based stores, revenue from our Canadian-based wholesale business, as well as revenue from international franchisees. We measure our segment profitability based on operating income, defined as income before interest and taxes. Net sales and direct costs are recorded by each segment. Certain inventory procurement functions such as production and design, as well as corporate overhead, including executive management, finance, real estate, human resources, legal, and information technology services, are managed by The Children's PlaceU.S. segment. Expenses related to these functions, including depreciation and amortization, are allocated toThe Children's Place International segment based primarily on net sales. The assets related to these functions are not allocated. We periodically review these allocations and adjust them based upon changes in business circumstances. Net sales to external customers are derived from merchandise sales, and we have no customers that individually account for more than 10% of our net sales.
Covid-19 pandemic
The COVID-19 pandemic continues to significantly impact regions all around the world, includingthe United States andCanada . SinceMarch 2020 , this has resulted in restrictions of businesses and other activities implemented by national, state, and local authorities and private entities, leading to significant adverse economic conditions and business and lifestyle disruptions, as well as significant volatility in global financial and retail markets. From the onset of the pandemic and as new variants emerged, federal, state, and local governments and health officials worldwide imposed varying degrees of preventative and protective actions in an effort to reduce the spread of the virus. Such factors, among others, have resulted in a significant decline in retail traffic and consumer spending on discretionary items. In addition, we have experienced, and will likely continue to experience, disruptions in our global supply chain, which have caused delays in the production and transportation of our products, which we are seeking to mitigate, including through shifting production schedules. As of the First Quarter 2022, the progress achieved nationwide in addressing the effects of the pandemic has allowed most businesses and shopping malls to reopen and resume operations, with some malls continuing to restrict hours of operation and the number of people permitted in stores. Our distribution centers remained open and operating during the pandemic to support our retail stores and e-commerce business, and as ofApril 30, 2022 , all of our stores are open to the public in theU.S. ,Canada , andPuerto Rico . OurU.S. office and certain of our foreign offices are also open in a hybrid work environment, while we continue to monitor the developments of the pandemic for our other foreign offices. We will continue to assess the pandemic's impact on our operations and financial situation, and will seek to implement all necessary measures as needed.
RECENT DEVELOPMENTS
Recent macroeconomic events have increased the cost of goods and services necessary to produce and distribute our products, including cotton and other materials used in production, as well as labor, transportation, fuel and energy. We expect these increased product input and transportation costs to continue to impact the remainder of 2022.
On
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lending group led by an affiliate of Wells Fargo Bank, National Association
("Wells Fargo") by entering into a Fourth amendment to our Credit Agreement,
dated as of May 9, 2019 , with the lenders party thereto (the "Fourth
Amendment"). The new debt consists of a revolving credit facility with $350.0
million of availability (the "ABL Credit Facility") and a $50.0 million term
loan (the "Term Loan"), both with five year maturities, lower interest rates,
reduced reporting requirements, and increased flexibility under the covenants.
Operating Highlights
Net sales decreased$73.1 million , or 16.8%, to$362.4 million during the First Quarter 2022 from$435.5 million during the First Quarter 2021, primarily due to lapping the COVID-19 stimulus relief program last year, the impact of unprecedented inflation on our customers, prolonged unseasonably cold temperatures through the end of the First Quarter 2022 in our major markets, and the impact of permanent store closures. Comparable retail sales decreased 16.9% for the First Quarter 2022. Gross profit decreased$46.3 million to$141.9 million during the First Quarter 2022 from$188.2 million during the First Quarter 2021. Gross margin deleveraged 406 basis points to 39.2% of net sales in the First Quarter 2022. The decrease was primarily the result of higher inbound transportation expenses and the deleverage of fixed expenses resulting from the decline in net sales, partially offset by higher merchandise margins in our brick-and-mortar retail and e-commerce channels, driven by AUR increases in both channels.
