Children's Place posts smaller Q3 profit

Nov 18 (Reuters) - Children's Place Retail Stores Inc (PLCE.O) posted a smaller third-quarter profit, hit by weak sales, but said it is headed for better results in 2011 and beyond as it corrects its fashion mistakes.

The kids' clothes retailer had earlier cut its earnings outlook for the quarter by a fifth as poor demand for kids' fashions and unseasonably warm weather hit its business.

"While short-term market conditions remain challenging for our business, we are making significant progress on our longer-term growth initiatives," Chief Executive Jane Elfers said in a statement.

The company, which competes with Carter's Inc (CRI.N), Gymboree Corp (GYMB.O) and the kids'line at Gap Inc (GPS.N), earned $31.2 million, or $1.14 per share, from continuing operations. Sales fell 2.1 percent to $453.4 million.

Analysts on average had expected earnings of $1.12 a share, on sales of $462.3 million.

Shares of the Secaucus, New Jersey-based company have lost about 8 percent of their value since it chopped its third-quarter view in October. They closed at $47.84 Wednesday on Nasdaq.

(Reporting by Nivedita Bhattacharjee in Bangalore; Editing by Gopakumar Warrier)