Operating profit decreased
Net income decreased$25.4 million to$19.8 million , or$1.43 per diluted share, during the First Quarter 2022 compared to$45.2 million , or$3.01 per diluted share, during the First Quarter 2021, due to the factors discussed above. During the First Quarter 2022, we repurchased approximately 0.7 million shares of our common stock for$38.8 million , consisting of shares surrendered to cover tax withholdings associated with the vesting of equity awards and shares acquired in the open market. As ofApril 30, 2022 , there was$218.6 million remaining under our share repurchase program. Although we are facing challenging macroeconomic events, including increases in the cost of goods and services necessary to produce and distribute our products, including cotton and other materials used in production, as well as labor, transportation, fuel and energy and continuing uncertainty regarding the future impact of the COVID-19 pandemic, we continue to focus on our key strategic growth initiatives - superior product, digital transformation, and fleet optimization. The transformation of our digital capabilities continues to expand given a completely redesigned responsive site and mobile application, providing a rich online shopping experience geared toward the needs of our "on-the-go" mobile customers, expanded customer personalization, to drive sales, loyalty and retention, and the ability to have our entire store fleet equipped with ship-from-store capabilities. Also, in response to increased digital demand, including as a result of the COVID-19 pandemic, we have increased and will continue to monitor the utilization of our third-party logistics provider to further support both ourU.S. and Canadian e-commerce operations.
We continue to evaluate our store base through our base optimization initiative. We have closed 534 stores, including 7 stores closed during the first quarter of 2022, since announcing our fleet optimization initiative in 2013. We expect to close a total of approximately 40 stores this year.
We have subsidiaries whose operating results are based in foreign currencies and are thus subject to the fluctuations of the corresponding translation rates intoU.S. dollars. The table below summarizes the average translation rates that most significantly impact our operating results: Thirteen Weeks Ended April 30, May 1, 2022 2021 Average Translation Rates(1) Canadian dollar 0.78950.7948 Hong Kong dollar 0.1279 0.1288 Chinese renminbi 0.1570 0.1539
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(1)The average conversion rates are the average of the monthly conversion rates used during each period to translate the respective income statements. Each rate represents the
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SIGNIFICANT ACCOUNTING POLICIES AND CRITICAL ACCOUNTING ESTIMATES
We describe our significant accounting policies in "Note 1. Basis of Preparation and Summary of Significant Accounting Policies" of the notes to consolidated financial statements included in our most recent Annual Report on Form 10-K for the fiscal year endedJanuary 29, 2022 . There have been no significant changes in our accounting policies from those described in our most recent Annual Report on Form 10-K. The preparation of financial statements in conformity withU.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the amounts of revenues and expenses reported during the period. We continuously review the appropriateness of the estimates used in preparing our financial statements; however, estimates routinely require adjustment based on changing circumstances and the receipt of new or better information. Consequently, actual results could differ materially from our estimates. Our critical accounting estimates are described under the heading "Critical Accounting Estimates" in Item 7 of our most recent Annual Report on Form 10-K for the fiscal year endedJanuary 29, 2022 . Our critical accounting estimates include impairment of long-lived assets, income taxes, stock-based compensation, and inventory valuation. There have been no material changes in these critical accounting estimates from those described in our most recent Annual Report on Form 10-K.
Recent updates to accounting standards
There are no updates to accounting standards in progress that are expected to have a material impact on the Company.
RESULTS OF OPERATIONS
We believe that our e-commerce and brick-and-mortar retail store operations are
highly interdependent, with both sharing common customers purchasing from a
common pool of product inventory. Accordingly, we believe that consolidated
omni-channel reporting presents the most meaningful and appropriate measure of
our performance, including net sales.
The following table sets forth, for the periods indicated, selected income
statement data expressed as a percentage of net sales. We primarily evaluate the
results of our operations as a percentage of net sales rather than in terms of
absolute dollar increases or decreases by analyzing the year over year change in
our business expressed as a percentage of net sales (i.e., "basis points"). For
example, SG&A increased 558 basis points to 30.1% of net sales during the First
Quarter 2022 from 24.5% during the First Quarter 2021. Accordingly, to the
extent that our sales have increased at a faster rate than our costs (i.e.,
"leveraging"), the more efficiently we have utilized the investments we have
made in our business. Conversely, if our sales decrease or if our costs grow at
a faster pace than our sales (i.e., "de-leveraging"), we have less efficiently
utilized the investments we have made in our business.
Thirteen weeks over
April 30, May 1,
2022 2021
Net sales 100.0 % 100.0 %
Cost of sales (exclusive of depreciation and amortization) 60.8 56.8
Gross profit 39.2 43.2
Selling, general, and administrative expenses 30.1 24.5
Depreciation and amortization 3.8 3.6
Operating income 5.3 15.1
Income before provision (benefit) for income taxes 4.8 14.1
Provision (benefit) for income taxes (0.6) 3.7
Net income 5.5 % 10.4 %
Number of Company stores, end of period 665 724
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Table may not add up due to rounding.
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The following table sets forth net sales by segment, for the periods indicated:
Thirteen Weeks Ended
April 30, May 1,
2022 2021
(in thousands)
Net sales:
The Children's Place U.S. $ 327,961 $ 399,659
The Children's Place International 34,389 35,822
Total net sales $ 362,350 $ 435,481
First quarter 2022 compared to first quarter 2021
Net sales decreased$73.1 million or 16.8%, to$362.4 million during the First Quarter 2022 from$435.5 million during the First Quarter 2021, primarily due to lapping the COVID-19 stimulus relief program last year, the impact of unprecedented inflation on our customers, prolonged unseasonably cold temperatures through the end of the First Quarter 2022 in our major markets, and the impact of permanent store closures. Comparable retail sales decreased 16.9% for the quarter. The Children's PlaceU.S. net sales decreased$71.7 million or 17.9%, to$328.0 million in the First Quarter 2022, compared to$399.7 million in the First Quarter 2021. This decrease was primarily due to lapping the COVID-19 stimulus relief program last year, the impact of unprecedented inflation on our customers, prolonged unseasonably cold temperatures through the end of the First Quarter 2022 in our major markets, and the impact of permanent store closures.The Children's Place International net sales decreased$1.4 million or 4.0%, to$34.4 million in the First Quarter 2022, compared to$35.8 million in the First Quarter 2021. This decrease was primarily driven by the impact of unprecedented inflation on our customers and permanent store closures, partially offset by the favorable impact of stores that were temporarily closed inCanada during the First Quarter 2021. Total e-commerce sales, which include postage and handling, were 42.1% of net sales during the First Quarter 2022, compared to 42.6% during the First Quarter 2021. Gross profit decreased$46.3 million to$141.9 million in the First Quarter 2022, compared to$188.2 million in the First Quarter 2021. Gross margin deleveraged 406 basis points to 39.2% of net sales in the First Quarter 2022. The First Quarter 2021 results included incremental expenses related to the COVID-19 pandemic, including personal protective equipment and incentive pay for our associates of$1.0 million . Excluding the impact of these charges, gross margin deleveraged 429 basis points to 39.2% of net sales. The decrease was primarily the result of higher inbound transportation expenses, higher occupancy expenses and the deleverage of fixed expenses resulting from the decline in net sales, partially offset by higher merchandise margins in our brick-and-mortar retail and e-commerce channels, driven by AUR increases in both channels.
Gross margin as a percentage of net sales depends on various factors, including changes in the relative mix of sales between distribution channels, changes in the mix of products sold, timing and level of promotional activities, currency exchange rates and fluctuation. in material costs. These and other factors can cause gross margin as a percentage of net sales to fluctuate from period to period.
Selling, general, and administrative expenses increased$2.3 million to$109.0 million during the First Quarter 2022 from$106.7 million during the First Quarter 2021. SG&A deleveraged 558 basis points to 30.1% of net sales in the First Quarter 2022. The First Quarter 2022 results included incremental operating expenses, including professional and consulting fees of$0.5 million and fleet optimization costs of$0.3 million . The First Quarter 2021 results included incremental operating expenses, primarily personal protective equipment for our associates, of$0.6 million , fleet optimization costs of$0.8 million , contract termination costs of$0.8 million , and restructuring costs, primarily related to severance costs for corporate associates, of$0.5 million . Excluding the impact of these incremental charges, SG&A deleveraged 595 basis points to 29.9% of net sales, primarily as a result of the deleverage of fixed expenses resulting from the decline in net sales as well as planned higher marketing spend.
The amortization was
Operating income decreased$46.6 million to$19.3 million during the First Quarter 2022 from$65.9 million during the First Quarter 2021. Operating income deleveraged 982 basis points to 5.3% of net sales in the First Quarter 2022. The First Quarter 2022 results included incremental operating expenses of$1.4 million , compared to$4.8 million in the First Quarter 2021. Excluding the impact of these incremental charges, operating income deleveraged 1,057 basis points to 5.7% of net sales. 21
-------------------------------------------------------------------------------- Interest expense, net was$1.7 million during the First Quarter 2022, compared to$4.4 million during the First Quarter 2021. The decrease was primarily driven by lower interest rates due to our recent refinancing and a lower Term Loan balance in the First Quarter 2022. Provision (benefit) for income taxes was a benefit of$2.3 million during the First Quarter 2022, compared to a provision of$16.3 million during the First Quarter 2021. Our effective tax rate was a benefit of 13.0% and a provision of 26.5% in the First Quarter 2022 and the First Quarter 2021, respectively. The decrease in our effective tax rate for the First Quarter 2022 compared to the First Quarter 2021 was primarily driven by the release of a reserve for unrecognized tax benefits as a result of a settlement with a taxing authority in the First Quarter 2022. Net income decreased$25.4 million to$19.8 million , or$1.43 per diluted share during the First Quarter 2022, compared to$45.2 million , or$3.01 per diluted share during the First Quarter 2021, due to the factors discussed above.
CASH AND CAPITAL RESOURCES
Liquidity
Our working capital needs typically follow a seasonal pattern, peaking during the third fiscal quarter based on seasonal inventory purchases. However, during Fiscal 2022, we anticipate our working capital needs will remain elevated in the second fiscal quarter, in part due to actions taken in an effort to mitigate the global supply chain disruption. Our primary uses of cash are for working capital requirements, which are principally inventory purchases, the financing of capital projects, including investments in new systems, and for our capital return program (other than payment of dividends, which continue to be temporarily suspended due to the COVID-19 pandemic). OnNovember 16, 2021 , we completed the refinancing of the Previous ABL Credit Facility and Previous Term Loan with a new lending group led by an affiliate of Wells Fargo by entering into the Fourth Amendment to our Credit Agreement with the lenders party thereto. The new debt consists of a revolving credit facility with$350.0 million of availability and a$50.0 million term loan. (See "ABL Credit Facility and Term Loan" below for further information). Our working capital deficit improved$66.8 million to a deficit of$30.2 million atApril 30, 2022 , compared to a deficit of$97.0 million atMay 1, 2021 , primarily reflecting operating results over the past twelve months, as well as lower current lease liabilities. During the First Quarter 2022, we used$40.4 million of cash to repurchase shares, inclusive of shares repurchased and surrendered to cover tax withholdings associated with the vesting of equity awards. AtApril 30, 2022 , we had$249.5 million of outstanding borrowings and$93.1 million available for borrowing under our ABL Credit Facility. In addition, atApril 30, 2022 , we had$7.4 million of outstanding letters of credit with an additional$42.6 million available for issuing letters of credit under our ABL Credit Facility.
We expect to be able to meet our working capital and capital expenditure requirements for the foreseeable future using our free cash, operating cash flow and availability under our ABL credit facility.
ABL credit facility and term loan
We and certain of our subsidiaries maintain a$350 million ABL Credit Facility and a$50 million Term Loan with Wells Fargo,Truist Bank ,Bank of America, N.A .,HSBC Business Credit (USA) Inc. , andJPMorgan Chase Bank, N.A ., as lenders (collectively, the "Lenders") and Wells Fargo, as Administrative Agent, Collateral Agent, SwingLine Lender and Term Agent. Both the ABL Credit Facility and the Term Loan mature inNovember 2026 , and both of these debt facilities have lower interest rates, reduced reporting requirements, and increased flexibility under the covenants compared to the Previous ABL Credit Facility and Previous Term Loan.
The ABL credit facility includes a
Borrowings outstanding under the ABL Credit Facility bear interest, at our option, at:
(i) the prime rate plus a margin of 0.375% or 0.625% depending on the amount of our average excess availability under the facility; Where
(ii)the London InterBank Offered Rate, or "LIBOR", for an interest period of
one, three, or six months, as selected by us, plus a margin of 1.125% or 1.375%
based on the amount of our average excess availability under the facility.
We are charged an unused line fee of 0.20% on the unused portion of the
commitments. Letter of credit fees range from 0.563% to 0.683% for commercial
letters of credit and range from 0.625% to 0.875% for standby letters of
credit. Letter of credit fees are determined based on the amount of our average
excess availability under the facility. The amount available for
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loans and letters of credit under the ABL Credit Facility is determined by a borrowing base consisting of certain credit card receivables, certain trade receivables, certain inventory and the fair market value of certain real estate, under subject to certain reservations.
The outstanding obligations under the ABL Credit Facility may be accelerated upon the occurrence of certain events, including, among others, non-payment, breach of covenants, the institution of insolvency proceedings, defaults under other material indebtedness, and a change of control, subject, in the case of certain defaults, to the expiration of applicable grace periods. We are not subject to any early termination fees. The ABL Credit Facility contains covenants, which include conditions on stock buybacks and the payment of cash dividends or similar payments. These covenants also limit our ability to incur certain liens, to incur certain indebtedness, to make certain investments, acquisitions, or dispositions, or to change the nature of our business. Credit extended under the ABL Credit Facility is secured by a first priority security interest in substantially all of ourU.S. and Canadian assets other than intellectual property, certain furniture, fixtures, equipment, and pledges of subsidiary capital stock, and a second priority security interest in our intellectual property, certain furniture, fixtures, equipment, and pledges of subsidiary capital stock. The table below presents the components of our ABL Credit Facility and Previous ABL Credit Facility: April 30, January 29, May 1, 2022 2022 2021 (in millions)
Credit facility maximum $ 350.0 $ 350.0 $ 360.0
Borrowing base (1) 350.0 279.7 330.4
Outstanding borrowings 249.5 175.3 196.9
Letters of credit outstanding-standby 7.4 7.4 7.4
Utilization of credit facility at end of period 256.9 182.7 204.3
Availability (2) $ 93.1 $ 97.0 $ 126.1
Interest rate at end of period 2.0% 1.6% 4.0%
First Quarter 2022 Fiscal 2021 First Quarter 2021
Average end of day loan balance during the period $ 251.2 $ 187.0 $ 210.3
Highest end of day loan balance during the period $ 308.6 $ 269.7 $ 260.6
Average interest rate 2.0% 3.6% 4.0%
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(1) Lower between the maximum of the credit facility or the total of the basic loan guarantee.
(2) The sub-limit available for letters of credit was
The Term Loan bears interest, payable monthly, at (a) the LIBOR Rate plus 2.50% for any portion that is a LIBOR loan, or (b) the base rate plus 1.75% for any portion that is a base rate loan. The Term Loan is pre-payable at any time without penalty, and does not require amortization. For the First Quarter 2022, we recognized$0.4 million in interest expense related to the Term Loan. The Term Loan is secured by a first priority security interest in our intellectual property, certain furniture, fixtures, equipment, and pledges of subsidiary capital stock, and a second priority security interest in the collateral securing the ABL Credit Facility on a first-priority basis. The Term Loan is guaranteed by each of our subsidiaries that guarantees the ABL Credit Facility and contains substantially the same covenants as provided in the ABL Credit Facility. Both the ABL Credit Facility and the Term Loan contain customary events of default, which include (subject in certain cases to customary grace and cure periods), nonpayment of principal or interest, breach of covenants, failure to pay certain other indebtedness, and certain events of bankruptcy, insolvency or reorganization. As ofApril 30, 2022 , unamortized deferred financing costs amounted to$2.7 million , of which$2.4 million related to our ABL Credit Facility. 23 --------------------------------------------------------------------------------
Cash flow and capital expenditure
Cash used in operating activities was$18.8 million during the First Quarter 2022, compared to$16.6 million during the First Quarter 2021. Cash used in operating activities during the First Quarter 2022 was primarily the result of the timing of inventory receipts as a result of global supply chain disruptions, partially offset by earnings generated during the period, the receipt of a net income tax refund of$21.6 million , as well as other planned changes in working capital. Cash used in operating activities during the First Quarter 2021 was primarily the result of the payment of certain suspended 2020 rents, net of abatements, as well as other planned changes in working capital, which brought our vendor payables in line with historical payment terms, partially offset by earnings generated during the period. Cash used in investing activities was$11.0 million during the First Quarter 2022, compared to$6.7 million during the First Quarter 2021. This change was primarily driven by the timing of capital expenditures.
Cash from financing activities was
We anticipate total capital expenditures to approximate$55 million in Fiscal 2022, primarily related to digital and supply chain fulfillment initiatives, compared to$29.3 million in Fiscal 2021. Our ability to continue to meet our capital requirements in Fiscal 2022 depends on our cash on hand, our ability to generate cash flows from operations, and available borrowings under our ABL Credit Facility. Cash flows generated from operations depends on our ability to achieve our financial plans. We believe that our existing cash on hand, cash generated from operations, and funds available to us through our ABL Credit Facility will be sufficient to fund our capital and other cash requirements for the foreseeable future.
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